Question 1

If the price index is now 120,it means:

Accepted Answer

A)   prices are 120 percent higher than in the base year.
B)   prices are 20 percent higher than in the base year.
C)   prices are 1.2 percent higher than in the base year
D)   nominal GDP will be less than real GDP.E) A) and D)
F) A) and C) B

Question 2

If the numbers of employed and unemployed do not change but the size of the population increases by 10%,what would be the effect?

Accepted Answer

A)   an increase in the unemployment rate and an increase in the labor force participation rate
B)   an increase in the unemployment rate and no change in the labor force participation rate
C)   an increase in the unemployment rate and a decrease in the labor force participation rate
D)   no change in the unemployment rate and a decrease in the labor force participation rateE) All of the above
F) C) and D)

Question 3

Given a fixed nominal interest rate on a loan,unanticipated deflation:

Accepted Answer

A)   decreases the burden of paying off the loan.
B)   increases the burden of paying off the loan.
C)   does not alter the burden of paying off the loan.
D)   has an indeterminate effect on the burden of paying off the loan.E) C) and D)
F) A) and B)

Question 4

The existence of discouraged workers:

Accepted Answer

A)   increases the size of the labor force, but does not affect the unemployment rate.
B)   affects neither the size of the labor force nor the unemployment rate.
C)   may cause the official unemployment rate to understate the true amount of unemployment.
D)   may cause the official unemployment rate to overstate the true amount of unemployment.E) B) and D)
F) B) and C)

Question 5

The portion of unemployment that is attributable to an overall decline in the economy's business activity is called:

Accepted Answer

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

Question 6

Which of the following observations concerning phases of a business cycle is incorrect?

Accepted Answer

A)   The maximum amount of unemployment occurs exactly at the trough.
B)   The expansion phase is measured from the trough to the peak.
C)   The trough is the point in time when output stops declining.
D)   The contraction phase is also called recession.E) A) and B)
F) A) and C) A

Question 7

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Accepted Answer

A)   frictionally unemployed.
B)   underemployed.
C)   cyclically unemployed.
D)   structurally unemployed.E) A) and D)
F) All of the above

Question 8

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking.What would happen to the unemployment rate?

Accepted Answer

A)   It would increase.
B)   It would fall.
C)   It would change, but the effect cannot be predicted.
D)   It would not change.E) None of the above
F) A) and B)

Question 9

Economists refer to the "typical" rate of unemployment as the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 10

The GDP deflator represents a somewhat ____ measure of prices that the CPI and the GDP deflator tends to be ____ volatile than the CPI.

Accepted Answer

A)   broader; more
B)   broader; less
C)   narrower; more
D)   narrower; lessE) A) and B)
F) B) and C)

Question 11

Which of the following refers to extremely high rates of inflation for sustained periods of time?

Accepted Answer

A)   deflation
B)   hyperinflation
C)   bust
D)   depressionE) C) and D)
F) All of the above

Question 12

In the 1970s,savings and loan associations primarily earned their income from extending fixed-rate home loans.They extended many of these loans in the early 1970s when inflation was low.Were the savings and loans winners or losers as inflation skyrocketed in the late 1970s?

Accepted Answer

The savings and loan associations were b...

Question 13

Why are creditors harmed by unexpected inflation?

Accepted Answer

A)   Creditors receive lower nominal rates of interest when prices rise.
B)   Creditors are paid back with more valuable dollars.
C)   Creditors receive higher nominal rates of interest when prices rise.
D)   Creditors are paid back money with less spending power than they expected when the money was loaned out.E) A) and B)
F) All of the above

Question 14

Each person in the population can be classified as employed,unemployed,or not in the labor force.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is incorrect?

Accepted Answer

A)   Job losers typically account for 50 to 60 percent of the unemployed.
B)   Unemployment rates in the United States during the Great Depression exceeded 50 percent.
C)   The labor force participation rate is the percentage of the non-institutional population over age 16 that is in the labor force.
D)   The increase in the labor force participation rate since 1950 can be partly attributed to the entry of baby boomers into the labor force.E) A) and C)
F) B) and C)

Question 16

The type of unemployment that occurs because of a recession is called:

Accepted Answer

A)   frictional unemployment.
B)   seasonal unemployment.
C)   the natural rate of unemployment.
D)   cyclical unemployment.E) B) and C)
F) A) and B)

Question 17

A person who works 25 hours per week:

Accepted Answer

A)   is considered to be a discouraged worker.
B)   is considered to be unemployed.
C)   is considered to part of the labor force.
D)   none of the aboveE) B) and C)
F) C) and D)

Question 18

The real interest rate is calculated by subtracting inflation from the nominal interest rate.

Accepted Answer

A) True 
 B)False

Question 19

Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Accepted Answer

A) True 
 B)False

Question 20

What are the four phases of the classical business cycle and how is employment typically affected during each phase?

Accepted Answer

The four phases of the business cycle are:
expansion--employment is typically increasing/unemployment falling
peak--output is the highest during the cycle,employment typically increases to this point (before it begins to fall)
contraction--employment falls and unemployment rises (as output falls)
trough--output reaches its lowest level during the cycle,employment is typically falling until the trough is reached (after which it begins to rise)

Exam 18: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

If the price index is now 120,it means:

Correct Answer
verified
B

If the numbers of employed and unemployed do not change but the size of the population increases by 10%,what would be the effect?

Correct Answer
verified

Given a fixed nominal interest rate on a loan,unanticipated deflation:

Correct Answer
verified

The existence of discouraged workers:

Correct Answer
verified

The portion of unemployment that is attributable to an overall decline in the economy's business activity is called:

Correct Answer
verified

Which of the following observations concerning phases of a business cycle is incorrect?

Correct Answer
verified
A

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Correct Answer
verified

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking.What would happen to the unemployment rate?

Correct Answer
verified

Economists refer to the "typical" rate of unemployment as the natural rate of unemployment.

Correct Answer
verified

The GDP deflator represents a somewhat measure of prices that the CPI and the GDP deflator tends to be volatile than the CPI.

Correct Answer
verified

Which of the following refers to extremely high rates of inflation for sustained periods of time?

Correct Answer
verified

In the 1970s,savings and loan associations primarily earned their income from extending fixed-rate home loans.They extended many of these loans in the early 1970s when inflation was low.Were the savings and loans winners or losers as inflation skyrocketed in the late 1970s?

Correct Answer
verified
The savings and loan associations were b...
View Answer

Why are creditors harmed by unexpected inflation?

Correct Answer
verified

Each person in the population can be classified as employed,unemployed,or not in the labor force.

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
verified

The type of unemployment that occurs because of a recession is called:

Correct Answer
verified

A person who works 25 hours per week:

Correct Answer
verified

The real interest rate is calculated by subtracting inflation from the nominal interest rate.

Correct Answer
verified

Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Correct Answer
verified

What are the four phases of the classical business cycle and how is employment typically affected during each phase?

Exam 18: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

If the price index is now 120,it means:

Correct AnswerverifiedB

If the numbers of employed and unemployed do not change but the size of the population increases by 10%,what would be the effect?

Correct AnswerverifiedShow Answer

Given a fixed nominal interest rate on a loan,unanticipated deflation:

Correct AnswerverifiedShow Answer

The existence of discouraged workers:

Correct AnswerverifiedShow Answer

The portion of unemployment that is attributable to an overall decline in the economy's business activity is called:

Correct AnswerverifiedShow Answer

Which of the following observations concerning phases of a business cycle is incorrect?

Correct AnswerverifiedA

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Correct AnswerverifiedShow Answer

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking.What would happen to the unemployment rate?

Correct AnswerverifiedShow Answer

Economists refer to the "typical" rate of unemployment as the natural rate of unemployment.

Correct AnswerverifiedShow Answer

The GDP deflator represents a somewhat ____ measure of prices that the CPI and the GDP deflator tends to be ____ volatile than the CPI.

Correct AnswerverifiedShow Answer

Which of the following refers to extremely high rates of inflation for sustained periods of time?

Correct AnswerverifiedShow Answer

In the 1970s,savings and loan associations primarily earned their income from extending fixed-rate home loans.They extended many of these loans in the early 1970s when inflation was low.Were the savings and loans winners or losers as inflation skyrocketed in the late 1970s?

Correct AnswerverifiedThe savings and loan associations were b...View AnswerShow Answer

Why are creditors harmed by unexpected inflation?

Correct AnswerverifiedShow Answer

Each person in the population can be classified as employed,unemployed,or not in the labor force.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

The type of unemployment that occurs because of a recession is called:

Correct AnswerverifiedShow Answer

A person who works 25 hours per week:

Correct AnswerverifiedShow Answer

The real interest rate is calculated by subtracting inflation from the nominal interest rate.

Correct AnswerverifiedShow Answer

Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Correct AnswerverifiedShow Answer

What are the four phases of the classical business cycle and how is employment typically affected during each phase?

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The GDP deflator represents a somewhat measure of prices that the CPI and the GDP deflator tends to be volatile than the CPI.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The savings and loan associations were b...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified