Question 1

An individual who has stopped looking for a job because he is convinced that he cannot find a job is referred to as

Accepted Answer

A)  a contingent worker.
B)  a productive worker.
C)  a discouraged worker.
D)  an unemployed worker.

Question 2

Which one of these factors plays a role in determining the extent and duration of frictional unemployment?

Accepted Answer

A)  the ease with which job seekers can obtain information about job openings
B)  the degree to which the overall level of business activity fluctuates up and down
C)  the extent to which government legislation requires firms to provide health insurance for employees
D)  the education and skill levels of labor force participants

Question 3

Cyclical unemployment occurs when

Accepted Answer

A)  individuals enter the labor market and make the rounds of potential employers.
B)  individuals with skills no longer valued in the domestic labor market cannot find employment.
C)  individuals give up the search for employment.
D)  a downturn in economic activity decreases employment.

Question 4

-Refer to the above figure. The points between B and C are known as

Accepted Answer

A)  a peak.
B)  a trough.
C)  an expansion.
D)  a contraction. C

Question 5

Typically, nominal interest rates and anticipated inflation rates

Accepted Answer

A)  move in opposite directions.
B)  are not related.
C)  move in the same direction.
D)  are such that the nominal rate is one-half the anticipated rate.

Question 6

According to your text, during the 2000s, the inflation rate was in which range of percentages?

Accepted Answer

A)  0-5%
B)  5-10%
C)  10-15%
D)  15-20% A

Question 7

The unemployment rate can increase when

Accepted Answer

A)  the number of job finders increases.
B)  the size of the military increases.
C)  the proportion of 18-22 year olds that go to college increases.
D)  the number of unemployed workers increases.

Question 8

A job loser is an individual

Accepted Answer

A)  in the labor force whose employment was involuntarily terminated.
B)  who used to work full time but left the labor force and has now reentered it looking for a job.
C)  in the labor force who quits voluntarily.
D)  who has never held a full-time job lasting two weeks or longer but is now seeking employment.

Question 9

Which one of the following is TRUE?

Accepted Answer

A)  Inflation increases the real value of money.
B)  In the base year, the value of a price index is 100.
C)  The consumer price index measures changes in the average income of consumers.
D)  The market basket defined for the consumer price index contains more items than does the market basket defined for the GDP deflator.

Question 10

According to business activity charts for the last 100 years, the point of the highest business activity in the United States occurred

Accepted Answer

A)  during the 1920s bull market boom.
B)  during World War II.
C)  during the Vietnam War.
D)  during the Clinton administration.

Question 11

During the Great Depression

Accepted Answer

A)  the unemployment rate was not unusually high, but wage levels were low.
B)  unemployment statistics were not collected.
C)  the U.S. unemployment rate reached its historical highest.
D)  most people who couldn't find work left the labor force, so the official unemployment rate remained low.

Question 12

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

Accepted Answer

A)  frictional unemployment
B)  cyclical unemployment
C)  structural unemployment
D)  seasonal unemployment

Question 13

Unemployment that results from the seasonal pattern of work in specific industries is

Accepted Answer

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

Question 14

Inflation is best defined as

Accepted Answer

A)  a sustained increase in the price of ALL goods and services in an economy.
B)  a relative price increase.
C)  a sustained increase in the average of all prices of goods and services in an economy.
D)  a sustained increase in the price of a single good or service.

Question 15

The official dating of recessions is done by

Accepted Answer

A)  the President.
B)  the Congress.
C)  the National Bureau of Economic Research.
D)  the Council of Economic Advisors.

Question 16

When economy-wide business activities are increasing, they are referred to as

Accepted Answer

A)  contractions.
B)  expansions.
C)  anti-cycles.
D)  corrections.

Question 17

For most people, the problems of inflation are caused by the fact that

Accepted Answer

A)  the inflation is unanticipated.
B)  the inflation is anticipated.
C)  the inflation rate causes the purchasing power of money to increase.
D)  all prices change so there is no way to protect themselves against the decline in their wealth.

Question 18

In a small country, the adult population equals 10,000. In that country, 8,000 people are in the labor force and 200 people are unemployed. The unemployment rate equals

Accepted Answer

A)  2.5 percent.
B)  2 percent.
C)  4 percent.
D)  an undetermined amount given the lack of information.

Question 19

The duration of unemployment tends to rise when

Accepted Answer

A)  people leave their jobs rather than lose their jobs.
B)  the number of entrants exceeds the number of reentrants.
C)  business activity starts back up after a long period of decline.
D)  business activity goes into a downturn.

Question 20

The price level has been rising 5 percent a year for 10 years and is expected to continue to do so. The nominal rate of interest is 6 percent. The real rate of interest is

Accepted Answer

A)  11 percent.
B)  1 percent.
C)  10 percent.
D)  -1 percent. B

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

An individual who has stopped looking for a job because he is convinced that he cannot find a job is referred to as

Correct AnswerverifiedShow Answer

Which one of these factors plays a role in determining the extent and duration of frictional unemployment?

Correct AnswerverifiedShow Answer

Cyclical unemployment occurs when

Correct AnswerverifiedShow Answer

-Refer to the above figure. The points between B and C are known as

Correct AnswerverifiedC

Typically, nominal interest rates and anticipated inflation rates

Correct AnswerverifiedShow Answer

According to your text, during the 2000s, the inflation rate was in which range of percentages?

Correct AnswerverifiedA

The unemployment rate can increase when

Correct AnswerverifiedShow Answer

A job loser is an individual

Correct AnswerverifiedShow Answer

Which one of the following is TRUE?

Correct AnswerverifiedShow Answer

According to business activity charts for the last 100 years, the point of the highest business activity in the United States occurred

Correct AnswerverifiedShow Answer

During the Great Depression

Correct AnswerverifiedShow Answer

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

Correct AnswerverifiedShow Answer

Unemployment that results from the seasonal pattern of work in specific industries is

Correct AnswerverifiedShow Answer

Inflation is best defined as

Correct AnswerverifiedShow Answer

The official dating of recessions is done by

Correct AnswerverifiedShow Answer

When economy-wide business activities are increasing, they are referred to as

Correct AnswerverifiedShow Answer

For most people, the problems of inflation are caused by the fact that

Correct AnswerverifiedShow Answer

In a small country, the adult population equals 10,000. In that country, 8,000 people are in the labor force and 200 people are unemployed. The unemployment rate equals

Correct AnswerverifiedShow Answer

The duration of unemployment tends to rise when

Correct AnswerverifiedShow Answer

The price level has been rising 5 percent a year for 10 years and is expected to continue to do so. The nominal rate of interest is 6 percent. The real rate of interest is

Correct AnswerverifiedB

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B