Question 1

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is:

Accepted Answer

A)   cyclical.
B)   frictional.
C)   structural.
D)   natural.E) A) and B)
F) A) and C)

Question 2

During 1993-1994, Democratic Republic of Congo has experienced an inflation rate of more than sixty-nine thousand percent per year. This economic condition would best be described as:

Accepted Answer

A)   a wage-price inflationary spiral.
B)   a cost-of-living adjustment.
C)   cost-push inflation.
D)   hyperinflation.E) A) and D)
F) None of the above

Question 3

Cost-push inflation could be explained by:

Accepted Answer

A)   an increase in the level of consumer spending.
B)   a decrease in wage rates.
C)   a decline in per-unit production costs.
D)   an increase in the per-unit production cost.E) All of the above
F) A) and B)

Question 4

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

Question 5

Unanticipated inflation benefits some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 6

Unanticipated inflation benefits creditors and savers.

Accepted Answer

A) True 
 B)False

Question 7

Part-time workers are counted as:

Accepted Answer

A)   unemployed and therefore the official unemployment rate tends to overstate the level of unemployment.
B)   unemployed and therefore the official unemployment rate tends to understate the level of unemployment.
C)   fully employed and therefore the official unemployment rate tends to overstate the level of unemployment.
D)   fully employed and therefore the official unemployment rate tends to understate the level of unemployment.E) A) and B)
F) All of the above

Question 8

If the consumer price index was 115 in one year and 120 in the next year, then the rate of inflation from one year to the next was:

Accepted Answer

A)   4.3 percent.
B)   5.1 percent.
C)   5.3 percent.
D)   6.8 percent.E) A) and B)
F) All of the above

Question 9

Suppose rate of inflation for some specific year was 10 percent. If the CPI for that year was 139.7, the previous year's CPI must have been:

Accepted Answer

A)   100.0.
B)   129.7.
C)   153.7.
D)   127.0.E) B) and C)
F) All of the above

Question 10

The descriptions give the responses of four individuals to Statistics Canada.
1. Mollie just graduated from university and is now looking for work. She has had three job interviews in the past month.
2. George works in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in several months when national economic conditions improve.
3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4. Ryan lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work.
-Refer to the above information. Which individual would be included in the calculation of the full-employment unemployment rate?

Accepted Answer

A)   1 only
B)   2 only
C)   1 and 3
D)   2 and 4E) A) and D)
F) B) and C)

Question 11

Canada's economy is considered to be at "full employment" when:

Accepted Answer

A)   90 percent of the total population is employed.
B)   90 percent of the labour force is employed.
C)   about 6-7 percent of the labour force is unemployed.
D)   100 percent of the labour force is employed.E) A) and D)
F) C) and D)

Question 12

Unanticipated inflation arbitrarily:

Accepted Answer

A)   "subsidizes" those who receive fixed money incomes.
B)   " penalises" those who receive fixed money incomes.
C)   "penalizes" those who borrow money.
D)   "benefits" those who save money.E) C) and D)
F) B) and C)

Question 13

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:

Accepted Answer

A)   inflation of 4 percent.
B)   inflation of 3.33 percent.
C)   deflation of 3.33 percent.
D)   deflation of 4 percent.E) C) and D)
F) B) and D)

Question 14

Cost-push inflation may be caused by:

Accepted Answer

A)   a decline in per-unit production costs.
B)   a decrease in wage rates.
C)   a negative supply shock.
D)   an increase in resource availability.E) All of the above
F) A) and D)

Question 15

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Accepted Answer

A)   frictional unemployment.
B)   structural unemployment.
C)   cyclical unemployment.
D)   compositional unemployment.E) A) and B)
F) B) and D)

Question 16

If the nominal interest rate is 12 percent and the real interest rate is 8 percent, then the inflation premium is:

Accepted Answer

A)   8 percent.
B)   12 percent.
C)   4 percent.
D)   20 percent.E) A) and B)
F) A) and C)

Question 17

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

Question 18

If the rate of inflation is 12 percent per year, the price level will double in about:

Accepted Answer

A)   4 years.
B)   6 years.
C)   10 years.
D)   12 years.E) A) and D)
F) B) and D)

Question 19

Unanticipated inflation benefits debtors at the expense of creditors.

Accepted Answer

A) True 
 B)False

Question 20

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) All of the above
F) A) and D)

Exam 7: Business Cycles, Unemployment, and Inflation

If the rate of inflation is 12 percent per year, the price level will double in about:

Correct Answer
verified

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

Correct Answer
verified

Canada's economy is considered to be at "full employment" when:

Correct Answer
verified

Unanticipated inflation benefits some groups in the economy.

Correct Answer
verified

Unanticipated inflation arbitrarily:

Correct Answer
verified

Correct Answer
verified

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Correct Answer
verified

Unanticipated inflation benefits debtors at the expense of creditors.

Correct Answer
verified

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:

Correct Answer
verified

Cost-push inflation could be explained by:

Correct Answer
verified

Part-time workers are counted as:

Correct Answer
verified

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

Correct Answer
verified

If the consumer price index was 115 in one year and 120 in the next year, then the rate of inflation from one year to the next was:

Correct Answer
verified

Suppose rate of inflation for some specific year was 10 percent. If the CPI for that year was 139.7, the previous year's CPI must have been:

Correct Answer
verified

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is:

Correct Answer
verified

If the nominal interest rate is 12 percent and the real interest rate is 8 percent, then the inflation premium is:

Correct Answer
verified

Unanticipated inflation benefits creditors and savers.

Correct Answer
verified

Cost-push inflation may be caused by:

Correct Answer
verified

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

Correct Answer
verified

During 1993-1994, Democratic Republic of Congo has experienced an inflation rate of more than sixty-nine thousand percent per year. This economic condition would best be described as:

Correct Answer
verified

Exam 7: Business Cycles, Unemployment, and Inflation

If the rate of inflation is 12 percent per year, the price level will double in about:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Canada's economy is considered to be at "full employment" when:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits some groups in the economy.

Correct AnswerverifiedShow Answer

Unanticipated inflation arbitrarily:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits debtors at the expense of creditors.

Correct AnswerverifiedShow Answer

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:

Correct AnswerverifiedShow Answer

Cost-push inflation could be explained by:

Correct AnswerverifiedShow Answer

Part-time workers are counted as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the consumer price index was 115 in one year and 120 in the next year, then the rate of inflation from one year to the next was:

Correct AnswerverifiedShow Answer

Suppose rate of inflation for some specific year was 10 percent. If the CPI for that year was 139.7, the previous year's CPI must have been:

Correct AnswerverifiedShow Answer

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is:

Correct AnswerverifiedShow Answer

If the nominal interest rate is 12 percent and the real interest rate is 8 percent, then the inflation premium is:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits creditors and savers.

Correct AnswerverifiedShow Answer

Cost-push inflation may be caused by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

During 1993-1994, Democratic Republic of Congo has experienced an inflation rate of more than sixty-nine thousand percent per year. This economic condition would best be described as:

Correct AnswerverifiedShow Answer

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