Question 1

The complexity in recognizing the type of inflation:

Accepted Answer

A)  arises because demand-pull inflation always follows the cost-push inflation.
B)  arises because sometimes the original source of inflation is unknown.
C)  arises because cost-push inflation always follows the demand-pull inflation.
D)  arises because demand-pull inflation is self-limiting while cost-push inflation will continue as long as there is excess spending.E) A) and D)
F) A) and C)

Question 2

The production of durable goods varies more than the production of nondurable goods because:

Accepted Answer

A)  durables purchases are non-postponable.
B)  durables purchases are postponable.
C)  nondurables purchases are postponable.
D)  durables purchases and nondurable purchases are both non- postponable.E) All of the above
F) A) and B)

Question 3

If average nominal income was about $15,000 and the price level index was 118, then average real income would be about:

Accepted Answer

A)  $11,146
B)  $12,712
C)  $13,385
D)  $14,249E) A) and B)
F) B) and C)

Question 4

The production of durable goods is more stable than the production of nondurables over the business cycle.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Unanticipated inflation tends to penalize:

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 which have a progressive personal income tax.E) C) and D)
F) A) and B)

Question 7

Cost-push inflation:

Accepted Answer

A)  is caused by excessive total spending.
B)  shifts the nation's production possibilities curve leftward.
C)  moves the economy inward from its production possibilities curve.
D)  is a mixed blessing because it has positive effects on real output and employment.E) A) and B)
F) A) and C)

Question 8

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy.Five million of the part-time workers switch to full-time work.We can conclude that:

Accepted Answer

A)  the official unemployment rate will fall.
B)  the official unemployment rate will rise.
C)  the official unemployment rate will remain unchanged.
D)  the size of the labour force will increase.E) A) and B)
F) A) and C)

Question 9

The rate of unemployment tends to be lower the:

Accepted Answer

A)  slower the economy grows.
B)  the younger the workers are.
C)  lower are the education level and the skill of workers.
D)  higher are the education level and the skill of workers.E) All of the above
F) A) and D)

Question 10

The consumer price index:

Accepted Answer

A)  uses a fixed market basket set in the base year for all subsequent years.
B)  is also called the GDP price index.
C)  measures changes in the prices of a market basket of some 50,000 goods and services.
D)  is adjusted annually for changes in consumer spending patterns.E) B) and C)
F) All of the above

Question 11

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) A) and C)

Question 12

If the price index rose from 254 in year 1 to 289 in year 2, then the rate of inflation for this economy in year 2 would be:

Accepted Answer

A)  11.3 percent.
B)  13.78 percent.
C)  89 percent.
D)  35 percent.E) B) and C)
F) C) and D)

Question 13

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 is structurally unemployed?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) None of the above
F) A) and B)

Question 14

A nation has a population of 300 million people.Of these, 80 million are retired, in the military, in institutions, or under 15 years old.There are 210 million who are employed.What is the unemployment rate?

Accepted Answer

A)  3.3 percent
B)  3.6 percent
C)  4.5 percent
D)  5.2 percentE) A) and B)
F) A) and C)

Question 15

In the expansion phase of a business cycle:

Accepted Answer

A)  the inflation rate decreases, but productive capacity increases.
B)  the inflation rate and productive capacity decrease.
C)  employment increases, but output decreases.
D)  employment and output increase.E) B) and C)
F) A) and C)

Question 16

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

Question 17

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Accepted Answer

A)  The euro
B)  The Canadian dollar
C)  The United States dollar
D)  The Indian rupeeE) B) and C)
F) A) and C)

Question 18

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Accepted Answer

A)  the changes in population, innovations and money supply.
B)  the changes in the level of total spending, productivity, irregular innovations and money supply.
C)  the changes in the population.
D)  the changes in the standards of living.E) A) and B)
F) A) and C)

Question 19

The natural rate of unemployment is the:

Accepted Answer

A)  unemployment rate experienced at the depth of a depression.
B)  full-employment unemployment rate.
C)  unemployment rate experienced by the least-skilled workers in the economy.
D)  unemployment rate experienced by the most-skilled workers in the economy.E) A) and D)
F) A) and B)

Question 20

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Accepted Answer

A)  $17,343
B)  $18,521
C)  $19,481
D)  $20,955E) C) and D)
F) B) and C)

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

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

Correct Answer
verified

The consumer price index:

Correct Answer
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Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Correct Answer
verified

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

Correct Answer
verified

The production of durable goods is more stable than the production of nondurables over the business cycle.

Correct Answer
verified

If the price index rose from 254 in year 1 to 289 in year 2, then the rate of inflation for this economy in year 2 would be:

Correct Answer
verified

The rate of unemployment tends to be lower the:

Correct Answer
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Unanticipated inflation tends to penalize:

Correct Answer
verified

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Correct Answer
verified

The complexity in recognizing the type of inflation:

Correct Answer
verified

The production of durable goods varies more than the production of nondurable goods because:

Correct Answer
verified

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct Answer
verified

Cost-push inflation could be explained by:

Correct Answer
verified

The natural rate of unemployment is the:

Correct Answer
verified

A nation has a population of 300 million people.Of these, 80 million are retired, in the military, in institutions, or under 15 years old.There are 210 million who are employed.What is the unemployment rate?

Correct Answer
verified

In the expansion phase of a business cycle:

Correct Answer
verified

If average nominal income was about $15,000 and the price level index was 118, then average real income would be about:

Correct Answer
verified

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy.Five million of the part-time workers switch to full-time work.We can conclude that:

Correct Answer
verified

Cost-push inflation:

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The consumer price index:

Correct AnswerverifiedShow Answer

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The production of durable goods is more stable than the production of nondurables over the business cycle.

Correct AnswerverifiedShow Answer

If the price index rose from 254 in year 1 to 289 in year 2, then the rate of inflation for this economy in year 2 would be:

Correct AnswerverifiedShow Answer

The rate of unemployment tends to be lower the:

Correct AnswerverifiedShow Answer

Unanticipated inflation tends to penalize:

Correct AnswerverifiedShow Answer

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Correct AnswerverifiedShow Answer

The complexity in recognizing the type of inflation:

Correct AnswerverifiedShow Answer

The production of durable goods varies more than the production of nondurable goods because:

Correct AnswerverifiedShow Answer

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct AnswerverifiedShow Answer

Cost-push inflation could be explained by:

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the:

Correct AnswerverifiedShow Answer

A nation has a population of 300 million people.Of these, 80 million are retired, in the military, in institutions, or under 15 years old.There are 210 million who are employed.What is the unemployment rate?

Correct AnswerverifiedShow Answer

In the expansion phase of a business cycle:

Correct AnswerverifiedShow Answer

If average nominal income was about $15,000 and the price level index was 118, then average real income would be about:

Correct AnswerverifiedShow Answer

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy.Five million of the part-time workers switch to full-time work.We can conclude that:

Correct AnswerverifiedShow Answer

Cost-push inflation:

Correct AnswerverifiedShow Answer

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