Question 1

Unanticipated inﬂation tends to harm

Accepted Answer

A)   people who save money in ﬁnancial institutions.
B)   individuals who borrow money from ﬁnancial institutions.
C)   businesses which borrow money from ﬁnancial institutions.
D)   governments that have a progressive personal income tax.E) C) and D)
F) A) and D)

Question 2

Innovations such as the microchip and the Internet lead to business cycle variations because

Accepted Answer

A)   they cause prices to be sticky.
B)   signiﬁcant innovations occur irregularly and unexpectedly.
C)   the central bank will often change the money supply in response.
D)   they cause prices to be ﬂexible.E) A) and B)
F) A) and C)

Question 3

A person's real income will increase by 3 percent if her nominal income

Accepted Answer

A)   increases by 5 percent while the price index falls by 2 percent.
B)   increases by 5 percent while the price index rises by 2 percent.
C)   increases by 2 percent while the price index rises by 5 percent.
D)   increases by 2 percent while the price index falls by 5 percent.E) B) and D)
F) B) and C)

Question 4

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

Accepted Answer

A)   the GDP Price Index
B)   the Consumer Price Index
C)   the Retail Trade survey
D)   the Wholesale Price IndexE) B) and C)
F) B) and D)

Question 5

A trough in the business cycle occurs when

Accepted Answer

A)   cyclical unemployment is at a minimum point.
B)   employment and output reach their lowest levels.
C)   the natural rate of unemployment is at a minimum point.
D)   the inﬂation rate is at its lowest level.E) None of the above
F) A) and D)

Question 6

A recession is a decline in

Accepted Answer

A)   the inﬂation rate that lasts six months or longer.
B)   the unemployment rate that lasts six months or longer.
C)   real GDP that lasts six months or longer.
D)   potential GDP that lasts six months or longer.E) A) and D)
F) B) and C)

Question 7

Inﬂation initiated by increases in wages or other resource prices is labeled

Accepted Answer

A)   demand-pull inﬂation.
B)   demand-push inﬂation.
C)   cost-push inﬂation.
D)   cost-pull inﬂation.E) None of the above
F) B) and D)

Question 8

Oﬃcial unemployment statistics

Accepted Answer

A)   understate unemployment because individuals receiving unemployment compensation are counted as employed.
B)   understate unemployment because discouraged workers are not counted as unemployed.
C)   include cyclical and structural unemployment but not frictional unemployment.
D)   overstate unemployment because workers who are involuntarily working part time are counted as being employed.E) B) and C)
F) A) and B)

Question 9

What is an advantage of mild inﬂation according to some economists?

Accepted Answer

A)   It helps to close the GDP gap.
B)   It reduces the inﬂation premium.
C)   It makes it easier for ﬁrms to adjust real wages downward as demand for their products falls.
D)   It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive.E) All of the above
F) A) and B)

Question 10

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of

Accepted Answer

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

Question 11

Recently, a teachers' union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because
The teachers had received signiﬁcant increases in nominal income through collective bargaining.
Could the union statement be correct?

Accepted Answer

A)   No, because real income may rise if price increases are proportionately greater than the increases in nominal income.
B)   Yes, because real income may fall if price increases are proportionately smaller than the increases in nominal income.
C)   Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income.
D)   No, because real income may rise if price increases are proportionately greater than declines in nominal income.E) All of the above
F) B) and C)

Question 12

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)   medical services
D)   capital goods productionE) A) and B)
F) A) and C)

Question 13

The CPI compiled by the Bureau of Labor Statistics is used in the computations for

Accepted Answer

A)   the unemployment rate.
B)   the inﬂation rate.
C)   the interest rate.
D)   the foreign exchange rate.E) B) and D)
F) B) and C)

Question 14

During the Great Depression of the 1930s, U.S. real GDP fell by about ____ percent, in comparison to the ____ percent decline during the Great Recession of 2007-09.

Accepted Answer

A)   27; 4.3
B)   10; 7
C)   25; 20
D)   25; 30E) None of the above
F) B) and D)

Question 15

If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inﬂation was approximately

Accepted Answer

A)   5.5 percent.
B)   5.9 percent.
C)   6.3 percent.
D)   7.2 percent.E) C) and D)
F) A) and D)

Question 16

What are the primary effects of cost-push inﬂation?

Accepted Answer

A)   It raises real output and redistributes an increased level of real income.
B)   It reduces real output and redistributes a decreased level of real income.
C)   It raises real output but redistributes a decreased level of real income.
D)   It reduces real output but redistributes an increased level of real income.E) A) and B)
F) B) and D)

Question 17

Inﬂation affects

Accepted Answer

A)   both the level and the distribution of income.
B)   neither the level nor the distribution of income.
C)   the distribution, but not the level, of income.
D)   the level, but not the distribution, of income.E) A) and D)
F) All of the above

Question 18

Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high
and growing spending that produces high levels of output, full employment, and economic growth.

Accepted Answer

A) True 
 B)False

Question 19

The amount by which actual GDP falls short of potential GDP is one measure of the

Accepted Answer

A)   natural rate of unemployment.
B)   macroeconomic cost of unemployment.
C)   difference between real and nominal GDP.
D)   potential to produce outside the nation's PPC.E) A) and D)
F) B) and C)

Question 20

The unemployment rate of

Accepted Answer

A)   women greatly exceeds that of men.
B)   whites is roughly equal to that of African Americans.
C)   managerial and professional workers exceeds that of construction and extraction workers.
D)   teenagers is much higher than that of adults.E) B) and D)
F) C) and D)

Exam 9: Business Cycles, Unemployment, and Inflation

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of

Correct Answer
verified

During the Great Depression of the 1930s, U.S. real GDP fell by about percent, in comparison to the percent decline during the Great Recession of 2007-09.

Correct Answer
verified

Innovations such as the microchip and the Internet lead to business cycle variations because

Correct Answer
verified

The amount by which actual GDP falls short of potential GDP is one measure of the

Correct Answer
verified

A person's real income will increase by 3 percent if her nominal income

Correct Answer
verified

Unanticipated inﬂation tends to harm

Correct Answer
verified

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

Correct Answer
verified

What are the primary effects of cost-push inﬂation?

Correct Answer
verified

Inﬂation initiated by increases in wages or other resource prices is labeled

Correct Answer
verified

Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Correct Answer
verified

Correct Answer
verified

If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inﬂation was approximately

Correct Answer
verified

Inﬂation affects

Correct Answer
verified

A trough in the business cycle occurs when

Correct Answer
verified

The unemployment rate of

Correct Answer
verified

Oﬃcial unemployment statistics

Correct Answer
verified

A recession is a decline in

Correct Answer
verified

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

Correct Answer
verified

The CPI compiled by the Bureau of Labor Statistics is used in the computations for

Correct Answer
verified

What is an advantage of mild inﬂation according to some economists?

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of

Correct AnswerverifiedShow Answer

During the Great Depression of the 1930s, U.S. real GDP fell by about ____ percent, in comparison to the ____ percent decline during the Great Recession of 2007-09.

Correct AnswerverifiedShow Answer

Innovations such as the microchip and the Internet lead to business cycle variations because

Correct AnswerverifiedShow Answer

The amount by which actual GDP falls short of potential GDP is one measure of the

Correct AnswerverifiedShow Answer

A person's real income will increase by 3 percent if her nominal income

Correct AnswerverifiedShow Answer

Unanticipated inﬂation tends to harm

Correct AnswerverifiedShow Answer

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

Correct AnswerverifiedShow Answer

What are the primary effects of cost-push inﬂation?

Correct AnswerverifiedShow Answer

Inﬂation initiated by increases in wages or other resource prices is labeled

Correct AnswerverifiedShow Answer

Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inﬂation was approximately

Correct AnswerverifiedShow Answer

Inﬂation affects

Correct AnswerverifiedShow Answer

A trough in the business cycle occurs when

Correct AnswerverifiedShow Answer

The unemployment rate of

Correct AnswerverifiedShow Answer

Oﬃcial unemployment statistics

Correct AnswerverifiedShow Answer

A recession is a decline in

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

The CPI compiled by the Bureau of Labor Statistics is used in the computations for

Correct AnswerverifiedShow Answer

What is an advantage of mild inﬂation according to some economists?

Correct AnswerverifiedShow Answer

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verified

During the Great Depression of the 1930s, U.S. real GDP fell by about percent, in comparison to the percent decline during the Great Recession of 2007-09.

Correct Answer
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