Question 1

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

Question 2

If Ernie's annual real income rises by 8 percent each year, his annual real income will double in about:

Accepted Answer

A)  8-9 years.
B)  10-11 years.
C)  5-6 years.
D)  19-20 years.E) C) and D)
F) None of the above

Question 3

During the Great Recession of 2008 - 2009 in Canada:

Accepted Answer

A)  burden of unemployment was quite evenly distributed among males and females, and young and old workers.
B)  unemployment rate for teenagers was below the rate for the labour force as a whole.
C)  unemployment rate for women was considerably higher than that for men.
D)  unemployment rate for women was lower than the rate for men.E) A) and D)
F) A) and B)

Question 4

Unemployment that occurs when there is a decline in total spending is called:

Accepted Answer

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

Question 5

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) A) and B)

Question 6

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

Question 7

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

Question 8

The official unemployment rate:

Accepted Answer

A)  involves people over 15 years of age who are not currently seeking employment.
B)  is the ratio of unemployed to employed workers.
C)  is the percentage of the labour force which is unemployed.
D)  is the percentage of the total population which is not working.E) A) and D)
F) C) and D)

Question 9

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

Accepted Answer

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

Question 10

People who work part time, but desire to work full time, are considered to be officially unemployed.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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) A) and D)
F) B) and C)

Question 13

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%.But, if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

Accepted Answer

A)  2 percent.
B)  4 percent.
C)  6 percent.
D)  10 percent.E) A) and C)
F) B) and D)

Question 14

To limit the loss of purchasing power from inflation:

Accepted Answer

A)  people increase the amount of money they hold as cash.
B)  people limit the amount of money they hold as cash.
C)  people do not spend their money.
D)  people limit the amount of goods and services they buy.E) A) and C)
F) B) and C)

Question 15

Demand-pull inflation:

Accepted Answer

A)  can occur before the economy has reached its full-employment output.
B)  can occur only after the economy has reached its full-employment output.
C)  can be present even during an economic depression.
D)  is self-limiting.E) A) and B)
F) A) and D)

Question 16

Which of the following formulas is correct? Percentage change in:

Accepted Answer

A)  price level approximates percentage change in real income minus percentage change in nominal income.
B)  real income approximates percentage change in nominal income minus percentage change in price level.
C)  nominal income approximates percentage change in price level minus percentage change in real income.
D)  real income approximates percentage change in price level minus percentage change in nominal income.E) B) and C)
F) A) and D)

Question 17

During a serious recession we would expect output to fall the most in:

Accepted Answer

A)  the alcoholic beverage industry.
B)  the clothing industry.
C)  agriculture industry.
D)  the machinery and equipment industry.E) A) and B)
F) B) and C)

Question 18

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

Question 19

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 B)
F) A) and C)

Question 20

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

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

During the Great Recession of 2008 - 2009 in Canada:

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During a serious recession we would expect output to fall the most in:

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People who work part time, but desire to work full time, are considered to be officially unemployed.

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Which of the following formulas is correct? Percentage change in:

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Unemployment that occurs when there is a decline in total spending is called:

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

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Which of the following is not correct?

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To limit the loss of purchasing power from inflation:

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

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With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%.But, if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

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Structural unemployment:

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

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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:

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If Ernie's annual real income rises by 8 percent each year, his annual real income will double in about:

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Cost-push inflation could be explained by:

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

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Demand-pull inflation:

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The official unemployment rate:

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

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