Question 1

A period in which the economy is growing at a rate significantly above normal is called a(n)

Accepted Answer

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

Question 2

If the natural rate of unemployment equals 4% and the actual rate of unemployment equals 6%,then cyclical unemployment equals

Accepted Answer

A)  - 2%. 
B)  0%. 
C)  2%. 
D)  6%. 
E)  10%. 
A)  - 2%. 
B)  0%. 
C)  2%. 
D)  6%. 
E)  10%. C

Question 3

The rate of unemployment when the economy is at potential output is called the

Accepted Answer

A)  seasonal rate of unemployment. 
B)  natural rate of unemployment. 
C)  structural rate of unemployment. 
D)  frictional rate of unemployment. 
E)  cyclical rate of unemployment. 
A)  seasonal rate of unemployment. 
B)  natural rate of unemployment. 
C)  structural rate of unemployment. 
D)  frictional rate of unemployment. 
E)  cyclical rate of unemployment. B

Question 4

In the short run,the quantity of output a firm produces and sells is determined by

Accepted Answer

A)  demand for the firm's products. 
B)  government decree. 
C)  the firm's labour force. 
D)  the firm's capital stock. 
E)  the firm's raw materials. 
A)  demand for the firm's products. 
B)  government decree. 
C)  the firm's labour force. 
D)  the firm's capital stock. 
E)  the firm's raw materials.

Question 5

If potential output equals $8 billion and actual output equals $9 billion,then this economy has a(n)

Accepted Answer

A)  budget deficit. 
B)  trade deficit. 
C)  expansionary gap. 
D)  recessionary gap. 
E)  value-added gap. 
A)  budget deficit. 
B)  trade deficit. 
C)  expansionary gap. 
D)  recessionary gap. 
E)  value-added gap.

Question 6

Which of the following statements is NOT true about the labour market during economic fluctuations?

Accepted Answer

A)  The unemployment rate rises during recessions. 
B)  The unemployment rate drops during expansions. 
C)  The part of unemployment that is associated with recessions is called cyclical unemployment. 
D)  Real wages grow slowly or decline during recessions. 
E)  Workers are more likely to receive promotions during recessions. 
A)  The unemployment rate rises during recessions. 
B)  The unemployment rate drops during expansions. 
C)  The part of unemployment that is associated with recessions is called cyclical unemployment. 
D)  Real wages grow slowly or decline during recessions. 
E)  Workers are more likely to receive promotions during recessions.

Question 7

The economy of Alpha operates according to Okun's law.In Alpha,actual GDP equals $520 billion,the natural rate of unemployment is 5%,and the actual rate of unemployment is 3%.What is potential GDP in Alpha?

Accepted Answer

A)  $480 billion. 
B)  $490 billion. 
C)  $500 billion. 
D)  $510 billion. 
E)  $520 billion. 
A)  $480 billion. 
B)  $490 billion. 
C)  $500 billion. 
D)  $510 billion. 
E)  $520 billion.

Question 8

The natural rate of unemployment is typically calculated as the unemployment rate that prevails when the economy has

Accepted Answer

A)  a recessionary gap. 
B)  an expansionary gap. 
C)  both a recessionary and an expansionary gap. 
D)  neither a recessionary nor an expansionary gap. 
E)  a gender gap. 
A)  a recessionary gap. 
B)  an expansionary gap. 
C)  both a recessionary and an expansionary gap. 
D)  neither a recessionary nor an expansionary gap. 
E)  a gender gap.

Question 9

Suppose that Human Resources and Social Development Canada (HRSDC)estimated Canada's natural rate of unemployment at 5.8% for 1994.The actual unemployment rate was 10.3% in 1994.Okun's law implies that,in 1994,Canada's negative output gap was

Accepted Answer

A)  8.1% of potential output. 
B)  6.1% of potential output. 
C)  5.1% of potential output. 
D)  4.1% of potential output. 
E)  9.0% of potential output. 
A)  8.1% of potential output. 
B)  6.1% of potential output. 
C)  5.1% of potential output. 
D)  4.1% of potential output. 
E)  9.0% of potential output.

Question 10

Which phase of the business cycle would be most closely associated with an economic contraction?

Accepted Answer

A)  Peak. 
B)  Recession. 
C)  Trough. 
D)  Recovery. 
E)  Boom. 
A)  Peak. 
B)  Recession. 
C)  Trough. 
D)  Recovery. 
E)  Boom.

Question 11

In Macroland,potential output equals $100 billion and the natural rate of unemployment is 5%.If the actual unemployment rate is 3%,then the output gap equals

Accepted Answer

A)  - $4 billion. 
B)  - $2 billion. 
C)  - $1 billion. 
D)  $2 billion. 
E)  $4 billion. 
A)  - $4 billion. 
B)  - $2 billion. 
C)  - $1 billion. 
D)  $2 billion. 
E)  $4 billion.

Question 12

In the short run,in response to a decrease in demand,producers will typically choose _______ prices,but rather to meet the decreased demand at _______ prices.

Accepted Answer

A)  not to cut;preset 
B)  to cut;variable 
C)  not to raise;preset 
D)  to raise;variable 
E)  to cut;preset 
A)  not to cut;preset 
B)  to cut;variable 
C)  not to raise;preset 
D)  to raise;variable 
E)  to cut;preset

Question 13

The following data give the dates of successive turning points in Canadian economic activity and the corresponding levels of real GDP at the time:  
Which of the following periods is most likely to correspond to a recession?

Accepted Answer

A)  June 1980 through July 1981. 
B)  June 1980 through October 1982. 
C)  July 1981 through April 1990. 
D)  October 1982 through April 1990. 
E)  July 1981 through October 1982. 
A)  June 1980 through July 1981. 
B)  June 1980 through October 1982. 
C)  July 1981 through April 1990. 
D)  October 1982 through April 1990. 
E)  July 1981 through October 1982.

Question 14

The output gap measures the amount by which

Accepted Answer

A)  nominal GDP exceeds real GDP. 
B)  actual GDP exceeds potential GDP. 
C)  potential GDP exceeds actual GDP. 
D)  actual GDP exceeds national income. 
E)  real GDP exceeds nominal GDP. 
A)  nominal GDP exceeds real GDP. 
B)  actual GDP exceeds potential GDP. 
C)  potential GDP exceeds actual GDP. 
D)  actual GDP exceeds national income. 
E)  real GDP exceeds nominal GDP.

Question 15

In Macroland,a country that operates according to Okun's law,potential GDP equals $10 trillion,actual GDP is $9.6 trillion,and the actual rate of unemployment is 8%.What is the natural rate of unemployment in Macroland?

Accepted Answer

A)  4%. 
B)  5%. 
C)  6%. 
D)  7%. 
E)  8%. 
A)  4%. 
B)  5%. 
C)  6%. 
D)  7%. 
E)  8%.

Question 16

A boom is

Accepted Answer

A)  a period in which the economy is growing at a rate significantly below normal. 
B)  the high point of economic activity prior to a downturn. 
C)  the low point of economic activity prior to a recovery. 
D)  a particularly strong and protracted phase of an expansion. 
E)  a particularly severe and protracted recession. 
A)  a period in which the economy is growing at a rate significantly below normal. 
B)  the high point of economic activity prior to a downturn. 
C)  the low point of economic activity prior to a recovery. 
D)  a particularly strong and protracted phase of an expansion. 
E)  a particularly severe and protracted recession.

Question 17

If potential output equals $8 billion and actual output equals $7 billion,then this economy has a(n)

Accepted Answer

A)  budget deficit. 
B)  trade deficit. 
C)  expansionary gap. 
D)  recessionary gap. 
E)  value-added gap. 
A)  budget deficit. 
B)  trade deficit. 
C)  expansionary gap. 
D)  recessionary gap. 
E)  value-added gap.

Question 18

The cyclical unemployment rate is positive when

Accepted Answer

A)  there is a recessionary gap. 
B)  there is an expansionary gap. 
C)  the output gap equals zero. 
D)  frictional unemployment equals structural unemployment. 
E)  the sum of frictional,structural,and seasonal unemployment equals zero. 
A)  there is a recessionary gap. 
B)  there is an expansionary gap. 
C)  the output gap equals zero. 
D)  frictional unemployment equals structural unemployment. 
E)  the sum of frictional,structural,and seasonal unemployment equals zero.

Question 19

The economy of Alpha operates according to Okun's law.In Alpha,potential GDP equals $500 billion,actual GDP equals $520 billion,and the actual rate of unemployment is 3%.What is the natural rate of unemployment in Alpha?

Accepted Answer

A)  1%. 
B)  2%. 
C)  3%. 
D)  4%. 
E)  5%. 
A)  1%. 
B)  2%. 
C)  3%. 
D)  4%. 
E)  5%.

Question 20

The unemployment duration is the length of a period during which an individual

Accepted Answer

A)  remains seasonally unemployed before becoming cyclically unemployed. 
B)  remains frictionally unemployed before becoming cyclically unemployed. 
C)  is continuously unemployed. 
D)  stays out of the labour force. 
E)  does not actively seek employment. 
A)  remains seasonally unemployed before becoming cyclically unemployed. 
B)  remains frictionally unemployed before becoming cyclically unemployed. 
C)  is continuously unemployed. 
D)  stays out of the labour force. 
E)  does not actively seek employment.

A period in which the economy is growing at a rate significantly above normal is called a(n)

If the natural rate of unemployment equals 4% and the actual rate of unemployment equals 6%,then cyclical unemployment equals

The rate of unemployment when the economy is at potential output is called the

In the short run,the quantity of output a firm produces and sells is determined by

If potential output equals $8 billion and actual output equals $9 billion,then this economy has a(n)

Which of the following statements is NOT true about the labour market during economic fluctuations?

The economy of Alpha operates according to Okun's law.In Alpha,actual GDP equals $520 billion,the natural rate of unemployment is 5%,and the actual rate of unemployment is 3%.What is potential GDP in Alpha?

The natural rate of unemployment is typically calculated as the unemployment rate that prevails when the economy has

Suppose that Human Resources and Social Development Canada (HRSDC)estimated Canada's natural rate of unemployment at 5.8% for 1994.The actual unemployment rate was 10.3% in 1994.Okun's law implies that,in 1994,Canada's negative output gap was

Which phase of the business cycle would be most closely associated with an economic contraction?

In Macroland,potential output equals $100 billion and the natural rate of unemployment is 5%.If the actual unemployment rate is 3%,then the output gap equals

In the short run,in response to a decrease in demand,producers will typically choose _ prices,but rather to meet the decreased demand at _ prices.

The following data give the dates of successive turning points in Canadian economic activity and the corresponding levels of real GDP at the time: Which of the following periods is most likely to correspond to a recession?

The output gap measures the amount by which

In Macroland,a country that operates according to Okun's law,potential GDP equals $10 trillion,actual GDP is $9.6 trillion,and the actual rate of unemployment is 8%.What is the natural rate of unemployment in Macroland?

A boom is

If potential output equals $8 billion and actual output equals $7 billion,then this economy has a(n)

The cyclical unemployment rate is positive when

The economy of Alpha operates according to Okun's law.In Alpha,potential GDP equals $500 billion,actual GDP equals $520 billion,and the actual rate of unemployment is 3%.What is the natural rate of unemployment in Alpha?

The unemployment duration is the length of a period during which an individual

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Exam 7: Money, Prices and the Reserve Bank

A period in which the economy is growing at a rate significantly above normal is called a(n)

If the natural rate of unemployment equals 4% and the actual rate of unemployment equals 6%,then cyclical unemployment equals

The rate of unemployment when the economy is at potential output is called the

In the short run,the quantity of output a firm produces and sells is determined by

If potential output equals $8 billion and actual output equals $9 billion,then this economy has a(n)

Which of the following statements is NOT true about the labour market during economic fluctuations?

The economy of Alpha operates according to Okun's law.In Alpha,actual GDP equals $520 billion,the natural rate of unemployment is 5%,and the actual rate of unemployment is 3%.What is potential GDP in Alpha?

The natural rate of unemployment is typically calculated as the unemployment rate that prevails when the economy has

Suppose that Human Resources and Social Development Canada (HRSDC)estimated Canada's natural rate of unemployment at 5.8% for 1994.The actual unemployment rate was 10.3% in 1994.Okun's law implies that,in 1994,Canada's negative output gap was

Which phase of the business cycle would be most closely associated with an economic contraction?

In Macroland,potential output equals $100 billion and the natural rate of unemployment is 5%.If the actual unemployment rate is 3%,then the output gap equals

In the short run,in response to a decrease in demand,producers will typically choose _______ prices,but rather to meet the decreased demand at _______ prices.

The following data give the dates of successive turning points in Canadian economic activity and the corresponding levels of real GDP at the time: Which of the following periods is most likely to correspond to a recession?

The output gap measures the amount by which

In Macroland,a country that operates according to Okun's law,potential GDP equals $10 trillion,actual GDP is $9.6 trillion,and the actual rate of unemployment is 8%.What is the natural rate of unemployment in Macroland?

A boom is

If potential output equals $8 billion and actual output equals $7 billion,then this economy has a(n)

The cyclical unemployment rate is positive when

The economy of Alpha operates according to Okun's law.In Alpha,potential GDP equals $500 billion,actual GDP equals $520 billion,and the actual rate of unemployment is 3%.What is the natural rate of unemployment in Alpha?

The unemployment duration is the length of a period during which an individual

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

In the short run,in response to a decrease in demand,producers will typically choose _ prices,but rather to meet the decreased demand at _ prices.