Question 1

Which of the following is NOT a consequence of unanticipated inflation?

Accepted Answer

A)  It increases the purchasing power of money. 
B)  It reduces the value of future obligations. 
C)  It increases uncertainty about the future. 
D)  It reduces the incentives of firms to undertake investments. 
A)  It increases the purchasing power of money. 
B)  It reduces the value of future obligations. 
C)  It increases uncertainty about the future. 
D)  It reduces the incentives of firms to undertake investments. A

Question 2

What does the phrase "jobless recovery" refer to?

Accepted Answer

A)  It refers to a situation where an economy is moving out of a recession without a significant increase in employment. 
B)  It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and increase output at the same time. 
C)  It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market and creating new jobs in foreign markets. 
D)  It refers to a situation in which a worker's real wage falls despite increases in productivity. 
A)  It refers to a situation where an economy is moving out of a recession without a significant increase in employment. 
B)  It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and increase output at the same time. 
C)  It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market and creating new jobs in foreign markets. 
D)  It refers to a situation in which a worker's real wage falls despite increases in productivity. A

Question 3

Use the following to answer questions.
Exhibit: Real GDP Over Time  
-(Exhibit: Real GDP Over Time) A typical business cycle begins:

Accepted Answer

A)  at t1 and ends at t2. 
B)  at t1 and ends at t3. 
C)  at t2 and ends at t3. 
D)  at t2 and ends at t4. 
A)  at t1 and ends at t2. 
B)  at t1 and ends at t3. 
C)  at t2 and ends at t3. 
D)  at t2 and ends at t4. B

Question 4

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

Accepted Answer

The difference between a real value and

Question 5

The trough of the business cycle:

Accepted Answer

A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  occurs when the actual rate of unemployment in the economy is zero. 
D)  is the point where a recession ends and an expansion begins. 
A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  occurs when the actual rate of unemployment in the economy is zero. 
D)  is the point where a recession ends and an expansion begins.

Question 6

In the Case in Point entitled "Might Increased Structural Unemployment Explain the 'Jobless Recovery' Following the 2001 Recession," economists Erica Goshen and Simon Potter note that when a layoff is temporary, the employer "suspends" the job, due to slack demand, and the employee expects to be recalled once demand picks up. With a permanent layoff, the employer eliminates the job. Which of the following statements is consistent with their observations?

Accepted Answer

A)  Both temporary and permanent layoffs create cyclical unemployment. 
B)  Both temporary and permanent layoffs create structural unemployment. 
C)  Temporary layoffs create structural unemployment while permanent layoffs create cyclical unemployment. 
D)  Temporary layoffs create cyclical unemployment while permanent layoffs create structural unemployment. 
A)  Both temporary and permanent layoffs create cyclical unemployment. 
B)  Both temporary and permanent layoffs create structural unemployment. 
C)  Temporary layoffs create structural unemployment while permanent layoffs create cyclical unemployment. 
D)  Temporary layoffs create cyclical unemployment while permanent layoffs create structural unemployment.

Question 7

If a nation liberalizes its immigration laws and receives a significant influx of young workers:

Accepted Answer

A)  the natural rate of unemployment is likely to increase. 
B)  the natural rate of unemployment is likely to decrease. 
C)  the natural rate of unemployment is unlikely to change. 
D)  frictional unemployment is likely to decrease. 
A)  the natural rate of unemployment is likely to increase. 
B)  the natural rate of unemployment is likely to decrease. 
C)  the natural rate of unemployment is unlikely to change. 
D)  frictional unemployment is likely to decrease.

Question 8

The formula for calculating a price index is:

Accepted Answer

A)  current cost of basket ÷ base-period cost of basket. 
B)  base-period cost of basket ÷ current cost of basket × 100. 
C)  (base-period cost of basket ÷ current cost of basket) × current nominal value of basket. 
D)  percentage change in current cost of basket ÷ percentage change in base-period cost of basket. 
A)  current cost of basket ÷ base-period cost of basket. 
B)  base-period cost of basket ÷ current cost of basket × 100. 
C)  (base-period cost of basket ÷ current cost of basket) × current nominal value of basket. 
D)  percentage change in current cost of basket ÷ percentage change in base-period cost of basket.

Question 9

Which of the following is an example of frictional unemployment?

Accepted Answer

A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California 
A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California

Question 10

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

Accepted Answer

A)  $6,796 billion 
B)  $5,714 billion 
C)  $8,276 billion 
D)  $6,238 billion 
A)  $6,796 billion 
B)  $5,714 billion 
C)  $8,276 billion 
D)  $6,238 billion

Question 11

A complete business cycle is defined by the passage from:

Accepted Answer

A)  one peak to the next peak. 
B)  one peak to the next trough. 
C)  one trough to the ensuing expansion. 
D)  one recession to the next recession. 
A)  one peak to the next peak. 
B)  one peak to the next trough. 
C)  one trough to the ensuing expansion. 
D)  one recession to the next recession.

Question 12

Use the following to answer questions .
Exhibit Real GDP and Employment
  
-(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. A complete business cycle:

Accepted Answer

A)  commenced in 1994 and ended in 1997. 
B)  commenced in 1991 and ended in 1994. 
C)  commenced in 1994 and ended in 1999. 
D)  commenced in 1991 and ended in 1996. 
A)  commenced in 1994 and ended in 1997. 
B)  commenced in 1991 and ended in 1994. 
C)  commenced in 1994 and ended in 1999. 
D)  commenced in 1991 and ended in 1996.

Question 13

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

Accepted Answer

A)  uses data on nominal GDP for two consecutive quarters. 
B)  uses a range of indicators including real GDP, employment and income. 
C)  identifies declining economic activity solely based on a fall in real GDP. 
D)  uses a procedure that determines the dates of peaks and troughs mainly on the basis of employment. 
A)  uses data on nominal GDP for two consecutive quarters. 
B)  uses a range of indicators including real GDP, employment and income. 
C)  identifies declining economic activity solely based on a fall in real GDP. 
D)  uses a procedure that determines the dates of peaks and troughs mainly on the basis of employment.

Question 14

Which of the following is true of unanticipated inflation?

Accepted Answer

A)  It hurts lenders because the purchasing power of the money they collect from their borrowers is now higher. 
B)  It hurts borrowers because they repay their debts with money that is now worth more. 
C)  It helps lenders because the purchasing power of the money they collect from their borrowers is now higher. 
D)  It helps borrowers because they repay their debts with money that is now worth less. 
A)  It hurts lenders because the purchasing power of the money they collect from their borrowers is now higher. 
B)  It hurts borrowers because they repay their debts with money that is now worth more. 
C)  It helps lenders because the purchasing power of the money they collect from their borrowers is now higher. 
D)  It helps borrowers because they repay their debts with money that is now worth less.

Question 15

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Accepted Answer

A)  a fixed market basket of goods and services, like the consumer price index. 
B)  a varying market basket of goods and services, like the consumer price index. 
C)  a varying market basket of goods and services, like the implicit price deflator. 
D)  a fixed market basket of goods and services, like the implicit price deflator. 
A)  a fixed market basket of goods and services, like the consumer price index. 
B)  a varying market basket of goods and services, like the consumer price index. 
C)  a varying market basket of goods and services, like the implicit price deflator. 
D)  a fixed market basket of goods and services, like the implicit price deflator.

Question 16

Inflation hurts people with fixed incomes.

Accepted Answer

A) True 
 B)False

Question 17

What is hyperinflation?

Accepted Answer

A)  Hyperinflation refers to an inflation rate in excess of 200 percent per year. 
B)  Hyperinflation occurs when the government of a country sells a large number of bonds. 
C)  It refers to a situation where a country's money supply is no longer backed by gold. 
D)  Hyperinflation arises due to a fall in the money supply. 
A)  Hyperinflation refers to an inflation rate in excess of 200 percent per year. 
B)  Hyperinflation occurs when the government of a country sells a large number of bonds. 
C)  It refers to a situation where a country's money supply is no longer backed by gold. 
D)  Hyperinflation arises due to a fall in the money supply.

Question 18

(Exhibit: Employment Data for an Economy) 
 
-(Exhibit: Employment Data for an Economy) Calculate the unemployment rate in the economy.

Accepted Answer

A)  7.01% 
B)  5.16% 
C)  4.90% 
D)  7.53% 
A)  7.01% 
B)  5.16% 
C)  4.90% 
D)  7.53%

Question 19

Unanticipated inflation helps lenders and hurts borrowers.

Accepted Answer

A) True 
 B)False

Question 20

A sustained period of rising real GDP is called a(n):

Accepted Answer

A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession. 
A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession.

Which of the following is NOT a consequence of unanticipated inflation?

What does the phrase "jobless recovery" refer to?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time) A typical business cycle begins:

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

The trough of the business cycle:

If a nation liberalizes its immigration laws and receives a significant influx of young workers:

The formula for calculating a price index is:

Which of the following is an example of frictional unemployment?

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

A complete business cycle is defined by the passage from:

Use the following to answer questions . Exhibit Real GDP and Employment -(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. A complete business cycle:

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

Which of the following is true of unanticipated inflation?

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Inflation hurts people with fixed incomes.

What is hyperinflation?

(Exhibit: Employment Data for an Economy) -(Exhibit: Employment Data for an Economy) Calculate the unemployment rate in the economy.

Unanticipated inflation helps lenders and hurts borrowers.

A sustained period of rising real GDP is called a(n):

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

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Exam 5: Macroeconomics: the Big Picture

Which of the following is NOT a consequence of unanticipated inflation?

What does the phrase "jobless recovery" refer to?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time) A typical business cycle begins:

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

The trough of the business cycle:

If a nation liberalizes its immigration laws and receives a significant influx of young workers:

The formula for calculating a price index is:

Which of the following is an example of frictional unemployment?

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

A complete business cycle is defined by the passage from:

Use the following to answer questions . Exhibit Real GDP and Employment -(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. A complete business cycle:

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

Which of the following is true of unanticipated inflation?

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Inflation hurts people with fixed incomes.

What is hyperinflation?

(Exhibit: Employment Data for an Economy) -(Exhibit: Employment Data for an Economy) Calculate the unemployment rate in the economy.

Unanticipated inflation helps lenders and hurts borrowers.

A sustained period of rising real GDP is called a(n):

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters