Question 1

Which of the following is an example of frictional unemployment?

Accepted Answer

A)  A student goes to school instead of working. 
B)  A worker leaves one job and is temporarily unemployed before starting a new one. 
C)  A worker can't find a job because she is trained in running an obsolete machine. 
D)  A worker stays at home to tend to children. 
A)  A student goes to school instead of working. 
B)  A worker leaves one job and is temporarily unemployed before starting a new one. 
C)  A worker can't find a job because she is trained in running an obsolete machine. 
D)  A worker stays at home to tend to children.

Question 2

The unemployment rate includes

Accepted Answer

A)  people not working because they are in school. 
B)  people who have given up looking for work. 
C)  people who are not working in order to stay at home with children. 
D)  people who are unemployed but actively seeking work. 
A)  people not working because they are in school. 
B)  people who have given up looking for work. 
C)  people who are not working in order to stay at home with children. 
D)  people who are unemployed but actively seeking work.

Question 3

The natural rate of unemployment is

Accepted Answer

A)  5%. 
B)  dependent on the business cycle. 
C)  determined by the Bureau of Labor Statistics. 
D)  the level where inflation is more or less stable. 
A)  5%. 
B)  dependent on the business cycle. 
C)  determined by the Bureau of Labor Statistics. 
D)  the level where inflation is more or less stable.

Question 4

When unemployment is above the natural rate,

Accepted Answer

A)  Inflation rises. 
B)  Nominal wages decrease. 
C)  Wage-price spirals occur. 
D)  The inflation rate falls. 
A)  Inflation rises. 
B)  Nominal wages decrease. 
C)  Wage-price spirals occur. 
D)  The inflation rate falls.

Question 5

When real GDP is lower than potential GDP,the output gap is

Accepted Answer

A)  zero. 
B)  inflationary. 
C)  negative. 
D)  Deflationary. 
A)  zero. 
B)  inflationary. 
C)  negative. 
D)  Deflationary.

Question 6

If GDP is too high relative to potential GDP,which of the following happens?

Accepted Answer

A)  Inflation rises. 
B)  A recession begins. 
C)  Deflation occurs. 
D)  Unemployment rises. 
A)  Inflation rises. 
B)  A recession begins. 
C)  Deflation occurs. 
D)  Unemployment rises.

Question 7

The NAIRU is short for the nonaccelerating inflation rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 8

Who would NOT be counted among the unemployed?

Accepted Answer

A)  A fast-food worker laid off due to lack of work. 
B)  A factory worker fired due to incompetence. 
C)  A full-time student taking classes. 
D)  A stay-at-home parent who reentered the workforce and was subsequently laid off. 
A)  A fast-food worker laid off due to lack of work. 
B)  A factory worker fired due to incompetence. 
C)  A full-time student taking classes. 
D)  A stay-at-home parent who reentered the workforce and was subsequently laid off.

Question 9

When unemployment is below the natural rate,

Accepted Answer

A)  inflation slows. 
B)  the inflation rate increases. 
C)  frictional unemployment increases. 
D)  structural unemployment declines. 
A)  inflation slows. 
B)  the inflation rate increases. 
C)  frictional unemployment increases. 
D)  structural unemployment declines.

Question 10

The pattern of recession,recovery,and expansion is called the business cycle.

Accepted Answer

A) True 
 B)False

Question 11

How are potential GDP and real GDP alike?

Accepted Answer

A)  They are two different terms for the same thing. 
B)  They are both adjusted for inflation. 
C)  They are both influenced by changes in the price level. 
D)  They both increase when the output gap is positive. 
A)  They are two different terms for the same thing. 
B)  They are both adjusted for inflation. 
C)  They are both influenced by changes in the price level. 
D)  They both increase when the output gap is positive.

Question 12

How is it possible for output to be greater than potential GDP?

Accepted Answer

Just as students can sometimes push them

Question 13

The ________ is the beginning of a recession.

Accepted Answer

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

Question 14

As the economy slows in a recession,the __________ schedules of most businesses shift to the __________.

Accepted Answer

A)  supply; left 
B)  supply; right 
C)  demand; left 
D)  demand; right 
A)  supply; left 
B)  supply; right 
C)  demand; left 
D)  demand; right

Question 15

Which of the following is an example of cyclical unemployment?

Accepted Answer

A)  A fast-food worker quits that job to find a better-paying job. 
B)  An autoworker is laid off when auto sales fall due to a recession. 
C)  A student goes to school instead of working. 
D)  A worker stays at home to care for a child. 
A)  A fast-food worker quits that job to find a better-paying job. 
B)  An autoworker is laid off when auto sales fall due to a recession. 
C)  A student goes to school instead of working. 
D)  A worker stays at home to care for a child.

Question 16

How can fighting inflation cause a recession?

Accepted Answer

A)  The Federal Reserve raises interest rates to intentionally slow down the economy. 
B)  Businesses lay off workers as a way to keep prices from rising too fast. 
C)  The federal government orders businesses to reduce prices, which raises interest rates. 
D)  Households stop buying goods and services in response to higher prices. 
A)  The Federal Reserve raises interest rates to intentionally slow down the economy. 
B)  Businesses lay off workers as a way to keep prices from rising too fast. 
C)  The federal government orders businesses to reduce prices, which raises interest rates. 
D)  Households stop buying goods and services in response to higher prices.

Question 17

Frictional unemployment occurs when

Accepted Answer

A)  employees file grievances and are fired. 
B)  workers take time off to care for parents or children. 
C)  workers experience temporary unemployment as they move from one job into another. 
D)  workers go back to school. 
A)  employees file grievances and are fired. 
B)  workers take time off to care for parents or children. 
C)  workers experience temporary unemployment as they move from one job into another. 
D)  workers go back to school.

Question 18

The Congressional Budget Office estimated that the NAIRU was equal to about __________ in 2008.

Accepted Answer

A)  9.6% 
B)  6.0% 
C)  4.8% 
D)  4.0% 
A)  9.6% 
B)  6.0% 
C)  4.8% 
D)  4.0%

Question 19

Recessions are always caused by negative demand shifts.

Accepted Answer

A) True 
 B)False

Question 20

The potential growth rate is sometimes also called the

Accepted Answer

A)  breaking point. 
B)  speed limit. 
C)  stop point. 
D)  peak. 
A)  breaking point. 
B)  speed limit. 
C)  stop point. 
D)  peak.

Which of the following is an example of frictional unemployment?

The unemployment rate includes

The natural rate of unemployment is

When unemployment is above the natural rate,

When real GDP is lower than potential GDP,the output gap is

If GDP is too high relative to potential GDP,which of the following happens?

The NAIRU is short for the nonaccelerating inflation rate of unemployment.

Who would NOT be counted among the unemployed?

When unemployment is below the natural rate,

The pattern of recession,recovery,and expansion is called the business cycle.

How are potential GDP and real GDP alike?

How is it possible for output to be greater than potential GDP?

The ________ is the beginning of a recession.

As the economy slows in a recession,the schedules of most businesses shift to the .

Which of the following is an example of cyclical unemployment?

How can fighting inflation cause a recession?

Frictional unemployment occurs when

The Congressional Budget Office estimated that the NAIRU was equal to about __________ in 2008.

Recessions are always caused by negative demand shifts.

The potential growth rate is sometimes also called the

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

Which of the following is an example of frictional unemployment?

The unemployment rate includes

The natural rate of unemployment is

When unemployment is above the natural rate,

When real GDP is lower than potential GDP,the output gap is

If GDP is too high relative to potential GDP,which of the following happens?

The NAIRU is short for the nonaccelerating inflation rate of unemployment.

Who would NOT be counted among the unemployed?

When unemployment is below the natural rate,

The pattern of recession,recovery,and expansion is called the business cycle.

How are potential GDP and real GDP alike?

How is it possible for output to be greater than potential GDP?

The ________ is the beginning of a recession.

As the economy slows in a recession,the __________ schedules of most businesses shift to the __________.

Which of the following is an example of cyclical unemployment?

How can fighting inflation cause a recession?

Frictional unemployment occurs when

The Congressional Budget Office estimated that the NAIRU was equal to about __________ in 2008.

Recessions are always caused by negative demand shifts.

The potential growth rate is sometimes also called the

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

As the economy slows in a recession,the schedules of most businesses shift to the .