Question 1

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 D)
F) A) and C)

Question 2

Most economists believe that the immediate cause of cyclical changes in the levels of real output and employment is:

Accepted Answer

A)   the changes in productivity.
B)   the changes in technology.
C)   the changes in the level of total spending.
D)   the changes in the money supply.E) A) and B)
F) All of the above

Question 3

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

Question 4

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) A) and C)

Question 5

The sequence of events by which inflation can reduce output is:

Accepted Answer

A)   as prices rise, the quantity of goods and services demanded increases, the firms therefore, produce more output which causes the unemployment to increase.
B)   as prices rise, the quantity of goods and services demanded increases, the firms therefore, produce more output which causes the unemployment to decrease.
C)   as prices rise, the quantity of goods and services demanded falls, the firms therefore, produce less output which causes the unemployment to increase.
D)   as prices rise, the quantity of goods and services demanded falls, the firms therefore, produce less output which causes the unemployment to decrease.E) B) and C)
F) A) and B)

Question 6

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 D)
F) B) and C)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Inflation initiated by increases in wages or other resource prices is labelled:

Accepted Answer

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

Question 9

A worker would be hurt least by inflation when the:

Accepted Answer

A)   worker anticipates inflation and increases savings at the bank.
B)   worker is protected by a cost-of-living adjustment clause in an employment contract.
C)   worker is protected by fixed annual increases in wages and benefits in an employment contract.
D)   government increases the level of social security retirement benefits to correct for the effects of anticipated inflation.E) B) and C)
F) A) and B)

Question 10

The type of unemployment associated with recessions is called:

Accepted Answer

A)   frictional unemployment.
B)   structural unemployment.
C)   cyclical unemployment.
D)   seasonal unemployment.E) C) and D)
F) All of the above

Question 11

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

Question 12

Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

Accepted Answer

A)   is 3 percent.
B)   is 6 percent.
C)   is 7 percent.
D)   is 9 percent.E) None of the above
F) A) and B)

Question 13

The labour force includes:

Accepted Answer

A)   employed workers and persons who are officially unemployed.
B)   employed workers, but excludes persons who are officially unemployed.
C)   full-time workers, but excludes part-time workers.
D)   permanent employees, but excludes temporary employees.E) B) and D)
F) B) and C)

Question 14

When unanticipated deflation occurs:

Accepted Answer

A)   creditors and people with fixed income benefit.
B)   both creditors and debtors are hurt.
C)   both debtors and creditors benefit.
D)   people with fixed income benefit but creditors are hurt.E) A) and C)
F) A) and B)

Question 15

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) All of the above
F) None of the above

Question 16

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 frictionally unemployed?

Accepted Answer

A)   Mollie
B)   George
C)   Jeanette
D)   RyanE) A) and D)
F) B) and C)

Question 17

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:

Accepted Answer

A)   both lenders and borrowers benefit.
B)   both lenders and borrowers are hurt.
C)   borrowers are hurt, but lenders benefit.
D)   lenders are hurt, but borrowers benefit.E) B) and D)
F) None of the above

Question 18

An annual rate of inflation of 7 percent will double the price level in about 15 years.

Accepted Answer

A) True 
 B)False

Question 19

"Depression means idleness. And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the:

Accepted Answer

A)   consequences of the hyperinflation that accompanies a recession.
B)   reasons for the natural rate of unemployment.
C)   noneconomic costs of unemployment.
D)   characteristics of structural unemployment.E) A) and B)
F) All of the above

Question 20

The phase of the business cycle in which real domestic output declines is called:

Accepted Answer

A)   the peak.
B)   an expansion.
C)   a recession.
D)   the trough.E) All of the above
F) B) and C)

Exam 7: Business Cycles, Unemployment, and Inflation

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

Correct Answer
verified

The type of unemployment associated with recessions is called:

Correct Answer
verified

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

Correct Answer
verified

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:

Correct Answer
verified

When unanticipated deflation occurs:

Correct Answer
verified

Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

Correct Answer
verified

The sequence of events by which inflation can reduce output is:

Correct Answer
verified

The phase of the business cycle in which real domestic output declines is called:

Correct Answer
verified

Most economists believe that the immediate cause of cyclical changes in the levels of real output and employment is:

Correct Answer
verified

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

Correct Answer
verified

Inflation initiated by increases in wages or other resource prices is labelled:

Correct Answer
verified

An annual rate of inflation of 7 percent will double the price level in about 15 years.

Correct Answer
verified

Correct Answer
verified

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

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

"Depression means idleness. And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the:

Correct Answer
verified

The labour force includes:

Correct Answer
verified

A worker would be hurt least by inflation when the:

Correct Answer
verified

In what circumstances would lenders most benefit?

Correct Answer
verified

If the Consumer Price index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

Correct Answer
verified

Exam 7: Business Cycles, Unemployment, and Inflation

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

Correct AnswerverifiedShow Answer

The type of unemployment associated with recessions is called:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:

Correct AnswerverifiedShow Answer

When unanticipated deflation occurs:

Correct AnswerverifiedShow Answer

Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

Correct AnswerverifiedShow Answer

The sequence of events by which inflation can reduce output is:

Correct AnswerverifiedShow Answer

The phase of the business cycle in which real domestic output declines is called:

Correct AnswerverifiedShow Answer

Most economists believe that the immediate cause of cyclical changes in the levels of real output and employment is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Inflation initiated by increases in wages or other resource prices is labelled:

Correct AnswerverifiedShow Answer

An annual rate of inflation of 7 percent will double the price level in about 15 years.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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

"Depression means idleness. And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the:

Correct AnswerverifiedShow Answer

The labour force includes:

Correct AnswerverifiedShow Answer

A worker would be hurt least by inflation when the:

Correct AnswerverifiedShow Answer

In what circumstances would lenders most benefit?

Correct AnswerverifiedShow Answer

If the Consumer Price index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

Correct AnswerverifiedShow Answer

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