Question 1

When the Canadian economy has achieved "full employment," the unemployment rate is at or below:

Accepted Answer

A)  7 percent.
B)  4.0 percent.
C)  3.3 percent.
D)  2.5 percent.E) B) and C)
F) A) and D)

Question 2

The consumer price index was 247 in year 1 and 272 in year 2.The rate of inflation in year 2 was about:

Accepted Answer

A)  12 percent.
B)  10 percent.
C)  8 percent.
D)  6 percent.E) None of the above
F) A) and B)

Question 3

Okun's law indicates that for:

Accepted Answer

A)  every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, there is a generated 2 percent GDP gap.
B)  every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, there is a generated 5 percent GDP gap.
C)  a 5 percent GDP gap, there is a generated 1 percent increase in the natural unemployment rate.
D)  a 2 percent GDP gap, there is a generated 2 percent increase in the actual unemployment rate.E) A) and B)
F) B) and D)

Question 4

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 C)
F) A) and B)

Question 5

The unemployment rate of:

Accepted Answer

A)  women greatly exceeds that of men.
B)  retired persons is more than that of women.
C)  white-collar workers exceeds that of blue-collar workers.
D)  teenagers is much higher than that of adults.E) All of the above
F) C) and D)

Question 6

Which statement about inflation is correct?

Accepted Answer

A)  Families are always hurt by inflation.
B)  Inflation "subsidizes" those who receive relatively fixed money income.
C)  The redistributive effects of inflation are arbitrary with respect to people and groups in society.
D)  Inflation will decrease the real value of property assets and increase the real value of fixed-value assets.E) A) and B)
F) A) and C)

Question 7

Dr.Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in P.E.I.That year, Professor Simpson would be officially counted as:

Accepted Answer

A)  structurally unemployed.
B)  frictionally unemployed.
C)  not in the labour force.
D)  employed.E) C) and D)
F) A) and D)

Question 8

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130.The person's real income will:

Accepted Answer

A)  fall by about 1 percent.
B)  remain constant.
C)  rise by about 4 percent.
D)  rise by about 1 percent.E) B) and C)
F) B) and D)

Question 9

Inflation means:

Accepted Answer

A)  all prices are rising, but at different rates.
B)  all prices are rising and at the same rate.
C)  each unit of a currency (such as Canadian dollar)  buys more goods and services.
D)  the continual rise in the general level of prices.E) B) and C)
F) B) and D)

Question 10

The consumer price index (CPI) :

Accepted Answer

A)  is an average of the prices of all consumer goods purchased each year.
B)  measures changes in the prices of a market basket of some 600 goods and services purchased by urban consumers.
C)  measures prices of goods, but not services since services don't fit into a market basket.
D)  is also known as the GDP price index.E) B) and D)
F) None of the above

Question 11

In 2017, the number of people who worked part-time was:

Accepted Answer

A)  3.3 million.
B)  4.5 million.
C)  2.5 million.
D)  1.1 million.E) All of the above
F) B) and D)

Question 12

In what circumstances would lenders most benefit?

Accepted Answer

A)  when there is an unanticipated decrease in inflation
B)  when there is an anticipated increase in inflation
C)  when there is an unanticipated increase in inflation
D)  when there is an anticipated decrease in inflationE) A) and D)
F) A) and B)

Question 13

Unanticipated inflation arbitrarily:

Accepted Answer

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

Question 14

If the natural rate of unemployment is 6 percent and the actual unemployment rate is 9 percent, then Okun's law indicates that the GDP gap is:

Accepted Answer

A)  2 percent.
B)  3 percent.
C)  4 percent.
D)  6 percent.E) All of the above
F) A) and B)

Question 15

At the economy's natural rate of unemployment:

Accepted Answer

A)  the economy achieves its potential output.
B)  there is only a relatively small amount of cyclical unemployment.
C)  only frictional unemployment exists.
D)  none of the above are true.E) A) and D)
F) B) and C)

Question 16

Which of the following countries experienced hyperinflation after World War II?

Accepted Answer

A)  Japan
B)  Germany
C)  Canada
D)  United KingdomE) B) and C)
F) A) and B)

Question 17

If both the real interest rate and the nominal interest rate are 3 percent, then the:

Accepted Answer

A)  inflation premium is zero.
B)  real GDP must exceed the nominal GDP.
C)  nominal GDP must exceed real GDP.
D)  inflation premium also is 3 percent.E) A) and B)
F) A) and C)

Question 18

Core inflation refers to the:

Accepted Answer

A)  underlying increases in the CPI after volatile food and energy prices are removed.
B)  underlying decreases in the CPI after volatile durable goods prices are removed.
C)  underlying increases for goods and services bought by businesses only.
D)  overall inflation rate for consumers and not businesses.E) A) and C)
F) B) and D)

Question 19

Which of the following statements is correct? Unanticipated inflation:

Accepted Answer

A)  arbitrarily "taxes" fixed-income groups.
B)  increases the real value of savings.
C)  increases the purchasing power of the dollar.
D)  benefits creditors at the expense of debtors.E) None of the above
F) A) and B)

Question 20

In defending a mild inflation rate in the economy, the proponents argue that a mild inflation is a by-product of strong spending, and as a result:

Accepted Answer

A)  high spending generates high profit, strong demand for labour and, a great incentive for firms to expand their production capacity.
B)  high spending generates high profit, less need for labour and, a great incentive for firms to cut back production.
C)  high spending increases the general price level, increase in the cost of labour and this would result in cost push inflation.
D)  even a low inflation rate reduces the real output, employment and the profits of the firms.E) A) and B)
F) B) and D)

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

The consumer price index (CPI) :

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In what circumstances would lenders most benefit?

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If both the real interest rate and the nominal interest rate are 3 percent, then the:

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Core inflation refers to the:

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In 2017, the number of people who worked part-time was:

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Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130.The person's real income will:

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Which of the following statements is correct? Unanticipated inflation:

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The consumer price index was 247 in year 1 and 272 in year 2.The rate of inflation in year 2 was about:

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Which of the following countries experienced hyperinflation after World War II?

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Inflation affects:

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At the economy's natural rate of unemployment:

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The unemployment rate of:

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When the Canadian economy has achieved "full employment," the unemployment rate is at or below:

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If the natural rate of unemployment is 6 percent and the actual unemployment rate is 9 percent, then Okun's law indicates that the GDP gap is:

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Okun's law indicates that for:

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In defending a mild inflation rate in the economy, the proponents argue that a mild inflation is a by-product of strong spending, and as a result:

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Dr.Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in P.E.I.That year, Professor Simpson would be officially counted as:

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Inflation means:

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Which statement about inflation is correct?

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Unanticipated inflation arbitrarily:

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