Question 1

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) All of the above
F) None of the above

Question 2

The Canadian economy is said to be producing its non-inflationary potential level of GDP when the natural rate of unemployment is:

Accepted Answer

A)   10-15 percent.
B)   7-10 percent.
C)   6-7 percent.
D)   2.3 percent.E) C) and D)
F) None of the above

Question 3

The unemployment rate in an economy is 12 percent.The civilian labour force is 50 million.The number of employed workers in the economy is:

Accepted Answer

A)   38 million.
B)   40 million.
C)   42 million.
D)   44 million.E) A) and C)
F) B) and D)

Question 4

An annual rate of inflation of 7 percent will double the price level in about 15 years.

Accepted Answer

A) True 
 B)False

Question 5

Which statement about inflation is correct?

Accepted Answer

A)   Families are always hurt by inflation.
B)   Inflation "subsidizes" those who receive relatively fixed money income.
C)   The redistributive effects of inflation are arbitrary with respect to people and groups in society.
D)   Inflation will decrease the real value of property assets and increase the real value of fixed-value assets.E) B) and C)
F) C) and D)

Question 6

If the price index rose from 254 in year 1 to 289 in year 2,then the rate of inflation for this economy in year 2 would be:

Accepted Answer

A)   11.3 percent.
B)   13.78 percent.
C)   89 percent.
D)   35 percent.E) B) and D)
F) A) and B)

Question 7

Most economists believe that the immediate cause of cyclical changes in the levels of real output and employment is:

Accepted Answer

A)   the changes in productivity.
B)   the changes in technology.
C)   the changes in the level of total spending.
D)   the changes in the money supply.E) A) and B)
F) A) and C)

Question 8

If both the real interest rate and the nominal interest rate are 3 percent,then the:

Accepted Answer

A)   inflation premium is zero.
B)   real GDP must exceed the nominal GDP.
C)   nominal GDP must exceed real GDP.
D)   inflation premium also is 3 percent.E) C) and D)
F) A) and B)

Question 9

If the average level of nominal income is $30,000 and the price level index is 154,the average real income would be about:

Accepted Answer

A)   $17,343
B)   $18,521
C)   $19,481
D)   $20,955E) A) and D)
F) A) and C)

Question 10

In what circumstances would lenders most benefit?

Accepted Answer

A)   when there is an unanticipated decrease in inflation
B)   when there is an anticipated increase in inflation
C)   when there is an unanticipated increase in inflation
D)   when there is an anticipated decrease in inflationE) B) and D)
F) B) and C)

Question 11

After World War I,Germany experienced an economic condition which can be best described as:

Accepted Answer

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

Question 12

If the nominal interest rate is 12 percent and the real interest rate is 8 percent,then the inflation premium is:

Accepted Answer

A)   8 percent.
B)   12 percent.
C)   4 percent.
D)   20 percent.E) B) and D)
F) All of the above

Question 13

Too much spending chasing too few goods best describes:

Accepted Answer

A)   the GDP gap.
B)   demand-pull inflation.
C)   the inflation premium.
D)   cost-push inflation.E) B) and C)
F) None of the above

Question 14

Part-time workers are counted as:

Accepted Answer

A)   unemployed and therefore the official unemployment rate tends to overstate the level of unemployment.
B)   unemployed and therefore the official unemployment rate tends to understate the level of unemployment.
C)   fully employed and therefore the official unemployment rate tends to overstate the level of unemployment.
D)   fully employed and therefore the official unemployment rate tends to understate the level of unemployment.E) All of the above
F) C) and D)

Question 15

Generally speaking,output and employment are more variable over the business cycle in capital goods and consumer durable industries than they are in service and nondurable consumer goods sector.

Accepted Answer

A) True 
 B)False

Question 16

Hyperinflation does not have a devastating impact on real output and employment.

Accepted Answer

A) True 
 B)False

Question 17

The phase of the business cycle where real domestic output is at a minimum is called:

Accepted Answer

A)   the peak.
B)   a recession.
C)   the trough.
D)   the pits.E) None of the above
F) C) and D)

Question 18

The production of durable goods is more stable than the production of nondurables over the business cycle.

Accepted Answer

A) True 
 B)False

Question 19

When a group of workers find that their job skills and work experience have become obsolete and are not needed by industry,this type of unemployment is:

Accepted Answer

A)   search.
B)   frictional.
C)   structural.
D)   cyclical.E) A) and C)
F) None of the above

Question 20

Unanticipated inflation arbitrarily:

Accepted Answer

A)   subsidizes those who receive fixed money incomes.
B)   penalises those who receive fixed money incomes.
C)   penalizes those who borrow money.
D)   benefits those who save money.E) All of the above
F) A) and B)

Exam 9: Business Cycles, Unemployment, and Inflation

Generally speaking,output and employment are more variable over the business cycle in capital goods and consumer durable industries than they are in service and nondurable consumer goods sector.

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If the average level of nominal income is $30,000 and the price level index is 154,the average real income would be about:

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After World War I,Germany experienced an economic condition which can be best described as:

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Part-time workers are counted as:

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In what circumstances would lenders most benefit?

Correct AnswerverifiedShow Answer

If the nominal interest rate is 12 percent and the real interest rate is 8 percent,then the inflation premium is:

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Which statement about inflation is correct?

Correct AnswerverifiedShow Answer

Too much spending chasing too few goods best describes:

Correct AnswerverifiedShow Answer

Hyperinflation does not have a devastating impact on real output and employment.

Correct AnswerverifiedShow Answer

When a group of workers find that their job skills and work experience have become obsolete and are not needed by industry,this type of unemployment is:

Correct AnswerverifiedShow Answer

If both the real interest rate and the nominal interest rate are 3 percent,then the:

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Most economists believe that the immediate cause of cyclical changes in the levels of real output and employment is:

Correct AnswerverifiedShow Answer

If the price index rose from 254 in year 1 to 289 in year 2,then the rate of inflation for this economy in year 2 would be:

Correct AnswerverifiedShow Answer

An annual rate of inflation of 7 percent will double the price level in about 15 years.

Correct AnswerverifiedShow Answer

The production of durable goods is more stable than the production of nondurables over the business cycle.

Correct AnswerverifiedShow Answer

Unanticipated inflation arbitrarily:

Correct AnswerverifiedShow Answer

The phase of the business cycle where real domestic output is at a minimum is called:

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The unemployment rate in an economy is 12 percent.The civilian labour force is 50 million.The number of employed workers in the economy is:

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Structural unemployment:

Correct AnswerverifiedShow Answer

The Canadian economy is said to be producing its non-inflationary potential level of GDP when the natural rate of unemployment is:

Correct AnswerverifiedShow Answer

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