Question 1

Which of the following is true of unemployment?

Accepted Answer

A)  The natural rate of unemployment is present when the economy is operating at full employment. 
B)  The natural rate of unemployment is equal to the number of persons unemployed divided by the number of persons in the labor force. 
C)  The natural rate of unemployment is primarily the result of the ups and downs of the business cycle. 
D)  Public policy cannot influence the natural rate of unemployment. 
A)  The natural rate of unemployment is present when the economy is operating at full employment. 
B)  The natural rate of unemployment is equal to the number of persons unemployed divided by the number of persons in the labor force. 
C)  The natural rate of unemployment is primarily the result of the ups and downs of the business cycle. 
D)  Public policy cannot influence the natural rate of unemployment. A

Question 2

Which of the following will most likely increase the natural rate of unemployment?

Accepted Answer

A)  a decrease in the minimum wage 
B)  an increase in unemployment benefits 
C)  an increase in the number of people who stop looking for a job 
D)  an increase in the proportion of prime-age workers as a share of the labor force 
A)  a decrease in the minimum wage 
B)  an increase in unemployment benefits 
C)  an increase in the number of people who stop looking for a job 
D)  an increase in the proportion of prime-age workers as a share of the labor force B

Question 3

During a recession, the actual rate of unemployment will be

Accepted Answer

A)  less than the natural rate of unemployment. 
B)  greater than the natural rate of unemployment. 
C)  equal to the natural rate of unemployment. 
D)  unaffected by the economic contraction. 
A)  less than the natural rate of unemployment. 
B)  greater than the natural rate of unemployment. 
C)  equal to the natural rate of unemployment. 
D)  unaffected by the economic contraction. B

Question 4

Cyclical unemployment is primarily caused by

Accepted Answer

A)  a large proportion of youthful workers in the labor force. 
B)  fluctuations in aggregate demand. 
C)  a lack of training on the part of job seekers. 
D)  the failure of job seekers to search adequately for the available jobs. 
A)  a large proportion of youthful workers in the labor force. 
B)  fluctuations in aggregate demand. 
C)  a lack of training on the part of job seekers. 
D)  the failure of job seekers to search adequately for the available jobs.

Question 5

Suppose there was a country with an adult (age 16 and over) population of 1,000, of which 100 were unemployed and 700 were employed. Which of the following is true?

Accepted Answer

A)  The employment population ratio is 87.5 percent. 
B)  The labor force participation rate is 70 percent. 
C)  The unemployment rate is 12.5 percent. 
D)  There are 700 individuals in this country's labor force. 
A)  The employment population ratio is 87.5 percent. 
B)  The labor force participation rate is 70 percent. 
C)  The unemployment rate is 12.5 percent. 
D)  There are 700 individuals in this country's labor force.

Question 6

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  both employed and unemployed. 
D)  not in the labor force. 
A)  employed. 
B)  unemployed. 
C)  both employed and unemployed. 
D)  not in the labor force.

Question 7

Full employment

Accepted Answer

A)  exists when everyone in the economy has a job 
B)  exists when everyone who wants a job has one 
C)  exists when the unemployment rate is zero 
D)  exists when everyone in the labor force has a job 
E)  will always include some unemployment 
A)  exists when everyone in the economy has a job 
B)  exists when everyone who wants a job has one 
C)  exists when the unemployment rate is zero 
D)  exists when everyone in the labor force has a job 
E)  will always include some unemployment

Question 8

Which of the following about unemployment is true?

Accepted Answer

A)  The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B)  Compared to the U.S., European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C)  High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D)  The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce. 
A)  The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B)  Compared to the U.S., European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C)  High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D)  The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce.

Question 9

Economists define full employment as the level of employment that results when

Accepted Answer

A)  the economy is in an economic boom. 
B)  the rate of unemployment is zero. 
C)  the rate of unemployment has fallen to its historical low of approximately two percent. 
D)  the rate of unemployment is normal, considering both frictional and structural factors. 
A)  the economy is in an economic boom. 
B)  the rate of unemployment is zero. 
C)  the rate of unemployment has fallen to its historical low of approximately two percent. 
D)  the rate of unemployment is normal, considering both frictional and structural factors.

Question 10

Which of the following is a danger of inflation?

Accepted Answer

A)  Price changes can affect the people who sign long-term contracts. 
B)  Rapid price changes reduce uncertainty. 
C)  Anticipated inflation may be greater than unanticipated inflation. 
D)  High rates of inflation will reduce interest rates. 
A)  Price changes can affect the people who sign long-term contracts. 
B)  Rapid price changes reduce uncertainty. 
C)  Anticipated inflation may be greater than unanticipated inflation. 
D)  High rates of inflation will reduce interest rates.

Question 11

Suppose the population (age 16 and over) of the Philippines is 100 million; 5 million are unemployed, and 70 million hold jobs. The labor force participation rate in the Philippines is

Accepted Answer

A)  5 percent. 
B)  65 percent. 
C)  70 percent. 
D)  75 percent. 
A)  5 percent. 
B)  65 percent. 
C)  70 percent. 
D)  75 percent.

Question 12

Actual GDP will be below potential GDP

Accepted Answer

A)  when the economy is at full employment. 
B)  during an economic boom. 
C)  when resources are fully utilized. 
D)  during a recession. 
A)  when the economy is at full employment. 
B)  during an economic boom. 
C)  when resources are fully utilized. 
D)  during a recession.

Question 13

The period of growth in real GDP between the trough of the business cycle and the next peak is called the

Accepted Answer

A)  recessionary phase. 
B)  expansionary phase. 
C)  contractionary phase. 
D)  cyclical phase. 
A)  recessionary phase. 
B)  expansionary phase. 
C)  contractionary phase. 
D)  cyclical phase.

Question 14

If the consumer price index (CPI) was 125 at year-end of 2008 and 132.5 at year-end 2009, inflation during 2009 was

Accepted Answer

A)  zero; prices were stable during 2009. 
B)  6.0 percent. 
C)  7.5 percent. 
D)  12.5 percent. 
A)  zero; prices were stable during 2009. 
B)  6.0 percent. 
C)  7.5 percent. 
D)  12.5 percent.

Question 15

Virtually all economists and policy makers agree that, within limits, higher employment is better. If this is true, couldn't the government create more employment by hiring people to dig holes and fill them in again? Is this good economic policy?

Accepted Answer

The fallacy in this policy is in believi

Question 16

Suppose the labor-force participation rate of men is greater in Troy than in Sparta. This could be because the men of Troy

Accepted Answer

A)  spend more time in school and have earlier and longer retirements than men in Sparta. 
B)  spend more time in school and have later and shorter retirements than men in Sparta. 
C)  spend less time in school and have earlier and longer retirements than men in Sparta. 
D)  spend less time in school and have later and shorter retirements than men in Sparta. 
A)  spend more time in school and have earlier and longer retirements than men in Sparta. 
B)  spend more time in school and have later and shorter retirements than men in Sparta. 
C)  spend less time in school and have earlier and longer retirements than men in Sparta. 
D)  spend less time in school and have later and shorter retirements than men in Sparta.

Question 17

Which of the following about unemployment is true?

Accepted Answer

A)  Frictional unemployment implies a lack of available jobs. 
B)  During a recession, cyclical unemployment will be low. 
C)  When an economy is at full employment, actual unemployment will be less than the natural rate of unemployment. 
D)  When actual GDP equals potential GDP, the actual unemployment rate will equal the economy's natural rate of unemployment. 
A)  Frictional unemployment implies a lack of available jobs. 
B)  During a recession, cyclical unemployment will be low. 
C)  When an economy is at full employment, actual unemployment will be less than the natural rate of unemployment. 
D)  When actual GDP equals potential GDP, the actual unemployment rate will equal the economy's natural rate of unemployment.

Question 18

The period of declining growth in real GDP between the peak of the business cycle and the trough is called the

Accepted Answer

A)  contractionary phase. 
B)  boom. 
C)  expansionary phase. 
D)  stationary phase. 
A)  contractionary phase. 
B)  boom. 
C)  expansionary phase. 
D)  stationary phase.

Question 19

High and variable rates of inflation will

Accepted Answer

A)  distort the information delivered by market prices. 
B)  encourage people to spend more time producing and less time trying to protect their wealth. 
C)  decrease the risks that accompany the undertaking of long-term investment projects. 
D)  promote economic growth and the efficient use of resources. 
A)  distort the information delivered by market prices. 
B)  encourage people to spend more time producing and less time trying to protect their wealth. 
C)  decrease the risks that accompany the undertaking of long-term investment projects. 
D)  promote economic growth and the efficient use of resources.

Question 20

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

Accepted Answer

A)  Frictional 
B)  Seasonal 
C)  Structural 
D)  Cyclical 
A)  Frictional 
B)  Seasonal 
C)  Structural 
D)  Cyclical

Which of the following is true of unemployment?

Which of the following will most likely increase the natural rate of unemployment?

During a recession, the actual rate of unemployment will be

Cyclical unemployment is primarily caused by

Suppose there was a country with an adult (age 16 and over) population of 1,000, of which 100 were unemployed and 700 were employed. Which of the following is true?

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Full employment

Which of the following about unemployment is true?

Economists define full employment as the level of employment that results when

Which of the following is a danger of inflation?

Suppose the population (age 16 and over) of the Philippines is 100 million; 5 million are unemployed, and 70 million hold jobs. The labor force participation rate in the Philippines is

Actual GDP will be below potential GDP

The period of growth in real GDP between the trough of the business cycle and the next peak is called the

If the consumer price index (CPI) was 125 at year-end of 2008 and 132.5 at year-end 2009, inflation during 2009 was

Virtually all economists and policy makers agree that, within limits, higher employment is better. If this is true, couldn't the government create more employment by hiring people to dig holes and fill them in again? Is this good economic policy?

Suppose the labor-force participation rate of men is greater in Troy than in Sparta. This could be because the men of Troy

Which of the following about unemployment is true?

The period of declining growth in real GDP between the peak of the business cycle and the trough is called the

High and variable rates of inflation will

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 8: Economic Fluctuations, Unemployment, and Inflation

Which of the following is true of unemployment?

Which of the following will most likely increase the natural rate of unemployment?

During a recession, the actual rate of unemployment will be

Cyclical unemployment is primarily caused by

Suppose there was a country with an adult (age 16 and over) population of 1,000, of which 100 were unemployed and 700 were employed. Which of the following is true?

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Full employment

Which of the following about unemployment is true?

Economists define full employment as the level of employment that results when

Which of the following is a danger of inflation?

Suppose the population (age 16 and over) of the Philippines is 100 million; 5 million are unemployed, and 70 million hold jobs. The labor force participation rate in the Philippines is

Actual GDP will be below potential GDP

The period of growth in real GDP between the trough of the business cycle and the next peak is called the

If the consumer price index (CPI) was 125 at year-end of 2008 and 132.5 at year-end 2009, inflation during 2009 was

Virtually all economists and policy makers agree that, within limits, higher employment is better. If this is true, couldn't the government create more employment by hiring people to dig holes and fill them in again? Is this good economic policy?

Suppose the labor-force participation rate of men is greater in Troy than in Sparta. This could be because the men of Troy

Which of the following about unemployment is true?

The period of declining growth in real GDP between the peak of the business cycle and the trough is called the

High and variable rates of inflation will

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters