Question 1

What is the definition of the output gap?

Accepted Answer

When there is a difference between actual GDP and potential GDP,the difference is referred to as the output gap.Underemployment,unemployment,and unused resources can contribute to the output gap.Working at a job that requires much lower skills than what you are qualified for is underemployment,which results in underutilized resources (your skills).Because your skills are not used,actual productivity is less than potential productivity,creating the output gap.

Question 2

If the average price level is rising,then we know that

Accepted Answer

A)  the unemployment rate must be below the NAIRU. 
B)  real GDP is above potential GDP. 
C)  the natural rate of unemployment is below the actual rate of unemployment. 
D)  any of these answer choices could be true. 
A)  the unemployment rate must be below the NAIRU. 
B)  real GDP is above potential GDP. 
C)  the natural rate of unemployment is below the actual rate of unemployment. 
D)  any of these answer choices could be true. D

Question 3

If there is a mismatch between the skills of unemployed workers and the needs of employers,economists say that there is

Accepted Answer

A)  frictional unemployment. 
B)  cyclical unemployment. 
C)  per capita unemployment. 
D)  structural unemployment. 
A)  frictional unemployment. 
B)  cyclical unemployment. 
C)  per capita unemployment. 
D)  structural unemployment. D

Question 4

The effects of a recession on auto companies are that ________ cars are demanded and prices generally __________.

Accepted Answer

A)  fewer; fall 
B)  fewer; rise 
C)  more; fall 
D)  more; rise 
A)  fewer; fall 
B)  fewer; rise 
C)  more; fall 
D)  more; rise

Question 5

Potential GDP is the output of the economy along a smooth path of growth,without strains on production or unused resources.

Accepted Answer

A) True 
 B)False

Question 6

Structural unemployment exists when

Accepted Answer

A)  the construction industry lays workers off. 
B)  there is a mismatch between the skills of unemployed workers and the needs of employers of unfilled jobs. 
C)  the government decides who is unemployed. 
D)  there are too few workers to fill available jobs. 
A)  the construction industry lays workers off. 
B)  there is a mismatch between the skills of unemployed workers and the needs of employers of unfilled jobs. 
C)  the government decides who is unemployed. 
D)  there are too few workers to fill available jobs.

Question 7

___________ policies of the government can also cause recessions.

Accepted Answer

A)  Inflation-fighting 
B)  Welfare 
C)  Defense 
D)  Poor market-based 
A)  Inflation-fighting 
B)  Welfare 
C)  Defense 
D)  Poor market-based

Question 8

Since the 1970s,the most common causes of recessions have been

Accepted Answer

A)  negative supply shifts and negative demand shifts. 
B)  negative supply shifts and inflation fighting. 
C)  problems in financial markets and inflation fighting. 
D)  problems in financial markets and negative demand shifts. 
A)  negative supply shifts and negative demand shifts. 
B)  negative supply shifts and inflation fighting. 
C)  problems in financial markets and inflation fighting. 
D)  problems in financial markets and negative demand shifts.

Question 9

The ___________ is the period of time from the trough,through recovery,and all the way back to peak.

Accepted Answer

A)  peak 
B)  trough 
C)  expansion 
D)  start 
A)  peak 
B)  trough 
C)  expansion 
D)  start

Question 10

_________ are organized groups of workers that bargain collectively with employers.

Accepted Answer

A)  Unions 
B)  Student councils 
C)  Aggregated labor groups 
D)  Amalgamations 
A)  Unions 
B)  Student councils 
C)  Aggregated labor groups 
D)  Amalgamations

Question 11

If the long-term labor force growth rate is 1.2% and the long-term productivity growth rate is 2.4%,then the

Accepted Answer

A)  potential growth rate is 3.6%. 
B)  short-term growth rate is 1.2%. 
C)  spending multiplier is 2. 
D)  real GDP per capita growth rate is 0.5%. 
A)  potential growth rate is 3.6%. 
B)  short-term growth rate is 1.2%. 
C)  spending multiplier is 2. 
D)  real GDP per capita growth rate is 0.5%.

Question 12

With a recession under way,consumers have less money,causing a demand shift to the right.

Accepted Answer

A) True 
 B)False

Question 13

If GDP is too low relative to potential GDP,which of the following is true?

Accepted Answer

A)  Inflation is higher than normal. 
B)  A recession has just begun. 
C)  Deflation will occur. 
D)  Unemployment is higher than normal. 
A)  Inflation is higher than normal. 
B)  A recession has just begun. 
C)  Deflation will occur. 
D)  Unemployment is higher than normal.

Question 14

The unemployment rate is calculated as

Accepted Answer

A)  the rate of inflation minus the rate of employment. 
B)  total productivity divided by frictional unemployment. 
C)  the percentage of the labor force that is unemployed. 
D)  structural unemployment divided by GDP. 
A)  the rate of inflation minus the rate of employment. 
B)  total productivity divided by frictional unemployment. 
C)  the percentage of the labor force that is unemployed. 
D)  structural unemployment divided by GDP.

Question 15

The difference between actual and potential GDP is called

Accepted Answer

A)  a gap shortage. 
B)  an output gap. 
C)  the output resistance. 
D)  the output decline. 
A)  a gap shortage. 
B)  an output gap. 
C)  the output resistance. 
D)  the output decline.

Question 16

The expansion is the period of time after the peak in business cycles.

Accepted Answer

A) True 
 B)False

Question 17

Negative demand shifts can

Accepted Answer

A)  be defined as an increase in demand without an increase in supply. 
B)  lead to a decrease in supply. 
C)  cause a recession. 
D)  be caused by falling aggregate production. 
A)  be defined as an increase in demand without an increase in supply. 
B)  lead to a decrease in supply. 
C)  cause a recession. 
D)  be caused by falling aggregate production.

Question 18

The periods of temporary unemployment that correspond to short gaps between jobs create

Accepted Answer

A)  Frictional unemployment. 
B)  Cyclical unemployment. 
C)  Per capita unemployment. 
D)  Superficial unemployment. 
A)  Frictional unemployment. 
B)  Cyclical unemployment. 
C)  Per capita unemployment. 
D)  Superficial unemployment.

Question 19

Which of the following is a reason that wages are sometimes "sticky"?

Accepted Answer

A)  Technological changes. 
B)  Labor market friction. 
C)  Structural unemployment. 
D)  Contractual wage agreements of unions. 
A)  Technological changes. 
B)  Labor market friction. 
C)  Structural unemployment. 
D)  Contractual wage agreements of unions.

Question 20

In a recession,demand for cars falls,and the demand curve in the market for cars

Accepted Answer

A)  shifts to the right. 
B)  remains unchanged. 
C)  shifts to the left. 
D)  slows down. 
A)  shifts to the right. 
B)  remains unchanged. 
C)  shifts to the left. 
D)  slows down.

What is the definition of the output gap?

If the average price level is rising,then we know that

If there is a mismatch between the skills of unemployed workers and the needs of employers,economists say that there is

The effects of a recession on auto companies are that cars are demanded and prices generally __.

Potential GDP is the output of the economy along a smooth path of growth,without strains on production or unused resources.

Structural unemployment exists when

___________ policies of the government can also cause recessions.

Since the 1970s,the most common causes of recessions have been

The ___________ is the period of time from the trough,through recovery,and all the way back to peak.

_________ are organized groups of workers that bargain collectively with employers.

If the long-term labor force growth rate is 1.2% and the long-term productivity growth rate is 2.4%,then the

With a recession under way,consumers have less money,causing a demand shift to the right.

If GDP is too low relative to potential GDP,which of the following is true?

The unemployment rate is calculated as

The difference between actual and potential GDP is called

The expansion is the period of time after the peak in business cycles.

Negative demand shifts can

The periods of temporary unemployment that correspond to short gaps between jobs create

Which of the following is a reason that wages are sometimes "sticky"?

In a recession,demand for cars falls,and the demand curve in the market for cars

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Exam 10: Business Cycles, unemployment and Inflation

What is the definition of the output gap?

If the average price level is rising,then we know that

If there is a mismatch between the skills of unemployed workers and the needs of employers,economists say that there is

The effects of a recession on auto companies are that ________ cars are demanded and prices generally __________.

Potential GDP is the output of the economy along a smooth path of growth,without strains on production or unused resources.

Structural unemployment exists when

___________ policies of the government can also cause recessions.

Since the 1970s,the most common causes of recessions have been

The ___________ is the period of time from the trough,through recovery,and all the way back to peak.

_________ are organized groups of workers that bargain collectively with employers.

If the long-term labor force growth rate is 1.2% and the long-term productivity growth rate is 2.4%,then the

With a recession under way,consumers have less money,causing a demand shift to the right.

If GDP is too low relative to potential GDP,which of the following is true?

The unemployment rate is calculated as

The difference between actual and potential GDP is called

The expansion is the period of time after the peak in business cycles.

Negative demand shifts can

The periods of temporary unemployment that correspond to short gaps between jobs create

Which of the following is a reason that wages are sometimes "sticky"?

In a recession,demand for cars falls,and the demand curve in the market for cars

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

The effects of a recession on auto companies are that cars are demanded and prices generally __.