CH 11. QUIZ

Which is not one of society's major economic goals?

a. Maintaining employment at high levels b. Maintaining prices at a stable level c. Maintaining a high rate of economic growth **d. All of the above are major economic goals of society.

High rates of unemployment

a. can lead to increased tensions and despair. b. result in the loss of some potential output in society. c. reduce the possible level of consumption in society. d. represent a loss of efficiency in society. ** e. All of the above are true.

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle in order are

a. expansion, peak, contraction, and trough

The official unemployment rate may overstate the extent of unemployment because

a. it excludes discouraged workers. b. it counts part-time workers as fully employed. c. it does not count those with jobs in the underground economy as employed. d. it includes those who claim to be looking for work as unemployed, even if they are just going through the motions in order to get government benefits. ** e. of both c. and d.

The largest fraction of those counted as unemployed is due to

a. job losers.

The costs of inflation include

a. menu costs. b. shoe-leather costs. c. a distortion of price signals. **d. all of the above.

In the contraction phase of the business cycle,

a. output is rising. b. unemployment is falling. c. consumer and business confidence are high. d. investment is rising. ** e. none of the above is true.

The contractionary phase of the business cycle is characterized by

a. reduced output and increased unemployment

Inflation that is greater than expected can harm

a. retirees on fixed pensions. b. borrowers who have long-term fixed interest rate loans. c. wage earners whose incomes grow slower than inflation. ** d. either a. or c.

If unemployment benefits increase, leading more people to claim to be seeking work when they are not really seeking work, the measured unemployment rate will

a. rise

The unemployment rate is the number of people officially unemployed divided by

a. the civilian labor force.

If a nation's labor force receives a significant influx of young workers,

a. the natural rate of unemployment is likely to increase

Frictional unemployment is

a. unemployment that is due to normal turnover in the labor market.

In Littletown, the population includes 1,000 people over the age of 16; 800 are in the labor force, and 600 are employed. The unemployment rate is

b. 25 percent.

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, the number of people employed is equal to

b. 94 million

The civilian labor force includes which of the following groups?

b. Those who are currently working part time

The labor force consists of

b. all persons over the age of 16 who are working or actively seeking work.

Discouraged workers

b. are considered as not in the labor force.

Unexpected increases in inflation generally benefits

b. borrowers

Unemployment caused by a contraction in the economy is called

b. cyclical unemployment.

The unemployment rate may underestimate the true extent of unemployment if

b. many people become discouraged and cease looking for work

Persons who do not have jobs and who do not look for work are considered

b. out of the labor force

Which of these groups tends to have the lowest unemployment rate?

c. College graduates

Which of the following is false?

c. If unemployment is greater than its natural rate, the economy is producing at greater than its potential output.

When would consumers and producers experience increased difficulty in coordinating their plans and decisions?

c. In a period of either inflation or deflation

A federal program aimed at retraining the unemployed workers of the declining auto and steel industries is designed to reduce which type of unemployment?

c. Structural

With regard to macroeconomic goals, which is not true?

c. Virtually everyone views the increase in potential consumption that economic growth allows.

After looking for a job for more than eight months, Kyle became frustrated and stopped looking. Economists view Kyle as

c. a discouraged worker

If people correctly anticipate inflation, it will

c. benefit neither borrowers nor lenders.

When an economy is operating at full employment,

c. cyclical unemployment will equal zero.

Inflation will be least harmful to society if

c. it is correctly anticipated and interest rates adjust accordingly

The three major macroeconomic goals of nearly every society are

c. maintaining stable prices, maintaining high levels of employment, and achieving high rates of economic growth

According to the Bureau of Labor Statistics, the four main categories of unemployed workers are

c. new entrants, job losers, job leavers, and reentrants

Economic growth is most commonly measured by changes in

c. real GDP per capita

When unemployment rises above the natural rate, it reflects the existence of __________ unemployment.

d. cyclical

The natural rate of unemployment would increase when which of the following increases?

e. Either frictional or structural unemployment