Question 1

In calculating the unemployment rate, part-time workers are:

Accepted Answer

A)   Counted as unemployed because they are not working full-time
B)   Counted as employed because they are receiving payment for work
C)   Used to determine the size of the labor force, but not the unemployment rate
D)   Treated the same as "discouraged" workers who are not actively seeking employmentE) B) and D)
F) C) and D)

Question 2

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 taxE) None of the above
F) B) and D)

Question 3

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 increaseE) B) and D)
F) A) and B)

Question 4

Only two resources, capital and labor, are used in an economy to produce an output of 600 million units. If the total cost of capital resources is $300 million and the total cost of labor resources is $100 million, then the per-unit production costs in this economy are:

Accepted Answer

A)   $0.67
B)   $1.50
C)   $2.00
D)   $3.00E) None of the above
F) B) and D)

Question 5

When there is demand-pull inflation, people's total spending in the economy will be falling.

Accepted Answer

A) True 
 B)False

Question 6

Full-time homemakers and retirees are classified in the BLS data as:

Accepted Answer

A)   Employed
B)   Unemployed
C)   Part of the labor force
D)   Not in the labor forceE) None of the above
F) A) and B)

Question 7

Official unemployment rate statistics may:

Accepted Answer

A)   Overstate the amount of unemployment by including part-time workers in the calculations
B)   Understate the amount of unemployment by excluding part-time workers in the calculations
C)   Overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment
D)   Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employmentE) A) and C)
F) B) and C)

Question 8

When total input costs rise slower than the total units of output produced, then the per-unit production costs:

Accepted Answer

A)   Will decrease
B)   Will increase
C)   Would be unaffected
D)   May either increase or decreaseE) A) and D)
F) All of the above

Question 9

Inflation means that the prices of all items in the economy are increasing.

Accepted Answer

A) True 
 B)False

Question 10

The natural rate of unemployment:

Accepted Answer

A)   Means that the economy will always operate at that rate
B)   Means that the economy will always realize its potential output
C)   Is equal to the total of frictional and structural unemployment
D)   Is a fixed unemployment rate that does not change over timeE) All of the above
F) A) and D)

Question 11

Inflation rates in the U.S. reached double-digit rates in the:

Accepted Answer

A)   1960's
B)   1970's
C)   1990's
D)   2000'sE) A) and C)
F) None of the above

Question 12

Which statement is correct?

Accepted Answer

A)   All sectors of the economy are affected to similar degrees by business fluctuations
B)   Real output and employment generally show little variance over the business cycle
C)   The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle
D)   Recessions have not been severe because economists and statisticians have been able to predict their occurrence and intensity with high accuracyE) C) and D)
F) A) and B)

Question 13

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%. But if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

Accepted Answer

A)   2 percent
B)   4 percent
C)   6 percent
D)   10 percentE) None of the above
F) B) and D)

Question 14

When unanticipated deflation occurs:

Accepted Answer

A)   Both creditors and debtors benefit
B)   Both creditors and debtors are hurt
C)   Debtors are hurt, but creditors benefit
D)   Creditors are hurt, but debtors benefitE) A) and B)
F) A) and C)

Question 15

The economy has an annual inflation rate of 3.5%. It will take approximately how many years for the price level to double?

Accepted Answer

A)   10 years
B)   20 years
C)   25 years
D)   30 yearsE) All of the above
F) B) and C)

Question 16

Recently a teachers' union argued that the standard of living of teachers working for the school district was falling. The negotiating team for the school board replied that this was not true because the teachers had received significant increases in nominal income through collective bargaining. Could the union statement be correct?

Accepted Answer

A)   No, because real income may rise if price increases are proportionately greater than the increases in nominal income
B)   Yes, because real income may fall if price increases are proportionately smaller than the increases in nominal income
C)   Yes, because real income may fall if price increases are proportionately greater than the increases in nominal income
D)   No, because real income may rise if price increases are proportionately greater than declines in nominal incomeE) A) and B)
F) A) and C)

Question 17

Economists who are willing to accept mild inflation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following groups declares the start and end of recessions in the U.S.?

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

Question 19

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the:

Accepted Answer

A)   Level of total spending
B)   Rate of unemployment
C)   Rate of inflation
D)   Stock market price indexesE) None of the above
F) All of the above

Question 20

Unanticipated inflation benefits creditors and savers.

Accepted Answer

A) True 
 B)False

Exam 9: Business Cycles, Unemployment, and Inflation

Unanticipated inflation tends to penalize:

Correct Answer
verified

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%. But if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

Correct Answer
verified

When there is demand-pull inflation, people's total spending in the economy will be falling.

Correct Answer
verified

When total input costs rise slower than the total units of output produced, then the per-unit production costs:

Correct Answer
verified

The economy has an annual inflation rate of 3.5%. It will take approximately how many years for the price level to double?

Correct Answer
verified

Inflation rates in the U.S. reached double-digit rates in the:

Correct Answer
verified

When unanticipated deflation occurs:

Correct Answer
verified

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the:

Correct Answer
verified

Which of the following groups declares the start and end of recessions in the U.S.?

Correct Answer
verified

Official unemployment rate statistics may:

Correct Answer
verified

Full-time homemakers and retirees are classified in the BLS data as:

Correct Answer
verified

In calculating the unemployment rate, part-time workers are:

Correct Answer
verified

Unanticipated inflation benefits creditors and savers.

Correct Answer
verified

In the expansion phase of a business cycle:

Correct Answer
verified

Correct Answer
verified

Inflation means that the prices of all items in the economy are increasing.

Correct Answer
verified

Economists who are willing to accept mild inflation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Correct Answer
verified

The natural rate of unemployment:

Correct Answer
verified

Only two resources, capital and labor, are used in an economy to produce an output of 600 million units. If the total cost of capital resources is $300 million and the total cost of labor resources is $100 million, then the per-unit production costs in this economy are:

Correct Answer
verified

Which statement is correct?

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

Unanticipated inflation tends to penalize:

Correct AnswerverifiedShow Answer

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%. But if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

Correct AnswerverifiedShow Answer

When there is demand-pull inflation, people's total spending in the economy will be falling.

Correct AnswerverifiedShow Answer

When total input costs rise slower than the total units of output produced, then the per-unit production costs:

Correct AnswerverifiedShow Answer

The economy has an annual inflation rate of 3.5%. It will take approximately how many years for the price level to double?

Correct AnswerverifiedShow Answer

Inflation rates in the U.S. reached double-digit rates in the:

Correct AnswerverifiedShow Answer

When unanticipated deflation occurs:

Correct AnswerverifiedShow Answer

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the:

Correct AnswerverifiedShow Answer

Which of the following groups declares the start and end of recessions in the U.S.?

Correct AnswerverifiedShow Answer

Official unemployment rate statistics may:

Correct AnswerverifiedShow Answer

Full-time homemakers and retirees are classified in the BLS data as:

Correct AnswerverifiedShow Answer

In calculating the unemployment rate, part-time workers are:

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits creditors and savers.

Correct AnswerverifiedShow Answer

In the expansion phase of a business cycle:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Inflation means that the prices of all items in the economy are increasing.

Correct AnswerverifiedShow Answer

Economists who are willing to accept mild inflation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Correct AnswerverifiedShow Answer

The natural rate of unemployment:

Correct AnswerverifiedShow Answer

Only two resources, capital and labor, are used in an economy to produce an output of 600 million units. If the total cost of capital resources is $300 million and the total cost of labor resources is $100 million, then the per-unit production costs in this economy are:

Correct AnswerverifiedShow Answer

Which statement is correct?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified