Question 1

In an economy, 35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

Accepted Answer

A)  15 percent.
B)  25 percent.
C)  50 percent.
D)  30 percent.E) B) and D)
F) None of the above

Question 2

Refer to the above diagram.The phases of the business cycle from points A to D are, respectively:

Accepted Answer

A)  peak, recession, expansion, trough.
B)  trough, expansion, expansion, peak.
C)  expansion, recession, trough, peak.
D)  peak, recession, trough, expansion.E) C) and D)
F) A) and B)

Question 3

The severe recession of 2008 - 2009 was precipitated by:

Accepted Answer

A)  a slowdown in productivity.
B)  a combination of excessive money and financial frenzy.
C)  a combination of a decrease in the money supply and financial frenzy.
D)  A combination of a decrease in money and a productivity slowdown.E) A) and B)
F) None of the above

Question 4

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) B) and C)

Question 5

Full-employment output is also called:

Accepted Answer

A)  zero-unemployment output.
B)  equilibrium output.
C)  potential output.
D)  zero-savings output.E) B) and D)
F) B) and C)

Question 6

Okun's law:

Accepted Answer

A)  measures the tradeoff between the rate of inflation and the rate of unemployment.
B)  indicates the number of years it will take for a constant rate of inflation to cause the price level to double.
C)  quantifies the relationship between nominal and real incomes.
D)  shows the relationship between the unemployment rate and the size of the GDP gap.E) A) and B)
F) A) and C)

Question 7

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Accepted Answer

A)  $17,343
B)  $18,521
C)  $19,481
D)  $20,955E) A) and B)
F) None of the above

Question 8

In the expansion phase of a business cycle:

Accepted Answer

A)  the inflation rate decreases, but productive capacity increases.
B)  the inflation rate and productive capacity decrease.
C)  employment increases, but output decreases.
D)  employment and output increase.E) All of the above
F) B) and C)

Question 9

Suppose there are 5 million unemployed workers seeking jobs.After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work.As a result of this, the official unemployment rate would:

Accepted Answer

A)  increase in the short run but eventually decline.
B)  increase.
C)  decline.
D)  be unchanged.E) A) and B)
F) A) and C)

Question 10

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) None of the above
F) All of the above

Question 11

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Accepted Answer

A)  The euro
B)  The Canadian dollar
C)  The United States dollar
D)  The Indian rupeeE) C) and D)
F) A) and D)

Question 12

When unanticipated inflation occurs:

Accepted Answer

A)  both creditors and debtors benefit.
B)  both creditors and debtors are hurt.
C)  debtors are hurt, but creditors benefit.
D)  creditors are hurt, but debtors benefit.E) B) and C)
F) B) and D)

Question 13

Which of the following is correct?

Accepted Answer

A)  inflation will always increase the real income.
B)  inflation does not affect the distribution of income.
C)  the redistribution effects of inflation does not depend upon expectation.
D)  the redistribution effects of inflation depends upon whether or not it is expected.E) B) and D)
F) B) and C)

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

Which of the following is correct?

Correct Answer
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When unanticipated inflation occurs:

Correct Answer
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Suppose there are 5 million unemployed workers seeking jobs.After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work.As a result of this, the official unemployment rate would:

Correct Answer
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Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Correct Answer
verified

Full-employment output is also called:

Correct Answer
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If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct Answer
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Okun's law:

Correct Answer
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In an economy, 35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

Correct Answer
verified

A large negative GDP gap implies:

Correct Answer
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The severe recession of 2008 - 2009 was precipitated by:

Correct Answer
verified

In the expansion phase of a business cycle:

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

Correct Answer
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Refer to the above diagram.The phases of the business cycle from points A to D are, respectively:

Correct Answer
verified

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

Which of the following is correct?

Correct AnswerverifiedShow Answer

When unanticipated inflation occurs:

Correct AnswerverifiedShow Answer

Suppose there are 5 million unemployed workers seeking jobs.After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work.As a result of this, the official unemployment rate would:

Correct AnswerverifiedShow Answer

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Correct AnswerverifiedShow Answer

Full-employment output is also called:

Correct AnswerverifiedShow Answer

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct AnswerverifiedShow Answer

Okun's law:

Correct AnswerverifiedShow Answer

In an economy, 35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

Correct AnswerverifiedShow Answer

A large negative GDP gap implies:

Correct AnswerverifiedShow Answer

The severe recession of 2008 - 2009 was precipitated by:

Correct AnswerverifiedShow Answer

In the expansion phase of a business cycle:

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

Refer to the above diagram.The phases of the business cycle from points A to D are, respectively:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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