Question 1

The natural rate of unemployment is:

Accepted Answer

A)  higher than the full-employment rate of unemployment.
B)  lower than the full-employment rate of unemployment.
C)  found by dividing total unemployment by the size of the labour force.
D)  that rate of unemployment occurring when the economy is at its potential output.E) A) and D)
F) A) and B)

Question 2

In 2018, the labour force in Canada constituted: Using Figure 9.2, what percentage of the total population of was in the labour force?

Accepted Answer

A)  50 percent of the total population.
B)  40 percent of the total population.
C)  60 percent of the total population.
D)  92 percent of the total population.E) None of the above
F) All of the above

Question 3

The GDP gap measures the:

Accepted Answer

A)  difference between NDI and GDP.
B)  amount by which potential GDP exceeds actual GDP.
C)  amount by which actual GDP exceeds NDI.
D)  amount by which nominal GDP exceeds real GDP.E) B) and C)
F) All of the above

Question 4

The presence of discouraged workers:

Accepted Answer

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

Question 5

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

Question 6

The following information is about a hypothetical economy: Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Members of underground economy = 6
Consumer Price Index = 110
Refer to the above information.If 6 members of the labour force are presently counted as part of the unemployed when in fact they are employed, the official unemployment rate is overstated by:

Accepted Answer

A)  0 percentage points.
B)  2 percentage points.
C)  7.5 percentage points.
D)  6 percentage points.E) B) and C)
F) None of the above

Question 7

Unanticipated inflation benefits debtors at the expense of creditors.

Accepted Answer

A) True 
 B)False

Question 8

In Year 1, the price level was 120 and the average nominal income was $30,000.In Year 2, the price level was 125 and the average nominal level of income was $32,000.What happened to real income from Year 1 to Year 2?

Accepted Answer

A)  It fell by $400.
B)  It rose by $400.
C)  It rose by $600.
D)  It rose by $2,000.E) C) and D)
F) None of the above

Question 9

As applied to the price level, the "rule of 70" indicates that the number of years required for the price to double can be found by:

Accepted Answer

A)  dividing "70" into the annual rate of inflation.
B)  dividing the annual rate of inflation into "70."
C)  subtracting the annual change in nominal incomes from "70."
D)  multiplying the annual rate of inflation by "70."E) A) and C)
F) A) and D)

Question 10

Real income can be determined by:

Accepted Answer

A)  dividing the price level by nominal income.
B)  inflating nominal income for inflation.
C)  dividing the annual rate of inflation into the number "70."
D)  dividing the nominal income by the price index.E) C) and D)
F) A) and B)

Question 11

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 C)
F) All of the above

Question 12

If the consumer price index was 170 in one year and 180 in the next year, then the rate of inflation from one year to the next was approximately:

Accepted Answer

A)  5.5 percent.
B)  5.9 percent.
C)  5.3 percent.
D)  7.2 percent.E) A) and B)
F) A) and C) B

Question 13

The type of unemployment associated with recessions is called:

Accepted Answer

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

Question 14

Demand-pull inflation:

Accepted Answer

A)  occurs when prices of resources rise, pushing up costs and the price level.
B)  occurs when total spending exceeds the economy's ability to provide output at the existing price level.
C)  occurs only when the economy has reached its absolute production capacity.
D)  is also called cost-push inflation.E) None of the above
F) B) and D)

Question 15

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following Canadian provinces had the highest decline in real GDP in 2016?

Accepted Answer

A)  Alberta
B)  Saskatchewan
C)  Yukon
D)  OntarioE) A) and B)
F) B) and C)

Question 18

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

Accepted Answer

A)  10 years
B)  12 years
C)  14 years
D)  16 yearsE) A) and B)
F) B) and C)

Question 19

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Accepted Answer

A)  structural
B)  cyclical
C)  frictional
D)  naturalE) A) and B)
F) None of the above B

Question 20

If the natural rate of unemployment was 7 percent, the current unemployment rate was 12 percent, and the nominal GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:

Accepted Answer

A)  $10 billion in potential output.
B)  $400 billion in potential output.
C)  $40 billion in potential output.
D)  $440 billion in potential output.E) A) and C)
F) None of the above

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

The natural rate of unemployment is:

Correct Answer
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In 2018, the labour force in Canada constituted: Using Figure 9.2, what percentage of the total population of was in the labour force?

Correct Answer
verified

The GDP gap measures the:

Correct Answer
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The presence of discouraged workers:

Correct Answer
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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
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Correct Answer
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Unanticipated inflation benefits debtors at the expense of creditors.

Correct Answer
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In Year 1, the price level was 120 and the average nominal income was $30,000.In Year 2, the price level was 125 and the average nominal level of income was $32,000.What happened to real income from Year 1 to Year 2?

Correct Answer
verified

As applied to the price level, the "rule of 70" indicates that the number of years required for the price to double can be found by:

Correct Answer
verified

Real income can be determined by:

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

If the consumer price index was 170 in one year and 180 in the next year, then the rate of inflation from one year to the next was approximately:

Correct Answer
verified
B

The type of unemployment associated with recessions is called:

Correct Answer
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C

Demand-pull inflation:

Correct Answer
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When unanticipated deflation occurs:

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

Correct Answer
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Which of the following Canadian provinces had the highest decline in real GDP in 2016?

Correct Answer
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If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

Correct Answer
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A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Correct Answer
verified
B

If the natural rate of unemployment was 7 percent, the current unemployment rate was 12 percent, and the nominal GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:

Correct Answer
verified

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

The natural rate of unemployment is:

Correct AnswerverifiedShow Answer

In 2018, the labour force in Canada constituted: Using Figure 9.2, what percentage of the total population of was in the labour force?

Correct AnswerverifiedShow Answer

The GDP gap measures the:

Correct AnswerverifiedShow Answer

The presence of discouraged workers:

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

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits debtors at the expense of creditors.

Correct AnswerverifiedShow Answer

In Year 1, the price level was 120 and the average nominal income was $30,000.In Year 2, the price level was 125 and the average nominal level of income was $32,000.What happened to real income from Year 1 to Year 2?

Correct AnswerverifiedShow Answer

As applied to the price level, the "rule of 70" indicates that the number of years required for the price to double can be found by:

Correct AnswerverifiedShow Answer

Real income can be determined by:

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

If the consumer price index was 170 in one year and 180 in the next year, then the rate of inflation from one year to the next was approximately:

Correct AnswerverifiedB

The type of unemployment associated with recessions is called:

Correct AnswerverifiedC

Demand-pull inflation:

Correct AnswerverifiedShow Answer

When unanticipated deflation occurs:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following Canadian provinces had the highest decline in real GDP in 2016?

Correct AnswerverifiedShow Answer

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

Correct AnswerverifiedShow Answer

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Correct AnswerverifiedB

If the natural rate of unemployment was 7 percent, the current unemployment rate was 12 percent, and the nominal GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:

Correct AnswerverifiedShow Answer

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B

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C

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B

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