Question 1

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Accepted Answer

A)   may have either increased or decreased.
B)   rose by approximately 6.2 percent.
C)   rose by approximately 3 percent.
D)   fell by approximately 13 percent.E) B) and C)
F) A) and B)

Question 2

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in
This economy is

Accepted Answer

A)   6 million.
B)   9 million.
C)   12 million.
D)   24 million.E) A) and B)
F) A) and C)

Question 3

In the United States, the rate of unemployment is highest for

Accepted Answer

A)   white teenagers.
B)   African-American teenagers.
C)   married women.
D)   unmarried women.E) A) and B)
F) A) and C)

Question 4

The rate of unemployment when the economy is at its potential output is called the

Accepted Answer

A)   full-employment rate of unemployment.
B)   natural rate of unemployment.
C)   structural rate of unemployment.
D)   frictional rate of unemployment.E) B) and C)
F) None of the above

Question 5

After the First World War, Germany experienced an economic condition that can be best described as

Accepted Answer

A)   hyperinﬂation.
B)   cost-push inﬂation.
C)   unanticipated inﬂation.
D)   anticipated inﬂation.E) B) and D)
F) B) and C)

Question 6

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on
the labor force.

Accepted Answer

A) True 
 B)False

Question 7

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Accepted Answer

The economic conditions that led to the ...

Question 8

The best example of a "frictionally unemployed" worker is one who

Accepted Answer

A)   reduces productivity by causing friction in a business.
B)   is laid off during a recessionary period in the economy.
C)   is in the process of voluntarily switching jobs.
D)   is discouraged and not actively seeking work.E) B) and C)
F) A) and D)

Question 9

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of
Potential GDP is

Accepted Answer

A)   4 percent.
B)   8 percent.
C)   10 percent.
D)   2 percent.E) A) and D)
F) A) and C)

Question 10

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Accepted Answer

A)   2 percent.
B)   3 percent.
C)   4 percent.
D)   6 percent.E) None of the above
F) All of the above

Question 11

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation
premium is 13 percent.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

Accepted Answer

A)   search unemployment
B)   wait unemployment
C)   cyclical unemployment
D)   frictional unemploymentE) A) and C)
F) All of the above

Question 13

The labor force includes

Accepted Answer

A)   employed workers and persons who are oﬃcially unemployed.
B)   employed workers but excludes persons who are oﬃcially unemployed.
C)   full-time workers but excludes part-time workers.
D)   permanent employees but excludes temporary employees.E) A) and C)
F) A) and B)

Question 14

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

Accepted Answer

A)   dividing 70 into the annual rate of inﬂation.
B)   dividing the annual rate of inﬂation into 70.
C)   subtracting the annual change in nominal incomes from 70.
D)   multiplying the annual rate of inﬂation by 70.E) None of the above
F) All of the above

Question 15

The accompanying list describes the responses of four individuals to a Bureau of Labor Statistics (BLS)  survey of employment.
1)  Mollie just graduated from college and is now looking for work. She has had three job interviews in
The past month but still has not gotten a job offer.
2)  George used to work in an automotive assembly plant. He was laid off six months ago as the
Economy weakened. He expects to return to work in a few months when national economic
Conditions improve.
3)  Jeanette worked as an aircraft design engineer for a company that produces military aircraft until
She lost her job last year when the Federal government cut defense spending. She has been
Looking for similar work for a year, but no company seems interested in her aircraft design skills.
4)  Ricardo lost his job last year when his company downsized and laid off middle-level managers. He
Tried to ﬁnd another job for a year but was unsuccessful and quit looking for work.
Which individual is structurally unemployed?

Accepted Answer

A)   Mollie
B)   George
C)   Jeanette
D)   RicardoE) All of the above
F) None of the above

Question 16

A worker would be hurt least by inﬂation when the

Accepted Answer

A)   worker anticipates inﬂation and increases savings at the bank.
B)   worker is protected by a cost-of-living adjustment clause in an employment contract.
C)   worker is protected by ﬁxed annual increases in wages and beneﬁts in an employment contract.
D)   government increases the level of Social Security retirement beneﬁts to correct for the effects of anticipated inﬂation.E) A) and B)
F) B) and D)

Question 17

Unanticipated inﬂation arbitrarily

Accepted Answer

A)   helps those who are minimum wageworkers.
B)   harms those who receive ﬁxed money incomes.
C)   harms those who borrow money.
D)   helps those who save money.E) B) and D)
F) C) and D)

Question 18

Unlike demand-pull inﬂation, cost-push inﬂation

Accepted Answer

A)   causes the supply of goods and services to decline.
B)   drives up the price level.
C)   increases nominal income.
D)   increases real income.E) A) and C)
F) All of the above

Question 19

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Accepted Answer

A)   Taylor's rule.
B)   Okun's law.
C)   Say's law.
D)   the Coase theorem.E) C) and D)
F) None of the above

Question 20

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

Accepted Answer

A)   frictional and cyclical unemployment
B)   structural and frictional unemployment
C)   cyclical and structural unemployment
D)   frictional, structural, and cyclical unemploymentE) B) and C)
F) A) and D)

Exam 9: Business Cycles, Unemployment, and Inflation

In the United States, the rate of unemployment is highest for

Correct Answer
verified

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of Potential GDP is

Correct Answer
verified

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

Correct Answer
verified

Unlike demand-pull inﬂation, cost-push inﬂation

Correct Answer
verified

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Correct Answer
verified
The economic conditions that led to the ...
View Answer

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Correct Answer
verified

Correct Answer
verified

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Correct Answer
verified

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in This economy is

Correct Answer
verified

The best example of a "frictionally unemployed" worker is one who

Correct Answer
verified

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Correct Answer
verified

After the First World War, Germany experienced an economic condition that can be best described as

Correct Answer
verified

Unanticipated inﬂation arbitrarily

Correct Answer
verified

The labor force includes

Correct Answer
verified

A worker would be hurt least by inﬂation when the

Correct Answer
verified

The rate of unemployment when the economy is at its potential output is called the

Correct Answer
verified

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on the labor force.

Correct Answer
verified

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation premium is 13 percent.

Correct Answer
verified

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

Correct Answer
verified

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

In the United States, the rate of unemployment is highest for

Correct AnswerverifiedShow Answer

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of Potential GDP is

Correct AnswerverifiedShow Answer

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

Correct AnswerverifiedShow Answer

Unlike demand-pull inﬂation, cost-push inﬂation

Correct AnswerverifiedShow Answer

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Correct AnswerverifiedThe economic conditions that led to the ...View AnswerShow Answer

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Correct AnswerverifiedShow Answer

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in This economy is

Correct AnswerverifiedShow Answer

The best example of a "frictionally unemployed" worker is one who

Correct AnswerverifiedShow Answer

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Correct AnswerverifiedShow Answer

After the First World War, Germany experienced an economic condition that can be best described as

Correct AnswerverifiedShow Answer

Unanticipated inﬂation arbitrarily

Correct AnswerverifiedShow Answer

The labor force includes

Correct AnswerverifiedShow Answer

A worker would be hurt least by inﬂation when the

Correct AnswerverifiedShow Answer

The rate of unemployment when the economy is at its potential output is called the

Correct AnswerverifiedShow Answer

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on the labor force.

Correct AnswerverifiedShow Answer

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation premium is 13 percent.

Correct AnswerverifiedShow Answer

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

Correct AnswerverifiedShow Answer

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The economic conditions that led to the ...
View Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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