Question 1

Generally speaking, output and employment are more variable over the business cycle in capital goods and consumer durable industries than they are in service and nondurable consumer goods sector.

Accepted Answer

A) True 
 B)False

Question 2

In the depth of the Great Depression, the unemployment rate in Canada was about:

Accepted Answer

A)  15 percent.
B)  33 percent.
C)  20 percent.
D)  40 percent.E) All of the above
F) None of the above

Question 3

A nation has a population of 260 million people.Of these, 60 million are retired, in the military, in institutions, or under 15 years old.There are 188 million who are employed.What is the unemployment rate?

Accepted Answer

A)  4 percent
B)  6 percent
C)  9 percent
D)  27 percentE) A) and B)
F) A) and C)

Question 4

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) None of the above

Question 5

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) None of the above
F) A) and B)

Question 6

The national unemployment rate in Canada:

Accepted Answer

A)  reveals the significant diversity in regional unemployment.
B)  does not reveal the significant diversity in regional unemployment.
C)  is a good indicator of unemployment rate in all regions in Canada.
D)  is always higher than the unemployment rate in each region in Canada.E) B) and C)
F) B) and D)

Question 7

Unanticipated inflation:

Accepted Answer

A)  hurts people whose income is fixed.
B)  hurts borrowers and helps lenders.
C)  helps people whose income is fixed.
D)  helps savers.E) None of the above
F) B) and C)

Question 8

If the actual GDP is less than potential GDP:

Accepted Answer

A)  potential GDP will fall.
B)  the price level will rise.
C)  investment spending will fall.
D)  the actual unemployment rate will be higher than the natural unemployment rate.E) A) and B)
F) B) and C)

Question 9

If the Consumer Price index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

Accepted Answer

A)  11 percent.
B)  33 percent.
C)  91 percent.
D)  10 percent.E) B) and C)
F) A) and B)

Question 10

When the unemployment rate is relatively high, we can conclude that:

Accepted Answer

A)  the economy is in the expansion phase of the business cycle.
B)  potential GDP is in excess of actual GDP.
C)  actual GDP is in excess of potential GDP.
D)  actual GDP is equal to potential GDP.E) A) and B)
F) A) and C)

Question 11

Cost-of-living adjustment clauses (COLAs) :

Accepted Answer

A)  invalidate the "rule of 70."
B)  apply only to demand-pull inflation.
C)  increase the gap between nominal and real income.
D)  tie wage increases to changes in the price level.E) A) and D)
F) All of the above

Question 12

During the past ten years the average annual rate of inflation in Canada has been less than 1 percent.

Accepted Answer

A) True 
 B)False

Question 13

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

Accepted Answer

A)  10 years
B)  12 years
C)  14 years
D)  16 yearsE) A) and B)
F) B) and C)

Question 14

Suppose the consumer price index was 140.3 in 2013 and 144.5 in 2014.Therefore, the rate of inflation for 2014 was about:

Accepted Answer

A)  6.7 percent.
B)  3.0 percent.
C)  1.2 percent.
D)  13.6 percent.E) None of the above
F) All of the above

Question 15

Which of the following is not correct?

Accepted Answer

A)  The Canadian unemployment rates of male and female workers are roughly the same.
B)  The unemployment rate for teenagers is higher than that of adults.
C)  Teenagers experience approximately the same unemployment rates as do adults.
D)  lower-skilled workers are more vulnerable to unemployment than are higher-skilled workersE) C) and D)
F) B) and D)

Question 16

A college or university graduate using the summer following graduation to search for a job would best be classified as:

Accepted Answer

A)  not officially a member of the labour force.
B)  a part of structural unemployment.
C)  a part of cyclical unemployment.
D)  a part of frictional unemployment.E) A) and B)
F) A) and C)

Question 17

The best example of a "frictionally unemployed" worker is one who:

Accepted Answer

A)  reduces productivity by causing frictions in a business.
B)  is laid off during a recessionary period in the economy.
C)  is in the process of voluntarily switching jobs.
D)  is discouraged and not actively seeking work.E) B) and C)
F) C) and D)

Question 18

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

Accepted Answer

A)  service industry
B)  automobile industry
C)  textile industry
D)  petroleum industryE) B) and D)
F) All of the above

Question 19

In 2018, the number of people Using figure 9.2, approximately how many people were unemployed in 2018?

Accepted Answer

A)  1.1 million.
B)  700,000.
C)  500,000.
D)  2.3 million.E) C) and D)
F) A) and B)

Question 20

Which of the following is the phase that follows the peak of a business cycle?

Accepted Answer

A)  Recession
B)  Expansion
C)  Trough
D)  ContractionE) A) and C)
F) B) and D)

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

Generally speaking, output and employment are more variable over the business cycle in capital goods and consumer durable industries than they are in service and nondurable consumer goods sector.

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In 2018, the number of people Using figure 9.2, approximately how many people were unemployed in 2018?

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Suppose the consumer price index was 140.3 in 2013 and 144.5 in 2014.Therefore, the rate of inflation for 2014 was about:

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If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

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In the depth of the Great Depression, the unemployment rate in Canada was about:

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Which of the following is not correct?

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Unanticipated inflation:

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When unanticipated inflation occurs:

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A nation has a population of 260 million people.Of these, 60 million are retired, in the military, in institutions, or under 15 years old.There are 188 million who are employed.What is the unemployment rate?

Correct AnswerverifiedShow Answer

When the unemployment rate is relatively high, we can conclude that:

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

Correct AnswerverifiedShow Answer

Cost-of-living adjustment clauses (COLAs) :

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If the Consumer Price index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

Correct AnswerverifiedShow Answer

If the actual GDP is less than potential GDP:

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Okun's law:

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A college or university graduate using the summer following graduation to search for a job would best be classified as:

Correct AnswerverifiedShow Answer

The best example of a "frictionally unemployed" worker is one who:

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During the past ten years the average annual rate of inflation in Canada has been less than 1 percent.

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The national unemployment rate in Canada:

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Which of the following is the phase that follows the peak of a business cycle?

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