Question 1

The peak of the business cycle:

Accepted Answer

A) usually occurs when the natural rate of unemployment is equal to its actual rate. 
B) is the minimum level of nominal GDP. 
C) is the point where an expansion ends and a recession begins. 
D) usually occurs immediately before the expansion phase. 
A) usually occurs when the natural rate of unemployment is equal to its actual rate. 
B) is the minimum level of nominal GDP. 
C) is the point where an expansion ends and a recession begins. 
D) usually occurs immediately before the expansion phase. C

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

Use the following to answer questions 
Exhibit: Price and Output Data for an Economy
  
-(Exhibit: Price and Output Data for an Economy)
Assume that 1994 is the base period.In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

Accepted Answer

A) 1996 
B) 1999 
C) 1998 
D) 1995 and 1999 
A) 1996 
B) 1999 
C) 1998 
D) 1995 and 1999

Question 5

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

Accepted Answer

A) True 
 B)False

Question 6

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Accepted Answer

A) $8,860 billion 
B) $15,880 billion 
C) $12,140 billion 
D) $17,360 billion 
A) $8,860 billion 
B) $15,880 billion 
C) $12,140 billion 
D) $17,360 billion

Question 7

Which of the following is an example of cyclical 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 8

Use the following to answer questions 
Exhibit: Consumer Price Index for a City
  
-(Exhibit: Consumer Price Index for a City)
The base year is 2002.What is the inflation rate in 2004?

Accepted Answer

A) 20.8% 
B) 22% 
C) 31.5% 
D) 30% 
A) 20.8% 
B) 22% 
C) 31.5% 
D) 30%

Question 9

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%.The structural unemployment rate is _____ and the unemployment rate is _____.

Accepted Answer

A) 3%; 7.9% 
B) 2.5%; 7.9% 
C) 2.5%; 5.4% 
D) 2.4%; 5.4% 
A) 3%; 7.9% 
B) 2.5%; 7.9% 
C) 2.5%; 5.4% 
D) 2.4%; 5.4%

Question 10

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion.Calculate the value of the implicit price deflator, in the way such numbers are normally published.

Accepted Answer

A) 21.59 
B) 82.24 
C) 121.59 
D) 177.57 
A) 21.59 
B) 82.24 
C) 121.59 
D) 177.57

Question 11

The phases of a business cycle are identified by examining the growth of real GDP.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit: Employment Data for an Economy
  
-(Exhibit: Employment Data for an Economy)
Now suppose 4,000 of the people looking for work get discouraged and give up their job searches.The unemployment rate becomes _____.

Accepted Answer

A) 6.35% 
B) 5.97% 
C) 5.91% 
D) 2.92% 
A) 6.35% 
B) 5.97% 
C) 5.91% 
D) 2.92%

Question 13

Deflation occurs when the rate of inflation falls over a period of time.

Accepted Answer

A) True 
 B)False

Question 14

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

Accepted Answer

A) the expansion period 
B) the recession period 
C) the adjustment period 
D) the base period 
A) the expansion period 
B) the recession period 
C) the adjustment period 
D) the base period

Question 15

An indexed payment is a payment for which:

Accepted Answer

A) the nominal value does not change with the rate of change in the price level. 
B) the nominal value is constant. 
C) the nominal value changes with the rate of change in the price level. 
D) the nominal value is equal to the real value, when inflation is positive. 
A) the nominal value does not change with the rate of change in the price level. 
B) the nominal value is constant. 
C) the nominal value changes with the rate of change in the price level. 
D) the nominal value is equal to the real value, when inflation is positive.

Question 16

The point in the business cycle at which a recession begins is known as the trough.

Accepted Answer

A) True 
 B)False

Question 17

A quality-change bias in the construction of the CPI arises because:

Accepted Answer

A) new goods and services are routinely introduced and many of them are not incorporated into the market basket that makes up the CPI. 
B) big box stores that carry electronic goods routinely run sales to reduce their inventories before stocking new models. 
C) newer versions of a product might be more expensive but could also be better than the older version. 
D) consumers also shop at superstores or outlet stores. 
A) new goods and services are routinely introduced and many of them are not incorporated into the market basket that makes up the CPI. 
B) big box stores that carry electronic goods routinely run sales to reduce their inventories before stocking new models. 
C) newer versions of a product might be more expensive but could also be better than the older version. 
D) consumers also shop at superstores or outlet stores.

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

The value, at current market prices, of the final goods and services produced during a particular period is:

Accepted Answer

A) net national product. 
B) gross foreign factor output. 
C) gross personal product. 
D) gross domestic product. 
A) net national product. 
B) gross foreign factor output. 
C) gross personal product. 
D) gross domestic product.

Question 20

Use the following to answer questions 
Exhibit: Market Basket for a Typical College Student
  
-(Exhibit: Market Basket for a Typical College Student)
Suppose the base year is 2007.What is the value of the price index in 2007?

Accepted Answer

A) 0.88 
B) 1.00 
C) 1.14 
D) 3.42 
A) 0.88 
B) 1.00 
C) 1.14 
D) 3.42

The peak of the business cycle:

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:

Use the following to answer questions Exhibit: Price and Output Data for an Economy -(Exhibit: Price and Output Data for an Economy) Assume that 1994 is the base period.In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Which of the following is an example of cyclical unemployment?

Use the following to answer questions Exhibit: Consumer Price Index for a City -(Exhibit: Consumer Price Index for a City) The base year is 2002.What is the inflation rate in 2004?

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%.The structural unemployment rate is _ and the unemployment rate is _.

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion.Calculate the value of the implicit price deflator, in the way such numbers are normally published.

The phases of a business cycle are identified by examining the growth of real GDP.

Exhibit: Employment Data for an Economy -(Exhibit: Employment Data for an Economy) Now suppose 4,000 of the people looking for work get discouraged and give up their job searches.The unemployment rate becomes _____.

Deflation occurs when the rate of inflation falls over a period of time.

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

An indexed payment is a payment for which:

The point in the business cycle at which a recession begins is known as the trough.

A quality-change bias in the construction of the CPI arises because:

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

The value, at current market prices, of the final goods and services produced during a particular period is:

Use the following to answer questions Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007.What is the value of the price index in 2007?

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

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

Exam 5: Macroeconomics: the Big Picture

The peak of the business cycle:

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:

Use the following to answer questions Exhibit: Price and Output Data for an Economy -(Exhibit: Price and Output Data for an Economy) Assume that 1994 is the base period.In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Which of the following is an example of cyclical unemployment?

Use the following to answer questions Exhibit: Consumer Price Index for a City -(Exhibit: Consumer Price Index for a City) The base year is 2002.What is the inflation rate in 2004?

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%.The structural unemployment rate is _____ and the unemployment rate is _____.

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion.Calculate the value of the implicit price deflator, in the way such numbers are normally published.

The phases of a business cycle are identified by examining the growth of real GDP.

Exhibit: Employment Data for an Economy -(Exhibit: Employment Data for an Economy) Now suppose 4,000 of the people looking for work get discouraged and give up their job searches.The unemployment rate becomes _____.

Deflation occurs when the rate of inflation falls over a period of time.

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

An indexed payment is a payment for which:

The point in the business cycle at which a recession begins is known as the trough.

A quality-change bias in the construction of the CPI arises because:

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

The value, at current market prices, of the final goods and services produced during a particular period is:

Use the following to answer questions Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007.What is the value of the price index in 2007?

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

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

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%.The structural unemployment rate is _ and the unemployment rate is _.