Question 1

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 2

To be considered officially unemployed, a person must be at least 16 years old

Accepted Answer

A)   and not working.
B)   and not in school and not working.
C)   and be a discouraged worker.
D)   and not working but is actively seeking employment.

Question 3

The estimate of the current natural rate of unemployment rate in the United States is approximately

Accepted Answer

A)   0 percent.
B)   0.5 percent.
C)   10 percent.
D)   none of the above.

Question 4

Which of the following statements is true about the seasonally adjusted unemployment rate?

Accepted Answer

A)   The seasonally adjusted unemployment rate is the sum of the frictional unemployment rate, structural unemployment rate, and cyclical unemployment rate.
B)   The seasonally adjusted unemployment rate shows how the unemployment rate fluctuates with the various seasons.
C)   The seasonally adjusted unemployment rate is the same as the natural rate of unemployment.
D)   The seasonally adjusted unemployment rate is the rate computed for Fall, Spring, Summer and Winter.

Question 5

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Accepted Answer

A)   CPI.
B)   PPI.
C)   Gross Domestic Product (GDP)  deflator.
D)   Personal Consumption Expenditure Index.

Question 6

Which of the following best describes an economy with full employment?

Accepted Answer

A)   "Everyone who is looking for a job will have one."
B)   "No person is unemployed for whatever reason."
C)   "Full employment occurs only when the economy has a zero percent unemployment rate."
D)   "The level of unemployment that corresponds to the normal friction in the labor market."

Question 7

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 8

The major change in American labor markets this century is

Accepted Answer

A)   the steady rise of the unemployment rate.
B)   the steady rise of the employment rate.
C)   the increase in the female labor-force participation rate.
D)   the increase in the labor-force participation rate.

Question 9

-Refer to the above figure. Stage "3" of the economy is called

Accepted Answer

A)   a development.
B)   a pit.
C)   a trough.
D)   a hole.

Question 10

Historically, the United States has experienced

Accepted Answer

A)   continuous decreases in the unemployment rate since World War II.
B)   periods of both increases and decreases in the unemployment rate since World War II.
C)   continuous increases in the unemployment rate since World War II.
D)   no changes in the unemployment rate since World War II.

Question 11

In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

Accepted Answer

A)   70 percent.
B)   57 percent.
C)   40 percent.
D)   an undetermined amount given the lack of information.

Question 12

All of the following are examples of a flow EXCEPT

Accepted Answer

A)   a new entrant into the labor force.
B)   an individual who voluntarily leaves the labor force.
C)   a person who is fired from a job.
D)   the current unemployment rate.

Question 13

An example of a cyclically unemployed individual is

Accepted Answer

A)   Charles, who lost his job as a real estate salesperson when the housing market went soft.
B)   Alice, who quit her job to enter college.
C)   Mary, who lost her job in the textile industry following a decrease in the tariff on textiles.
D)   Bob, who has just graduated from college and is entering the labor market.

Question 14

If the rate of inflation is 4 percent and the real interest rate is 3 percent, the nominal interest rate should be

Accepted Answer

A)   1 percent.
B)   4 percent.
C)   7 percent.
D)   11 percent.

Question 15

The value of an item expressed in today's dollars is known as

Accepted Answer

A)   inflation.
B)   deflation.
C)   the nominal value.
D)   the real value.

Question 16

A person quits her job in order to spend time looking for a better paying job. This is an example of

Accepted Answer

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

Question 17

The statistical measure of a weighted average of prices of goods and services that firms produce and sell is known as

Accepted Answer

A)   the inflation rate.
B)   the consumer price index (CPI) .
C)   the producer price index (PPI) .
D)   the Gross Domestic Product (GDP)  deflator.

Question 18

Which of the following would be a leading indicator?

Accepted Answer

A)   the number of unemployment claims
B)   the real interest rate
C)   personal income in the United States
D)   an increase in stock prices

Question 19

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 20

The level of unemployment that is equal to the frictional and structural rate in the long run is sometimes referred to as

Accepted Answer

A)   cyclical employment.
B)   the natural rate of unemployment.
C)   the total rate of unemployment.
D)   the zero unemployment rate.

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

Cyclical unemployment occurs when

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A person quits her job in order to spend time looking for a better paying job. This is an example of

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The level of unemployment that is equal to the frictional and structural rate in the long run is sometimes referred to as

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Which of the following statements is true about the seasonally adjusted unemployment rate?

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If the rate of inflation is 4 percent and the real interest rate is 3 percent, the nominal interest rate should be

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-Refer to the above figure. Stage "3" of the economy is called

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

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The price index that measures the changes in prices of ALL goods and services produced by the economy is the

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An example of a cyclically unemployed individual is

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The unemployment rate can increase when

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Which of the following best describes an economy with full employment?

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To be considered officially unemployed, a person must be at least 16 years old

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Which of the following would be a leading indicator?

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The statistical measure of a weighted average of prices of goods and services that firms produce and sell is known as

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In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

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The estimate of the current natural rate of unemployment rate in the United States is approximately

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The value of an item expressed in today's dollars is known as

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All of the following are examples of a flow EXCEPT

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Historically, the United States has experienced

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The major change in American labor markets this century is

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