Question 1

Which of the following would most likely move the economy into a recession in the short term?

Accepted Answer

A)   Invention of a new product that most consumers want to buy.
B)   Innovations in management that enhance worker productivity.
C)   The central bank printing less money than was anticipated.
D)   Congress passing a reduction in personal income tax rates.E) A) and C)
F) C) and D)

Question 2

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Accepted Answer

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

Question 3

Cost-push inflation:

Accepted Answer

A)   is caused by excessive total spending.
B)   shifts the nation's production possibilities curve leftward.
C)   moves the economy inward from its production possibilities curve.
D)   is a mixed blessing because it has positive effects on real output and employment.E) A) and B)
F) A) and C)

Question 4

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

Accepted Answer

A)   2 percent.
B)   3 percent.
C)   5 percent.
D)   7 percent.E) All of the above
F) A) and C)

Question 5

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Accepted Answer

A)   Unexpected financial bubbles that eventually burst.
B)   Shocks to the money supply by the nation's central bank.
C)   Supply shocks caused by major innovations.
D)   All of these are identified as causes of business cycle changes.E) None of the above
F) A) and D)

Question 6

(Consider This) The main point of the Consider This box on clipping coins is that:

Accepted Answer

A)   decreases in the money supply cause deflation.
B)   decreases in tax rates often increase tax revenues.
C)   inflation imposes a "hidden tax" on those who hold money.
D)   demand creates its own supply.E) A) and D)
F) C) and D)

Question 7

Answer the question on the basis of the following information about a hypothetical economy: Full-Time Employed =  80\mathbf { 8 0 }80 
Part-Time Employed = 25
Unemployed  =15= 15=15 
Discouraged Workers = 5
Members of Underground Economy = 6
Consumer Price Index  =110= 110=110  Refer to the given information.If the members of the underground economy are presently counted as part of the unemployed when in fact they are employed,the official unemployment rate is overstated by about:

Accepted Answer

A)   0 percentage points.
B)   2 percentage points.
C)   5 percentage points.
D)   6 percentage points. E) All of the above
F) B) and C)

Question 8

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Accepted Answer

A)   inflation of 4 percent.
B)   inflation of 3.33 percent.
C)   deflation of 3.33 percent.
D)   deflation of 4 percent.E) All of the above
F) A) and B)

Question 9

During a severe recession,we would expect output to fall the most in:

Accepted Answer

A)   the health care industry.
B)   the clothing industry.
C)   agriculture.
D)   the construction industry.E) A) and C)
F) C) and D)

Question 10

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

Accepted Answer

A)   3 percent.
B)   6 percent.
C)   7 percent.
D)   53 percent.E) C) and D)
F) A) and D)

Question 11

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Accepted Answer

A)   cyclically unemployed.
B)   frictionally unemployed.
C)   structurally unemployed.
D)   employed.E) B) and C)
F) A) and D)

Question 12

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

Accepted Answer

A)   cyclically unemployed.
B)   structurally unemployed.
C)   frictionally unemployed.
D)   not a member of the labor force.E) All of the above
F) A) and B)

Question 13

Answer the question on the basis of the following information about a hypothetical economy: Full-Time Employed =  80\mathbf { 8 0 }80 
Part-Time Employed = 25
Unemployed  =15= 15=15 
Discouraged Workers = 5
Members of Underground Economy = 6
Consumer Price Index  =110= 110=110  Refer to the given information.The unemployment rate is:

Accepted Answer

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

Question 14

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 15

People who work part time,but desire to work full time,are considered to be officially unemployed.

Accepted Answer

A) True 
 B)False

Question 16

The natural rate of unemployment is the:

Accepted Answer

A)   unemployment rate experienced at the depth of a depression.
B)   full-employment unemployment rate.
C)   unemployment rate experienced by the least-skilled workers in the economy.
D)   unemployment rate experienced by the most-skilled workers in the economy.E) C) and D)
F) A) and C)

Question 17

The phase of the business cycle in which real GDP is at a minimum is called:

Accepted Answer

A)   the peak.
B)   a recession.
C)   the trough.
D)   the underside.E) B) and C)
F) All of the above

Question 18

Part-time workers who want full-time work are counted as:

Accepted Answer

A)   unemployed and therefore the official unemployment rate may overstate the level of unemployment.
B)   unemployed and therefore the official unemployment rate may understate the level of unemployment.
C)   fully employed and therefore the official unemployment rate may overstate the level of unemployment.
D)   fully employed and therefore the official unemployment rate may understate the level of unemployment.E) A) and B)
F) None of the above

Question 19

The phrase "too much money 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) A) and B)
F) None of the above

Question 20

(Consider This) The feudal practice of clipping coins illustrates the idea of:

Accepted Answer

A)   taxation through inflation.
B)   good money driving out bad money.
C)   the derived demand for resources.
D)   cost-push inflation.E) A) and C)
F) None of the above

Exam 28: Business Cycles, Unemployment, and Inflation

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

Correct Answer
verified

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Correct Answer
verified

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Correct Answer
verified

The phase of the business cycle in which real GDP is at a minimum is called:

Correct Answer
verified

Correct Answer
verified

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Correct Answer
verified

Which of the following would most likely move the economy into a recession in the short term?

Correct Answer
verified

Cost-push inflation:

Correct Answer
verified

(Consider This) The feudal practice of clipping coins illustrates the idea of:

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

Part-time workers who want full-time work are counted as:

Correct Answer
verified

(Consider This) The main point of the Consider This box on clipping coins is that:

Correct Answer
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During a severe recession,we would expect output to fall the most in:

Correct Answer
verified

The phrase "too much money chasing too few goods" best describes:

Correct Answer
verified

The natural rate of unemployment is the:

Correct Answer
verified

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

Correct Answer
verified

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

Correct Answer
verified

Correct Answer
verified

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Correct Answer
verified

People who work part time,but desire to work full time,are considered to be officially unemployed.

Correct Answer
verified

Exam 28: Business Cycles, Unemployment, and Inflation

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

Correct AnswerverifiedShow Answer

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Correct AnswerverifiedShow Answer

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Correct AnswerverifiedShow Answer

The phase of the business cycle in which real GDP is at a minimum is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Correct AnswerverifiedShow Answer

Which of the following would most likely move the economy into a recession in the short term?

Correct AnswerverifiedShow Answer

Cost-push inflation:

Correct AnswerverifiedShow Answer

(Consider This) The feudal practice of clipping coins illustrates the idea of:

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

Part-time workers who want full-time work are counted as:

Correct AnswerverifiedShow Answer

(Consider This) The main point of the Consider This box on clipping coins is that:

Correct AnswerverifiedShow Answer

During a severe recession,we would expect output to fall the most in:

Correct AnswerverifiedShow Answer

The phrase "too much money chasing too few goods" best describes:

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Correct AnswerverifiedShow Answer

People who work part time,but desire to work full time,are considered to be officially unemployed.

Correct AnswerverifiedShow Answer

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