Question 1

Core inflation refers to the inflation picture after stripping away the

Accepted Answer

A)  capital goods prices.
B)  food and energy prices.
C)  government-regulated prices.
D)  service-sector prices.E) B) and C)
F) A) and D)

Question 2

The presence of discouraged workers Learning Objective: 29-02 Illustrate how unemployment is measured and explain the different types of unemployment.Test Bank: I Topic: Unemployment

Accepted Answer

A)  increases the size of the labor force but does not affect the unemployment rate.
B)  reduces the size of the labor force but does not affect the unemployment rate.
C)  may cause the official unemployment rate to understate the true amount of unemployment.
D)  may cause the official unemployment rate to overstate the true amount of unemployment.E) All of the above
F) C) and D)

Question 3

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 B)
F) C) and D)

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

Which measure of inflation would include consumer goods and capital goods?

Accepted Answer

A)  the GDP Price Index
B)  the Consumer Price Index
C)  the Retail Trade Survey
D)  the Employment Cost IndexE) C) and D)
F) A) and C)

Question 6

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is

Accepted Answer

A)  $360 billion.
B)  $660 billion.
C)  $320 billion.
D)  $20 billion.E) None of the above
F) B) and D)

Question 7

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) All of the above
F) None of the above

Question 8

If the total population is 175 million, the labor force is 100 million, and 89 million workers are employed, then the unemployment rate is 11 percent.

Accepted Answer

A) True 
 B)False

Question 9

What has been the range for the duration in months of U.S.recessions between 1950 and 2009?

Accepted Answer

A)  2 months to 5 months
B)  6 months to 18 months
C)  19 months to 25 months
D)  26 months to 30 monthsE) All of the above
F) A) and B)

Question 10

A college graduate using the summer following graduation to search for a job would best be classified as

Accepted Answer

A)  not officially a member of the labor force.
B)  structurally unemployed.
C)  cyclically unemployed.
D)  frictionally unemployed.E) A) and D)
F) All of the above

Question 11

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be available.We can say that Susie is faced with

Accepted Answer

A)  seasonal unemployment.
B)  cyclical unemployment.
C)  structural unemployment.
D)  frictional unemployment.E) A) and B)
F) None of the above

Question 12

A recession is defined as a period in which

Accepted Answer

A)  cost-push inflation is present.
B)  nominal domestic output falls.
C)  demand-pull inflation is present.
D)  real domestic output falls.E) C) and D)
F) A) and B)

Question 13

Unanticipated inflation helps some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 14

In the 1920s, Germany after the First World War experienced an economic condition that can be best described as

Accepted Answer

A)  hyperinflation.
B)  cost-push inflation.
C)  unanticipated inflation.
D)  anticipated inflation.E) A) and B)
F) A) and C)

Question 15

Recurring upswings and downswings in an economy's real GDP over time are called

Accepted Answer

A)  recessions.
B)  business cycles.
C)  output yo-yos.
D)  total product oscillations.E) A) and B)
F) A) and C)

Question 16

If the Consumer Price Index for a certain year is 120, this means that the average price of consumer items in that year was

Accepted Answer

A)  20 percent higher than the average price in the base period 1982-84.
B)  about $120 per basket of consumer goods and services.
C)  120 percent higher than the average price in the base period 1982-84.
D)  20 percent higher than the average price of the preceding year.E) B) and C)
F) All of the above

Question 17

During a period of hyperinflation,

Accepted Answer

A)  creditors gain because their loans are repaid with dollars of higher value.
B)  people tend to hold goods rather than money.
C)  income is redistributed away from borrowers.
D)  the real value of the national currency rises.E) A) and B)
F) A) and C)

Question 18

Which of the following groups declares the start and end of recessions in the United States?

Accepted Answer

A)  the Business Cycle Monitoring Committee of the Federal Reserve System
B)  the Business Cycle Tracking Agency of the Department of Commerce
C)  the Business Cycle Dating Committee of the National Bureau of Economic Research
D)  the Committee on Business Cycles of the Council of Economic AdvisersE) All of the above
F) B) and C)

Question 19

If the GDP gap is positive, then

Accepted Answer

A)  the inflation rate is falling.
B)  the unemployment rate is rising.
C)  potential GDP is greater than actual GDP.
D)  actual GDP is greater than potential GDP.E) A) and C)
F) A) and B)

Question 20

A concern about negative nominal interest rates is that they will encourage more saving by people trying to compensate for the negative return on their money saved.

Accepted Answer

A) True 
 B)False

Exam 29: Business Cycles, Unemployment, and Inflation

Core inflation refers to the inflation picture after stripping away the

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A concern about negative nominal interest rates is that they will encourage more saving by people trying to compensate for the negative return on their money saved.

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If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is

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A college graduate using the summer following graduation to search for a job would best be classified as

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Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be available.We can say that Susie is faced with

Correct AnswerverifiedShow Answer

Unanticipated inflation helps some groups in the economy.

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During a period of hyperinflation,

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If the total population is 175 million, the labor force is 100 million, and 89 million workers are employed, then the unemployment rate is 11 percent.

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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

Correct AnswerverifiedShow Answer

In the 1920s, Germany after the First World War experienced an economic condition that can be best described as

Correct AnswerverifiedShow Answer

Which measure of inflation would include consumer goods and capital goods?

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What has been the range for the duration in months of U.S.recessions between 1950 and 2009?

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The natural rate of unemployment is the

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If the Consumer Price Index for a certain year is 120, this means that the average price of consumer items in that year was

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Which of the following groups declares the start and end of recessions in the United States?

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A recession is defined as a period in which

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If the GDP gap is positive, then

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The presence of discouraged workers Learning Objective: 29-02 Illustrate how unemployment is measured and explain the different types of unemployment.Test Bank: I Topic: Unemployment

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Recurring upswings and downswings in an economy's real GDP over time are called

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

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