Question 1

The natural rate of unemployment in the United States today is about 5 to 6 percent.

Accepted Answer

A) True 
 B)False

Question 2

If Fred's annual real income rises by 8 percent each year,his annual real income will double in about:

Accepted Answer

A)   8-9 years.
B)   10-11 years.
C)   5-6 years.
D)   19-20 years.E) B) and D)
F) A) and B)

Question 3

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 percent of potential GDP is:

Accepted Answer

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

Question 4

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 unemployment.E) B) and D)
F) A) and B)

Question 5

Under which of the following circumstances would we observe the greatest increase in real income?

Accepted Answer

A)   Nominal income falls by 2 percent and the price level falls by 10 percent.
B)   Nominal income rises by 8 percent and the price level rises by 4 percent.
C)   Nominal income rises by 12 percent and the price level rises by 15 percent.
D)   Nominal income falls by 4 percent and the price level rises by 6 percent.E) B) and C)
F) All of the above

Question 6

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent,then the:

Accepted Answer

A)   frictional unemployment rate is 5 percent.
B)   cyclical unemployment rate and the frictional unemployment rate together are 5 percent.
C)   cyclical unemployment rate is 4 percent.
D)   natural rate of unemployment will eventually increase.E) A) and B)
F) A) and C)

Question 7

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?

Accepted Answer

A)   Government is unable to respond by changing the amount of money in circulation.
B)   Changes in total spending cause supply shocks that cause cyclical variation.
C)   Prices are sticky in the short run.
D)   Prices are flexible in the long run.E) B) and D)
F) All of the above

Question 8

If the nominal interest rate is 5 percent and the real interest rate is 2 percent,then the inflation premium is:

Accepted Answer

A)   8 percent.
B)   5 percent.
C)   3 percent.
D)   2 percent.E) A) and B)
F) A) and C)

Question 9

Answer the question on the basis of the following information about the hypothetical economy of Scoob.All figures are in millions.   Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3\begin{array} { l l } 	ext { Unemployed } & 7 \	ext { Total Population } & 145 \	ext { Employed } & 95 \	ext { Discouraged Workers } & 3\end{array} Unemployed  Total Population  Employed  Discouraged Workers ​7145953​  Refer to the given information.If the natural rate of unemployment in Scoob is 5 percent,then:

Accepted Answer

A)   structural unemployment is about 3 percent.
B)   frictional unemployment is about 2 percent.
C)   cyclical unemployment is about 2 percent.
D)   hidden unemployment is about 5 percent. E) A) and B)
F) C) and D)

Question 10

The natural rate of unemployment is:

Accepted Answer

A)   higher than the full-employment rate of unemployment.
B)   lower than the full-employment rate of unemployment.
C)   that rate of unemployment occurring when the economy is at its potential output.
D)   found by dividing total unemployment by the size of the labor force.E) B) and D)
F) B) and C)

Question 11

Full-employment output is also called:

Accepted Answer

A)   zero-unemployment output.
B)   equilibrium output.
C)   potential output.
D)   zero-savings output.E) All of the above
F) A) and B)

Question 12

The production of durable goods varies more than the production of nondurable goods because:

Accepted Answer

A)   durables purchases are nonpostponable.
B)   durables purchases are postponable.
C)   the producers of nondurables have monopoly power.
D)   producers of durables are highly competitive.E) A) and B)
F) A) and C)

Question 13

According to the Bureau of Labor Statistics,to be officially unemployed a person must:

Accepted Answer

A)   be in the labor force.
B)   be 21 years of age or older.
C)   have lost a job.
D)   be waiting to be called back from a layoff.E) None of the above
F) A) and D)

Question 14

Structural unemployment:

Accepted Answer

A)   is also known as frictional unemployment.
B)   is the main component of cyclical unemployment.
C)   is said to occur when people are waiting to be called back to previous jobs.
D)   may involve a locational mismatch between unemployed workers and job openings.E) B) and C)
F) A) and B)

Question 15

Unanticipated inflation:

Accepted Answer

A)   reduces the real burden of the public debt to the federal government.
B)   hurts borrowers and helps lenders.
C)   hurts people whose sole source of income is from Social Security benefits.
D)   helps savers.E) A) and B)
F) None of the above

Question 16

In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?

Accepted Answer

A)   Military goods.
B)   Capital goods.
C)   Textile products.
D)   Agricultural commodities.E) All of the above
F) A) and D)

Question 17

A recession is defined as a period in which:

Accepted Answer

A)   cost-push inflation is present.
B)   nominal domestic output falls.
C)   demand-pull inflation is present.
D)   real domestic output falls.E) None of the above
F) A) and B)

Question 18

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion,real GDP is:

Accepted Answer

A)   $415 billion.
B)   $385 billion.
C)   $15 billion.
D)   $785 billion.E) B) and D)
F) B) and C)

Question 19

Which of the following best describes why unemployment rates remained high well after the end of the Great Recession of 2007-2009?

Accepted Answer

A)   Falling wages discouraged workers from taking on new employment.
B)   The 20 percent of U.S.workers employed at minimum-wage jobs were unable to take wage cuts.
C)   Workers that were initially cyclically unemployed,like construction workers,effectively became structurally unemployed as they needed to transition to new industries to find work.
D)   Deflation in the economy discouraged spending,preventing output and employment from recovering.E) B) and C)
F) All of the above

Question 20

The government agency responsible for collecting and reporting unemployment data is the:

Accepted Answer

A)   Bureau of Labor Statistics.
B)   Bureau of Unemployment.
C)   Bureau of Economic Analysis.
D)   Bureau of Economic Research.E) A) and C)
F) None of the above

Exam 28: Business Cycles, Unemployment, and Inflation

Unanticipated inflation:

Correct Answer
verified

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent,then the:

Correct Answer
verified

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

Correct Answer
verified

The government agency responsible for collecting and reporting unemployment data is the:

Correct Answer
verified

Correct Answer
verified

If Fred's annual real income rises by 8 percent each year,his annual real income will double in about:

Correct Answer
verified

The production of durable goods varies more than the production of nondurable goods because:

Correct Answer
verified

The natural rate of unemployment is:

Correct Answer
verified

Full-employment output is also called:

Correct Answer
verified

Under which of the following circumstances would we observe the greatest increase in real income?

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 percent of potential GDP is:

Correct Answer
verified

Structural unemployment:

Correct Answer
verified

In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?

Correct Answer
verified

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?

Correct Answer
verified

If the nominal interest rate is 5 percent and the real interest rate is 2 percent,then the inflation premium is:

Correct Answer
verified

Which of the following best describes why unemployment rates remained high well after the end of the Great Recession of 2007-2009?

Correct Answer
verified

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion,real GDP is:

Correct Answer
verified

According to the Bureau of Labor Statistics,to be officially unemployed a person must:

Correct Answer
verified

A recession is defined as a period in which:

Correct Answer
verified

The natural rate of unemployment in the United States today is about 5 to 6 percent.

Correct Answer
verified

Exam 28: Business Cycles, Unemployment, and Inflation

Unanticipated inflation:

Correct AnswerverifiedShow Answer

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent,then the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The government agency responsible for collecting and reporting unemployment data is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Fred's annual real income rises by 8 percent each year,his annual real income will double in about:

Correct AnswerverifiedShow Answer

The production of durable goods varies more than the production of nondurable goods because:

Correct AnswerverifiedShow Answer

The natural rate of unemployment is:

Correct AnswerverifiedShow Answer

Full-employment output is also called:

Correct AnswerverifiedShow Answer

Under which of the following circumstances would we observe the greatest increase in real income?

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 percent of potential GDP is:

Correct AnswerverifiedShow Answer

Structural unemployment:

Correct AnswerverifiedShow Answer

In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?

Correct AnswerverifiedShow Answer

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?

Correct AnswerverifiedShow Answer

If the nominal interest rate is 5 percent and the real interest rate is 2 percent,then the inflation premium is:

Correct AnswerverifiedShow Answer

Which of the following best describes why unemployment rates remained high well after the end of the Great Recession of 2007-2009?

Correct AnswerverifiedShow Answer

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion,real GDP is:

Correct AnswerverifiedShow Answer

According to the Bureau of Labor Statistics,to be officially unemployed a person must:

Correct AnswerverifiedShow Answer

A recession is defined as a period in which:

Correct AnswerverifiedShow Answer

The natural rate of unemployment in the United States today is about 5 to 6 percent.

Correct AnswerverifiedShow Answer

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