Question 1

Which event(s) increase cyclical unemployment?

Accepted Answer

A)  Real GDP growth turns negative. 
B)  Unemployment benefits increase. 
C)  The pace of technological changes increases. 
D)  Both job destruction and job creation increase. 
E)  All of the above increase cyclical unemployment. 
A)  Real GDP growth turns negative. 
B)  Unemployment benefits increase. 
C)  The pace of technological changes increases. 
D)  Both job destruction and job creation increase. 
E)  All of the above increase cyclical unemployment. A

Question 2

When consumers substitute to avoid rising prices, the official CPI increases more slowly.

Accepted Answer

A) True 
 B)False  False

Question 3

The natural rate of unemployment does not include seasonal unemployment.

Accepted Answer

A) True 
 B)False  False

Question 4

Gina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation rate of 4 percent. At the end of the year, the inflation rate turns out to be 5 percent. This unexpected change is

Accepted Answer

A)  good for George but bad for Gina. 
B)  good for both George and Gina. 
C)  bad for both Gina and George. 
D)  good for Gina but bad for George. 
E)  irrelevant, a deal is a deal. 
A)  good for George but bad for Gina. 
B)  good for both George and Gina. 
C)  bad for both Gina and George. 
D)  good for Gina but bad for George. 
E)  irrelevant, a deal is a deal.

Question 5

The original Phillips Curve suggests it is unlikely to have high inflation at the same time as low unemployment.

Accepted Answer

A) True 
 B)False

Question 6

Economists believed in a clear tradeoff between unemployment and inflation until

Accepted Answer

A)  A.W. Phillips' work. 
B)  the 1950s. 
C)  the 1960s. 
D)  the 1970s. 
E)  the Great Recession. 
A)  A.W. Phillips' work. 
B)  the 1950s. 
C)  the 1960s. 
D)  the 1970s. 
E)  the Great Recession.

Question 7

The velocity of money is 5. The quantity theory of money suggests that an 8 percent increase in the money supply results in an 8 percent increase in average prices.

Accepted Answer

A) True 
 B)False

Question 8

The quantity theory of money states that P x Q = M x R.

Accepted Answer

A) True 
 B)False

Question 9

The quantity theory of money begins with the equation containing the money supply (M), velocity of money (V), average prices (P) and real GDP (Q), and then assumes that

Accepted Answer

A)  M does not change when V changes. 
B)  V does not change when Q changes. 
C)  V is fixed and Q is fixed at potential GDP. 
D)  V is fixed and Q is fixed at real GDP. 
E)  V is fixed and Q is fixed at nominal GDP. 
A)  M does not change when V changes. 
B)  V does not change when Q changes. 
C)  V is fixed and Q is fixed at potential GDP. 
D)  V is fixed and Q is fixed at real GDP. 
E)  V is fixed and Q is fixed at nominal GDP.

Question 10

When real GDP is below potential GDP, the unemployment rate is above the natural rate.

Accepted Answer

A) True 
 B)False

Question 11

The velocity of money is 10, real GDP is 100 and the money supply is 100. According to the quantity theory of money, a 20 percent increase in the money supply causes a

Accepted Answer

A)  10 percent decrease in average prices. 
B)  10 percent increase in average prices. 
C)  5 percent decrease in real GDP. 
D)  20 percent decrease in velocity. 
E)  20 percent increase in average prices. 
A)  10 percent decrease in average prices. 
B)  10 percent increase in average prices. 
C)  5 percent decrease in real GDP. 
D)  20 percent decrease in velocity. 
E)  20 percent increase in average prices.

Question 12

The quantity theory of money suggests that a 20 percent decrease in the money supply causes a 20 percent decrease in real GDP.

Accepted Answer

A) True 
 B)False

Question 13

Cyclical unemployment increases during economic contractions.

Accepted Answer

A) True 
 B)False

Question 14

Including discouraged workers in the official unemployment rate will

Accepted Answer

A)  not change the official unemployment rate. 
B)  lower the official unemployment rate. 
C)  raise the official unemployment rate. 
D)  raise the natural rate of unemployment. 
E)  raise the full employment rate. 
A)  not change the official unemployment rate. 
B)  lower the official unemployment rate. 
C)  raise the official unemployment rate. 
D)  raise the natural rate of unemployment. 
E)  raise the full employment rate.

Question 15

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 5 percent, cyclical unemployment is negative.

Accepted Answer

A) True 
 B)False

Question 16

An economy only uses cash. If the quantity of money in the economy is $10,000, then aggregate spending is limited to $10,000.

Accepted Answer

A) True 
 B)False

Question 17

A fall in the average level of prices is called deflation.

Accepted Answer

A) True 
 B)False

Question 18

"Where does inflation come from?" is a macroeconomic question.

Accepted Answer

A) True 
 B)False

Question 19

When unemployed workers get discouraged and stop looking for work, the labour force participation rate falls.

Accepted Answer

A) True 
 B)False

Question 20

When there is deflation, the value of money is rising.

Accepted Answer

A) True 
 B)False

Which event(s) increase cyclical unemployment?

When consumers substitute to avoid rising prices, the official CPI increases more slowly.

The natural rate of unemployment does not include seasonal unemployment.

Gina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation rate of 4 percent. At the end of the year, the inflation rate turns out to be 5 percent. This unexpected change is

The original Phillips Curve suggests it is unlikely to have high inflation at the same time as low unemployment.

Economists believed in a clear tradeoff between unemployment and inflation until

The velocity of money is 5. The quantity theory of money suggests that an 8 percent increase in the money supply results in an 8 percent increase in average prices.

The quantity theory of money states that P x Q = M x R.

The quantity theory of money begins with the equation containing the money supply (M), velocity of money (V), average prices (P) and real GDP (Q), and then assumes that

When real GDP is below potential GDP, the unemployment rate is above the natural rate.

The velocity of money is 10, real GDP is 100 and the money supply is 100. According to the quantity theory of money, a 20 percent increase in the money supply causes a

The quantity theory of money suggests that a 20 percent decrease in the money supply causes a 20 percent decrease in real GDP.

Cyclical unemployment increases during economic contractions.

Including discouraged workers in the official unemployment rate will

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 5 percent, cyclical unemployment is negative.

An economy only uses cash. If the quantity of money in the economy is $10,000, then aggregate spending is limited to $10,000.

A fall in the average level of prices is called deflation.

"Where does inflation come from?" is a macroeconomic question.

When unemployed workers get discouraged and stop looking for work, the labour force participation rate falls.

When there is deflation, the value of money is rising.

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters

Exam 7: Costs of Not Working and Living: Unemployment and Inflation

Which event(s) increase cyclical unemployment?

When consumers substitute to avoid rising prices, the official CPI increases more slowly.

The natural rate of unemployment does not include seasonal unemployment.

Gina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation rate of 4 percent. At the end of the year, the inflation rate turns out to be 5 percent. This unexpected change is

The original Phillips Curve suggests it is unlikely to have high inflation at the same time as low unemployment.

Economists believed in a clear tradeoff between unemployment and inflation until

The velocity of money is 5. The quantity theory of money suggests that an 8 percent increase in the money supply results in an 8 percent increase in average prices.

The quantity theory of money states that P x Q = M x R.

The quantity theory of money begins with the equation containing the money supply (M), velocity of money (V), average prices (P) and real GDP (Q), and then assumes that

When real GDP is below potential GDP, the unemployment rate is above the natural rate.

The velocity of money is 10, real GDP is 100 and the money supply is 100. According to the quantity theory of money, a 20 percent increase in the money supply causes a

The quantity theory of money suggests that a 20 percent decrease in the money supply causes a 20 percent decrease in real GDP.

Cyclical unemployment increases during economic contractions.

Including discouraged workers in the official unemployment rate will

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 5 percent, cyclical unemployment is negative.

An economy only uses cash. If the quantity of money in the economy is $10,000, then aggregate spending is limited to $10,000.

A fall in the average level of prices is called deflation.

"Where does inflation come from?" is a macroeconomic question.

When unemployed workers get discouraged and stop looking for work, the labour force participation rate falls.

When there is deflation, the value of money is rising.

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters