Question 1

At the beginning of a year, decision makers expect the general level of prices to increase at a 3 percent annual rate. The CPI increases from 150 to 154.5 during the year; this is an example of

Accepted Answer

A)   an inflation rate that is equal to 4.5 percent.
B)   an unanticipated increase in the general level of prices.
C)   an increase in the general level of prices that was accurately anticipated.
D)   an inflation rate that is less than what people anticipated.

Question 2

Answer the following questions:
a.What are the three types of unemployment, and which two compose the natural rate?
b.Give an example of a person who would be counted in each type.
c.Would an economy with 2 percent actual unemployment be in a recession? Why or why not?

Accepted Answer

a.Cyclical, structural, and frictional a...

Question 3

The distinguishing characteristics of business cycles are

Accepted Answer

A)   periods of inflation followed by periods of deflation.
B)   high rates of economic growth coupled with high rates of unemployment.
C)   a constant rate of economic growth coupled with ups and downs in the general level of prices.
D)   periods of growth in real output followed by periods of decline.

Question 4

Which of the following is an example of someone with inflationary expectations taking a step designed to insulate themselves from the higher expected rates of inflation?

Accepted Answer

A)   a consumer deciding to delay the purchase of a new home or automobile
B)   a consumer who borrows money at a fixed interest rate in order to purchase a new home or automobile
C)   an investor who borrows funds at an adjustable money interest rate (one that automatically increases with higher inflation) 
D)   a home buyer who borrows funds at a variable interest rate

Question 5

Isabella is on a temporary layoff from her factory job. If Isabella participates in the BLS survey, she will be classified as

Accepted Answer

A)   unemployed and in the labor force.
B)   unemployed and out of the labor force.
C)   employed and in the labor force.
D)   employed and out of the labor force.

Question 6

When workers are unemployed due to a mismatch between their skills and the jobs available, economists call this

Accepted Answer

A)   cyclical unemployment.
B)   frictional unemployment.
C)   structural unemployment.
D)   transitional unemployment.

Question 7

The expansionary phase of the business cycle is characterized by

Accepted Answer

A)   decreasing real output and increasing unemployment.
B)   decreasing real output and declining unemployment.
C)   increasing real output and increasing unemployment.
D)   increasing real output and declining unemployment.

Question 8

Frictional unemployment

Accepted Answer

A)   would be eliminated if the economy were more stable.
B)   would be eliminated if the minimum wage were raised.
C)   is the result of workers' skills not matching the jobs available.
D)   is present even when labor markets are working well.

Question 9

The employment/population ratio is the number of persons employed divided by the number of persons

Accepted Answer

A)   in the labor force.
B)   unemployed.
C)   employed plus the number unemployed.
D)   in the civilian population age 16 and over.

Question 10

Which of the following is most indicative of a recession?

Accepted Answer

A)   a decline in unemployment
B)   a rise in inflation
C)   a decline in real GDP
D)   an increase in the interest rate

Question 11

Which of the following is a true statement about potential output?

Accepted Answer

A)   The concept of potential output might be thought of as the maximum sustainable output of the economy under normal circumstances.
B)   Actual output cannot exceed potential output, even during a boom.
C)   When the actual rate of unemployment exceeds the natural rate, the actual output of the economy will rise above its potential.
D)   Potential output represents the absolute maximum level of production.

Question 12

As the economy recovered from the 2008-2009 recession during 2010-2013 the employment/population ratio

Accepted Answer

A)   rose sharply during the expansion.
B)   remained well below the rates achieved prior to the recession.
C)   remained well above the rates achieved prior to the recession.
D)   rose even though the labor force participation rate was declining.

Question 13

Which type of unemployment is most likely to help the economy become more efficient?

Accepted Answer

A)   cyclical
B)   structural
C)   seasonal
D)   frictional
E)   underemployment

Question 14

The recessionary phase of the business cycle is characterized by

Accepted Answer

A)   decreasing real output and increasing unemployment.
B)   decreasing real output and declining unemployment.
C)   increasing real output and increasing unemployment.
D)   increasing real output and declining unemployment.

Question 15

When individuals are unemployed because they lack the qualifications to fill available jobs, this is called

Accepted Answer

A)   frictional unemployment.
B)   natural unemployment.
C)   cyclical unemployment.
D)   structural unemployment.

Question 16

The primary cause of frictional unemployment is

Accepted Answer

A)   discouraged workers who give up looking for work.
B)   fluctuations in aggregate demand.
C)   the lack of training and marketable qualifications in job seekers.
D)   inaccurate and costly information about job opportunities.

Question 17

Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the civilian labor force is

Accepted Answer

A)   30.
B)   60.
C)   85.
D)   90.
E)   70.

Question 18

Which of the following would be classified as employed?

Accepted Answer

A)   a full-time college student
B)   a construction worker on layoff due to cold weather
C)   a parent who works 50 to 60 hours per week caring for family members
D)   a worker who is in the midst of a two-week vacation from his regular job

Question 19

Ashley was being treated unfairly by her boss, so she stormed off the job and two days later found another position. For two days, Ashley experienced

Accepted Answer

A)   cyclical unemployment.
B)   structural unemployment.
C)   seasonal unemployment.
D)   frictional unemployment.
E)   being out of the labor force.

Question 20

During a period of rapid growth in output,

Accepted Answer

A)   employment generally increases and unemployment decreases.
B)   employment generally decreases and unemployment increases.
C)   both employment and unemployment generally increase.
D)   both employment and unemployment generally decrease.

Exam 8: Economic Fluctuations, Unemployment, and Inflation

The recessionary phase of the business cycle is characterized by

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The primary cause of frictional unemployment is

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As the economy recovered from the 2008-2009 recession during 2010-2013 the employment/population ratio

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Frictional unemployment

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Which of the following would be classified as employed?

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Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the civilian labor force is

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Which of the following is most indicative of a recession?

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At the beginning of a year, decision makers expect the general level of prices to increase at a 3 percent annual rate. The CPI increases from 150 to 154.5 during the year; this is an example of

Correct AnswerverifiedShow Answer

When individuals are unemployed because they lack the qualifications to fill available jobs, this is called

Correct AnswerverifiedShow Answer

Which of the following is a true statement about potential output?

Correct AnswerverifiedShow Answer

When workers are unemployed due to a mismatch between their skills and the jobs available, economists call this

Correct AnswerverifiedShow Answer

The distinguishing characteristics of business cycles are

Correct AnswerverifiedShow Answer

Answer the following questions: a.What are the three types of unemployment, and which two compose the natural rate? b.Give an example of a person who would be counted in each type. c.Would an economy with 2 percent actual unemployment be in a recession? Why or why not?

Correct Answerverifieda.Cyclical, structural, and frictional a...View AnswerShow Answer

During a period of rapid growth in output,

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Which type of unemployment is most likely to help the economy become more efficient?

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Isabella is on a temporary layoff from her factory job. If Isabella participates in the BLS survey, she will be classified as

Correct AnswerverifiedShow Answer

Which of the following is an example of someone with inflationary expectations taking a step designed to insulate themselves from the higher expected rates of inflation?

Correct AnswerverifiedShow Answer

The expansionary phase of the business cycle is characterized by

Correct AnswerverifiedShow Answer

The employment/population ratio is the number of persons employed divided by the number of persons

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Ashley was being treated unfairly by her boss, so she stormed off the job and two days later found another position. For two days, Ashley experienced

Correct AnswerverifiedShow Answer

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a.Cyclical, structural, and frictional a...
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