Question 1

The labour force includes:

Accepted Answer

A)  employed workers and persons who are officially unemployed.
B)  employed workers, but excludes persons who are officially unemployed.
C)  full-time workers, but excludes part-time workers.
D)  permanent employees, but excludes temporary employees.E) All of the above
F) None of the above A

Question 2

To be officially unemployed a person must be in the labour force and must:

Accepted Answer

A)  be actively seeking work.
B)  be 21 years of age or older.
C)  have just lost a job.
D)  be waiting to be called back from a layoff.E) A) and B)
F) A) and D)

Question 3

Unanticipated inflation benefits some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 4

The natural rate of unemployment is:

Accepted Answer

A)  higher than the full-employment rate of unemployment.
B)  lower than the full-employment rate of unemployment.
C)  found by dividing total unemployment by the size of the labour force.
D)  that rate of unemployment occurring when the economy is at its potential output.E) C) and D)
F) B) and C)

Question 5

In Year 1, the price level was 120 and the average nominal income was $30,000.In Year 2, the price level was 125 and the average nominal level of income was $32,000.What happened to real income from Year 1 to Year 2?

Accepted Answer

A)  It fell by $400.
B)  It rose by $400.
C)  It rose by $600.
D)  It rose by $2,000.E) None of the above
F) A) and B)

Question 6

A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment?

Accepted Answer

A)  wait
B)  cyclical
C)  frictional
D)  structuralE) A) and C)
F) B) and C)

Question 7

Given the annual rate of inflation, the "rule of 70" allows one to:

Accepted Answer

A)  determine whether the inflation is demand-pull or cost-push.
B)  calculate the accompanying rate of unemployment.
C)  determine when the value of a real asset will approach zero.
D)  calculate the number of years required for the price level to double.E) None of the above
F) A) and B)

Question 8

In 2014, Ortega's nominal income rose by 8 percent and the price level rose by 5 percent.We can conclude that Ortega's real income:

Accepted Answer

A)  fell by 13 percent.
B)  rose by 13 percent.
C)  rose by 3 percent.
D)  fell by 3 percent.E) A) and B)
F) B) and C)

Question 9

When unanticipated deflation occurs:

Accepted Answer

A)  creditors and people with fixed income benefit.
B)  both creditors and debtors are hurt.
C)  both debtors and creditors benefit.
D)  people with fixed income benefit but creditors are hurt.E) B) and C)
F) None of the above

Question 10

Structural unemployment:

Accepted Answer

A)  is also known as frictional unemployment.
B)  is the main component of cyclical unemployment.
C)  is said to occur when people are waiting to be called back to previous jobs.
D)  may involve a locational mismatch between unemployed workers and job openings.E) B) and D)
F) A) and D) D

Question 11

Which of the following countries experienced hyperinflation after World War II?

Accepted Answer

A)  Japan
B)  Germany
C)  Canada
D)  United KingdomE) C) and D)
F) A) and B)

Question 12

Assume that there is a fixed rate of interest on contracts for borrowers and lenders.If unanticipated inflation occurs in the economy, then:

Accepted Answer

A)  both lenders and borrowers benefit.
B)  both lenders and borrowers are hurt.
C)  borrowers are hurt, but lenders benefit.
D)  lenders are hurt, but borrowers benefit.E) None of the above
F) B) and C)

Question 13

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Accepted Answer

A)  housing construction
B)  automobile production
C)  agricultural commodities
D)  capital goods productionE) All of the above
F) A) and D)

Question 14

A large negative GDP gap implies:

Accepted Answer

A)  an excess of imports over exports.
B)  a low rate of unemployment.
C)  a high rate of unemployment.
D)  a sharply rising price level.E) A) and D)
F) None of the above

Question 15

In 2017, the number of people who worked part-time was:

Accepted Answer

A)  3.3 million.
B)  4.5 million.
C)  2.5 million.
D)  1.1 million.E) None of the above
F) B) and C)

Question 16

Waiting for employment and "searching for employment" are both types of:

Accepted Answer

A)  cyclical unemployment.
B)  hidden unemployment.
C)  frictional unemployment.
D)  structural unemployment.E) All of the above
F) B) and D)

Question 17

In what circumstances would lenders most benefit?

Accepted Answer

A)  when there is an unanticipated decrease in inflation
B)  when there is an anticipated increase in inflation
C)  when there is an unanticipated increase in inflation
D)  when there is an anticipated decrease in inflationE) B) and C)
F) A) and D) A

Question 18

Anne Kasperson works in her own home as a full-time caretaker and homemaker.Officially, she is:

Accepted Answer

A)  unemployed.
B)  employed.
C)  not in the labour force.
D)  in the labour force.E) B) and C)
F) None of the above

Question 19

One perspective on low levels of inflation is that it can:

Accepted Answer

A)  reduce real output.
B)  increase real output.
C)  have no effect on real output.
D)  have no effect on businesses.E) A) and D)
F) All of the above

Question 20

A peak in the business cycle:

Accepted Answer

A)  occurs when the unemployment rate is its greatest.
B)  occurs when the inflation rate is its lowest.
C)  is a temporary maximum point.
D)  is a temporary minimum point.E) A) and D)
F) All of the above

Exam 9: Part B: Business Cycles, Unemployment, and Inflation

The labour force includes:

Correct AnswerverifiedA

To be officially unemployed a person must be in the labour force and must:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits some groups in the economy.

Correct AnswerverifiedShow Answer

The natural rate of unemployment is:

Correct AnswerverifiedShow Answer

In Year 1, the price level was 120 and the average nominal income was $30,000.In Year 2, the price level was 125 and the average nominal level of income was $32,000.What happened to real income from Year 1 to Year 2?

Correct AnswerverifiedShow Answer

A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment?

Correct AnswerverifiedShow Answer

Given the annual rate of inflation, the "rule of 70" allows one to:

Correct AnswerverifiedShow Answer

In 2014, Ortega's nominal income rose by 8 percent and the price level rose by 5 percent.We can conclude that Ortega's real income:

Correct AnswerverifiedShow Answer

When unanticipated deflation occurs:

Correct AnswerverifiedShow Answer

Structural unemployment:

Correct AnswerverifiedD

Which of the following countries experienced hyperinflation after World War II?

Correct AnswerverifiedShow Answer

Assume that there is a fixed rate of interest on contracts for borrowers and lenders.If unanticipated inflation occurs in the economy, then:

Correct AnswerverifiedShow Answer

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Correct AnswerverifiedShow Answer

A large negative GDP gap implies:

Correct AnswerverifiedShow Answer

In 2017, the number of people who worked part-time was:

Correct AnswerverifiedShow Answer

Waiting for employment and "searching for employment" are both types of:

Correct AnswerverifiedShow Answer

In what circumstances would lenders most benefit?

Correct AnswerverifiedA

Anne Kasperson works in her own home as a full-time caretaker and homemaker.Officially, she is:

Correct AnswerverifiedShow Answer

One perspective on low levels of inflation is that it can:

Correct AnswerverifiedShow Answer

A peak in the business cycle:

Correct AnswerverifiedShow Answer

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