Question 1

When unanticipated inflation occurs:

Accepted Answer

A)   both creditors and debtors benefit.
B)   both creditors and debtors are hurt.
C)   debtors are hurt,but creditors benefit.
D)   creditors are hurt,but debtors benefit.E) All of the above
F) A) and B) D

Question 2

Unanticipated inflation benefits some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 3

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) None of the above
F) B) and C)

Question 4

The descriptions give the responses of four individuals to Statistics Canada.
1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.
2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.
3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year,but was unsuccessful and quit looking for work.
-Refer to the above information.Which individual is structurally unemployed?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and D)
F) A) and C)

Question 5

-Refer to the above diagram.The straight line E drawn through the wavy lines would provide an estimate of the:

Accepted Answer

A)   recession fluctuation.
B)   growth trend.
C)   natural rate of unemployment.
D)   expansion trend.E) None of the above
F) A) and D)

Question 6

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

Accepted Answer

A)   the alcoholic beverage industry.
B)   the clothing industry.
C)   agriculture industry.
D)   the machinery and equipment industry.E) None of the above
F) A) and B)

Question 7

Demand-pull inflation:

Accepted Answer

A)   can occur before the economy has reached its full-employment output.
B)   can occur only after the economy has reached its full-employment output.
C)   can be present even during an economic depression.
D)   is self-limiting.E) B) and C)
F) A) and C)

Question 8

A lender need not be penalized by inflation if the:

Accepted Answer

A)   long-term rate of inflation is less than the short-term rate of inflation.
B)   short-term rate of inflation is less than the long-term rate of inflation.
C)   lender correctly anticipates inflation and increases the nominal interest rate accordingly.
D)   inflation is unanticipated by both borrower and lender.E) B) and D)
F) None of the above

Question 9

Unemployment that occurs when there is a decline in total spending is called:

Accepted Answer

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

Question 10

The descriptions give the responses of four individuals to Statistics Canada.
1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.
2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.
3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year,but was unsuccessful and quit looking for work.
-Refer to the above information.Which individual is cyclically unemployed?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) C) and D)

Question 11

Suppose rate of inflation for some specific year was 10 percent.If the CPI for that year was 139.7,the previous year's CPI must have been:

Accepted Answer

A)   100.0.
B)   129.7.
C)   153.7.
D)   127.0.E) A) and C)
F) B) and D)

Question 12

-Refer to the above diagram.The phases of the business cycle from points A to D are,respectively:

Accepted Answer

A)   peak,recession,expansion,trough.
B)   trough,expansion,expansion,peak.
C)   expansion,recession,trough,peak.
D)   peak,recession,trough,expansion.E) B) and C)
F) A) and D)

Question 13

The consumer price index (CPI) :

Accepted Answer

A)   is an average of the prices of all consumer goods purchased each year.
B)   measures changes in the prices of a market basket of some 600 goods and services purchased by urban consumers.
C)   measures prices of goods,but not services since services don't fit into a market basket.
D)   is also known as the GDP price index.E) A) and C)
F) A) and D)

Question 14

During the past ten years the average annual rate of inflation in Canada has been less than 1 percent.

Accepted Answer

A) True 
 B)False

Question 15

Cyclical unemployment is the result of:

Accepted Answer

A)   expansion in the economy.
B)   technological change in the economy.
C)   seasonal variation in the labour force.
D)   a decline in total spending.E) A) and B)
F) A) and C)

Question 16

If the natural rate of unemployment is 6 percent and the actual unemployment rate is 9 percent,then Okun's law indicates that the GDP gap is:

Accepted Answer

A)   2 percent.
B)   3 percent.
C)   4 percent.
D)   6 percent.E) None of the above
F) C) and D)

Question 17

The best example of a "frictionally unemployed" worker is one who:

Accepted Answer

A)   reduces productivity by causing frictions in a business.
B)   is laid off during a recessionary period in the economy.
C)   is in the process of voluntarily switching jobs.
D)   is discouraged and not actively seeking work.E) B) and C)
F) A) and D)

Question 18

Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent.According to Okun's law,the GDP gap:

Accepted Answer

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

Question 19

In an economy nominal GDP is $4,000 billion.The actual unemployment rate is 8 percent and the natural rate of unemployment is 6 percent.According to Okun's law there will be:

Accepted Answer

A)   $80 billion lost in potential output.
B)   $100 billion lost in potential output.
C)   $160 billion lost in potential output.
D)   $300 billion lost in potential output.E) B) and C)
F) None of the above C

Question 20

Real income can be determined by:

Accepted Answer

A)   dividing the price level by nominal income.
B)   inflating nominal income for inflation.
C)   dividing the annual rate of inflation into the number "70."
D)   dividing the nominal income by the price index.E) C) and D)
F) None of the above

Exam 9: Business Cycles, Unemployment, and Inflation

When unanticipated inflation occurs:

Correct Answer
verified
D

Unanticipated inflation benefits some groups in the economy.

Correct Answer
verified

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 Answer
verified

Correct Answer
verified

-Refer to the above diagram.The straight line E drawn through the wavy lines would provide an estimate of the:

Correct Answer
verified

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

Correct Answer
verified

Demand-pull inflation:

Correct Answer
verified

A lender need not be penalized by inflation if the:

Correct Answer
verified

Unemployment that occurs when there is a decline in total spending is called:

Correct Answer
verified

Correct Answer
verified

Suppose rate of inflation for some specific year was 10 percent.If the CPI for that year was 139.7,the previous year's CPI must have been:

Correct Answer
verified

-Refer to the above diagram.The phases of the business cycle from points A to D are,respectively:

Correct Answer
verified

The consumer price index (CPI) :

Correct Answer
verified

During the past ten years the average annual rate of inflation in Canada has been less than 1 percent.

Correct Answer
verified

Cyclical unemployment is the result of:

Correct Answer
verified

If the natural rate of unemployment is 6 percent and the actual unemployment rate is 9 percent,then Okun's law indicates that the GDP gap is:

Correct Answer
verified

The best example of a "frictionally unemployed" worker is one who:

Correct Answer
verified

Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent.According to Okun's law,the GDP gap:

Correct Answer
verified
A

In an economy nominal GDP is $4,000 billion.The actual unemployment rate is 8 percent and the natural rate of unemployment is 6 percent.According to Okun's law there will be:

Correct Answer
verified
C

Real income can be determined by:

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

When unanticipated inflation occurs:

Correct AnswerverifiedD

Unanticipated inflation benefits some groups in the economy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The straight line E drawn through the wavy lines would provide an estimate of the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand-pull inflation:

Correct AnswerverifiedShow Answer

A lender need not be penalized by inflation if the:

Correct AnswerverifiedShow Answer

Unemployment that occurs when there is a decline in total spending is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose rate of inflation for some specific year was 10 percent.If the CPI for that year was 139.7,the previous year's CPI must have been:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The phases of the business cycle from points A to D are,respectively:

Correct AnswerverifiedShow Answer

The consumer price index (CPI) :

Correct AnswerverifiedShow Answer

During the past ten years the average annual rate of inflation in Canada has been less than 1 percent.

Correct AnswerverifiedShow Answer

Cyclical unemployment is the result of:

Correct AnswerverifiedShow Answer

If the natural rate of unemployment is 6 percent and the actual unemployment rate is 9 percent,then Okun's law indicates that the GDP gap is:

Correct AnswerverifiedShow Answer

The best example of a "frictionally unemployed" worker is one who:

Correct AnswerverifiedShow Answer

Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent.According to Okun's law,the GDP gap:

Correct AnswerverifiedA

In an economy nominal GDP is $4,000 billion.The actual unemployment rate is 8 percent and the natural rate of unemployment is 6 percent.According to Okun's law there will be:

Correct AnswerverifiedC

Real income can be determined by:

Correct AnswerverifiedShow Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
C

Correct Answer
verified