Question 1

The following information is about a hypothetical economy: Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Members of underground economy = 6
Consumer Price Index = 110
Refer to the above information.The unemployment rate is:

Accepted Answer

A)  18.8 percent.
B)  12.5 percent.
C)  16.7 percent.
D)  25 percent.E) None of the above
F) A) and C)

Question 2

Which of the following constitute the unemployment occurring when the natural rate of unemployment exists?

Accepted Answer

A)  frictional and cyclical unemployment
B)  structural, seasonal and frictional unemployment
C)  cyclical and structural unemployment
D)  frictional, structural, and cyclical unemployment.E) A) and B)
F) All of the above

Question 3

If the price level doubles in a 23-year period, we can conclude that the average annual rate of inflation over that period was about 3 percent.

Accepted Answer

A) True 
 B)False

Question 4

Inflation initiated by increases in wages or other resource prices is labelled:

Accepted Answer

A)  demand-pull inflation.
B)  demand-push inflation.
C)  cost-push inflation.
D)  cost-pull inflation.E) B) and C)
F) A) and D)

Question 5

Suppose the nominal annual interest rate on a two year loan is 16 percent and lenders expect inflation to be 10 percent in each of the two years.The annual real rate of interest is:

Accepted Answer

A)  12 percent.
B)  16 percent.
C)  4 percent.
D)  6 percent.E) A) and C)
F) None of the above

Question 6

Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

Accepted Answer

A)  is 3 percent.
B)  is 6 percent.
C)  is 7 percent.
D)  is 9 percent.E) All of the above
F) C) and D)

Question 7

Compared to the United States, Canada's recent unemployment rate has been:

Accepted Answer

A)  higher.
B)  lower.
C)  about the same.
D)  more variable.E) C) and D)
F) A) and B)

Question 8

During 1993-1994, Democratic Republic of Congo has experienced an inflation rate of more than sixty-nine thousand percent per year.This economic condition would best be described as:

Accepted Answer

A)  a wage-price inflationary spiral.
B)  a cost-of-living adjustment.
C)  cost-push inflation.
D)  hyperinflation.E) A) and C)
F) A) and B)

Question 9

If the actual GDP is less than potential GDP:

Accepted Answer

A)  potential GDP will fall.
B)  the price level will rise.
C)  investment spending will fall.
D)  the actual unemployment rate will be higher than the natural unemployment rate.E) C) and D)
F) A) and D)

Question 10

Unanticipated inflation benefits some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 11

Unanticipated inflation:

Accepted Answer

A)  hurts people whose income is fixed.
B)  hurts borrowers and helps lenders.
C)  helps people whose income is fixed.
D)  helps savers.E) A) and B)
F) None of the above

Question 12

The national unemployment rate in Canada:

Accepted Answer

A)  reveals the significant diversity in regional unemployment.
B)  does not reveal the significant diversity in regional unemployment.
C)  is a good indicator of unemployment rate in all regions in Canada.
D)  is always higher than the unemployment rate in each region in Canada.E) B) and C)
F) A) and D)

Question 13

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 14

Unanticipated inflation benefits creditors and savers.

Accepted Answer

A) True 
 B)False

Question 15

Which phase of the business cycle would be most closely associated with an economic contraction?

Accepted Answer

A)  peak
B)  recession
C)  trough
D)  expansionE) B) and C)
F) A) and D)

Question 16

The natural rate of unemployment:

Accepted Answer

A)  is fixed over time.
B)  is found by adding the cyclical and structural unemployment rates.
C)  may change from one decade to another.
D)  cannot be changed through public policy.E) A) and D)
F) None of the above

Question 17

Depression means idleness.And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest.This quote describes some of the:

Accepted Answer

A)  consequences of the hyperinflation that accompanies a recession.
B)  reasons for the natural rate of unemployment.
C)  noneconomic costs of unemployment.
D)  characteristics of structural unemployment.E) B) and C)
F) C) and D)

Question 18

The unemployment rate in an economy is 7.5 percent.The total population of the economy is 250 million and the size of the civilian labour force is 180 million.The number of employed workers in this economy is:

Accepted Answer

A)  13.5 million.
B)  15.7 million.
C)  166.5 million.
D)  174.6 million.E) B) and C)
F) A) and D)

Question 19

Waiting for employment and "searching for employment" are both types of:

Accepted Answer

A)  cyclical unemployment.
B)  hidden unemployment.
C)  frictional unemployment.
D)  structural unemployment.E) All of the above
F) C) and D)

Question 20

Cyclical unemployment is a consequence of:

Accepted Answer

A)  a decline in aggregate spending.
B)  the decreasing relative importance of goods and the increasing relative importance of services in our economy.
C)  the everyday dynamics of a free labour market.
D)  technological change.E) B) and D)
F) None of the above

Exam 9: B: Business Cycles, Unemployment, and Inflation

The national unemployment rate in Canada:

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Unanticipated inflation:

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Waiting for employment and "searching for employment" are both types of:

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Compared to the United States, Canada's recent unemployment rate has been:

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Depression means idleness.And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest.This quote describes some of the:

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Which of the following constitute the unemployment occurring when the natural rate of unemployment exists?

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Unanticipated inflation benefits some groups in the economy.

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Which phase of the business cycle would be most closely associated with an economic contraction?

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Inflation initiated by increases in wages or other resource prices is labelled:

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:

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Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

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Cyclical unemployment is a consequence of:

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If the price level doubles in a 23-year period, we can conclude that the average annual rate of inflation over that period was about 3 percent.

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The following information is about a hypothetical economy: Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer Price Index = 110 Refer to the above information.The unemployment rate is:

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The natural rate of unemployment:

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If the actual GDP is less than potential GDP:

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During 1993-1994, Democratic Republic of Congo has experienced an inflation rate of more than sixty-nine thousand percent per year.This economic condition would best be described as:

Correct AnswerverifiedShow Answer

Suppose the nominal annual interest rate on a two year loan is 16 percent and lenders expect inflation to be 10 percent in each of the two years.The annual real rate of interest is:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits creditors and savers.

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The unemployment rate in an economy is 7.5 percent.The total population of the economy is 250 million and the size of the civilian labour force is 180 million.The number of employed workers in this economy is:

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