Question 1

The consumer price index was 177.1 in 2001 and 179.9 in 2002.Therefore,the rate of inflation in 2002 was about:

Accepted Answer

A)   2.8 percent.
B)   3.4 percent.
C)   1.6 percent.
D)   4.1 percent.E) A) and B)
F) None of the above

Question 2

Most economists agree that the immediate cause of most business cycle variation is:

Accepted Answer

A)   an unexpected change in the productivity of workers.
B)   an unexpected change in the level of total spending.
C)   the invention of new products.
D)   the growth and subsequent bursting of financial bubbles.E) A) and C)
F) A) and D)

Question 3

Demand-pull inflation:

Accepted Answer

A)   occurs when prices of resources rise,pushing up costs and the price level.
B)   occurs when total spending exceeds the economy's ability to provide output at the existing price level.
C)   occurs only when the economy has reached its absolute production capacity.
D)   is also called cost-push inflation.E) B) and D)
F) A) and C)

Question 4

The type of unemployment associated with recessions is called:

Accepted Answer

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

Question 5

A large negative GDP gap implies:

Accepted Answer

A)   an excess of imports over exports.
B)   a low rate of unemployment.
C)   a high rate of unemployment.
D)   a sharply rising price level.E) None of the above
F) A) and B)

Question 6

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.The labor force in Scoob is:

Accepted Answer

A)   95 million.
B)   102 million.
C)   105 million.
D)   145 million. E) A) and D)
F) C) and D)

Question 7

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Accepted Answer

A)   frictional unemployment.
B)   structural unemployment.
C)   cyclical unemployment.
D)   compositional unemployment.E) A) and B)
F) A) and C)

Question 8

Alex works in his own home as a homemaker and full-time caretaker of his children.Officially,he is:

Accepted Answer

A)   unemployed.
B)   employed.
C)   not in the labor force.
D)   in the labor force.E) C) and D)
F) A) and B)

Question 9

At the economy's natural rate of unemployment:

Accepted Answer

A)   the economy achieves its potential output.
B)   there is only a relatively small amount of cyclical unemployment.
C)   only frictional unemployment exists.
D)   only structural unemployment exists.E) A) and B)
F) A) and D)

Question 10

The United States' economy is considered to be at full employment when:

Accepted Answer

A)   about 4-5 percent of the total population is unemployed.
B)   90 percent of the labor force is employed.
C)   about 4-5 percent of the labor force is unemployed.
D)   100 percent of the labor force is employed.E) A) and D)
F) All of the above

Question 11

The business cycle is so named because upswings and downswings in business activity are predictably equal in terms of duration and intensity.

Accepted Answer

A) True 
 B)False

Question 12

Suppose there are 5 million unemployed workers seeking jobs.After a period of time,1 million of them become discouraged over their job prospects and cease to look for work.As a result of this,all else equal,the official unemployment rate would:

Accepted Answer

A)   decline.
B)   increase.
C)   increase in the short run but eventually decline.
D)   be unchanged.E) B) and D)
F) B) and C)

Question 13

Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105.The person's real income will:

Accepted Answer

A)   fall by about 20 percent.
B)   fall by about 2 percent.
C)   rise by about 15 percent.
D)   rise by about 25 percent.E) C) and D)
F) All of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Exam 28: Business Cycles, Unemployment, and Inflation

Suppose there are 5 million unemployed workers seeking jobs.After a period of time,1 million of them become discouraged over their job prospects and cease to look for work.As a result of this,all else equal,the official unemployment rate would:

Correct Answer
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Demand-pull inflation:

Correct Answer
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The consumer price index was 177.1 in 2001 and 179.9 in 2002.Therefore,the rate of inflation in 2002 was about:

Correct Answer
verified

At the economy's natural rate of unemployment:

Correct Answer
verified

The type of unemployment associated with recessions is called:

Correct Answer
verified

Most economists agree that the immediate cause of most business cycle variation is:

Correct Answer
verified

Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105.The person's real income will:

Correct Answer
verified

The business cycle is so named because upswings and downswings in business activity are predictably equal in terms of duration and intensity.

Correct Answer
verified

Alex works in his own home as a homemaker and full-time caretaker of his children.Officially,he is:

Correct Answer
verified

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Correct Answer
verified

Correct Answer
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The United States' economy is considered to be at full employment when:

Correct Answer
verified

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

Correct Answer
verified

A large negative GDP gap implies:

Correct Answer
verified

Exam 28: Business Cycles, Unemployment, and Inflation

Suppose there are 5 million unemployed workers seeking jobs.After a period of time,1 million of them become discouraged over their job prospects and cease to look for work.As a result of this,all else equal,the official unemployment rate would:

Correct AnswerverifiedShow Answer

Demand-pull inflation:

Correct AnswerverifiedShow Answer

The consumer price index was 177.1 in 2001 and 179.9 in 2002.Therefore,the rate of inflation in 2002 was about:

Correct AnswerverifiedShow Answer

At the economy's natural rate of unemployment:

Correct AnswerverifiedShow Answer

The type of unemployment associated with recessions is called:

Correct AnswerverifiedShow Answer

Most economists agree that the immediate cause of most business cycle variation is:

Correct AnswerverifiedShow Answer

Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105.The person's real income will:

Correct AnswerverifiedShow Answer

The business cycle is so named because upswings and downswings in business activity are predictably equal in terms of duration and intensity.

Correct AnswerverifiedShow Answer

Alex works in his own home as a homemaker and full-time caretaker of his children.Officially,he is:

Correct AnswerverifiedShow Answer

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The United States' economy is considered to be at full employment when:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A large negative GDP gap implies:

Correct AnswerverifiedShow Answer

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