Economics-Chapter 12 Practice Quiz

The increase in the overall level of prices in the economy is called: the inflation rate. the growth rate of GDP. the interest rate. GDP. GDP per capita.

the inflation rate.

Inflation occurs when: all prices in the economy fall. the overall level of prices rises. all prices in the economy rise. the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases. the prices of some goods rise and prices of some goods fall, but more goods have price increases than decreases.

the overall level of prices rises

Consider the following data to answer the five questions that follow. Which two countries have the same average living standard? A and E C and E C and D B and C A and B

B and C

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the three questions that follow. The market value of pizza is: $250 million. $2.5 million. $750 million. $10 million. $25 million.

$250 million.

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the three questions that follow. The market value of cell phones is: $100 million. $500 million. $20 million. $5 million. $750 million.

$500 million.

The 2007-2009 recession lasted for ________ months. You Answered 36 12 24 6 18

18

GDP increases if prices decrease by ________ and quantities produced increase by ________. 2%; 2% 3%; 1% 4%; 2% 2%; 4% 3%; 3%

2%; 4%

Consider the following data to answer the five questions that follow. If these are the only five countries in the world, then country B produces _______ of world GDP. 20% 25% 50% 62.5% 30%

25%

Consider the following data to answer the five questions that follow. Although countries C and D have the same level of GDP, country C has a level of per capita GDP that is ________ times that of country D. 4 10 2 3 5

4

Between 1960 and 2014, the average unemployment rate in the United States was about: 6%. 4%. 8%. 0%. 9%.

6%.

Even in years when unemployment is high and millions of Americans are looking for work, thousands of jobs every year go unfilled by Americans in the farm industry. Which is the best explanation for this phenomenon? Americans appear to be unwilling or unable to work on farms. Americans do not have the educational skills required for farm work. Regulations prevent farmers from hiring Americans to work on farms. Farmers do not advertise the availability of farm jobs. Large farm employment states discourage migration into their states.

Americans appear to be unwilling or unable to work on farms.

Consider the following data to answer the five questions that follow. Which country has the lowest average living standard? B D C A E

D

Some individuals are unemployed because it takes time for them to find jobs that fit their skill sets. These individuals would be considered to be: cyclically unemployed. discouraged workers. structurally unemployed. frictionally unemployed. overemployed.

frictionally unemployed.

Macroeconomics is the study of: the broader economy. the behavior of the consumer. the behavior of the firm. changes in commodity prices. individual markets.

the broader economy.

The recession of 2007-2009 has been dubbed the: Great Depression. Grand Depression. Big Recession. Great Recession. Grand Recession.

Great Recession.

Which of the following is an example of structural unemployment? Chad graduates with his master's degree in economics and is searching for an analyst job in Oklahoma. Edith has decided to retire after 35 years of working at the state prison. Cameron quits his job because he wants to become an astronaut. Raymond loses his job as a steelworker because the economy is in a downturn. Jasmine loses her job as a newspaper editor because the publication has gone digital.

Jasmine loses her job as a newspaper editor because the publication has gone digital.

Some individuals are unemployed because it takes time for them to find jobs that fit their skill sets. These individuals would be considered to be: discouraged workers. structurally unemployed. cyclically unemployed. overemployed. frictionally unemployed.

frictionally unemployed.

Which of the following statements about historical unemployment rate is true? Since 1960 the average unemployment rate in the United States has been about 6%. Since 1960 the average unemployment rate in the United States has been about 2%. Since 1960 the average unemployment rate in the United States has been about 10%. The unemployment rate in the United States has never fallen below 6%. The unemployment rate in the United States is always above 5%.

Since 1960 the average unemployment rate in the United States has been about 6%.

Which of the following statements about structural unemployment is true? Structural unemployment is unhealthy for the long-run growth of an economy. Structural unemployment is equal to zero when the economy is in an expansion. Structural unemployment is not a burden on household incomes. Structural unemployment can be eliminated through government intervention. Structural unemployment cannot be eliminated.

Structural unemployment cannot be eliminated.

Which of the following policy statements would a classical economist tend to support? The government should only intervene in the economy when total output increases. The government should frequently change taxes and spending levels to manipulate the economy. The government should allow the economy to adjust to changes in demand on its own, without interference. The government should only intervene in the economy when total output decreases. The government should be prepared to intervene when the economy changes in any way.

The government should allow the economy to adjust to changes in demand on its own, without interference.

Which of the following policy statements would a Keynesian economist tend to support? The government should never intervene in the economy. The government should encourage savings as a means of promoting economic growth. The government should focus on long-run supply, not demand. The government should intervene in the economy to promote employment. The government should intervene in the economy only when total output changes.

The government should intervene in the economy to promote employment.

Which of the following questions does the official unemployment rate answer? How many workers are discouraged? How many people in the economy are underemployed? What percentage of the labor force is classified as unemployed? Are people unemployed for short-term or long-term spells? What is the overall health of the economy?

What percentage of the labor force is classified as unemployed?

A shortcoming of non-adjusted GDP is that: it does not include the value obtained through purchases of stocks and bonds. it does not measure changes in price. it does not include net exports. an increase in non-adjusted GDP can be caused by changes in either price or quantity. it does not measure changes in employment.

an increase in non-adjusted GDP can be caused by changes in either price or quantity.

A shortcoming of non-adjusted GDP is that: it does not measure changes in price. it does not measure changes in employment. it does not include net exports. it does not include the value obtained through purchases of stocks and bonds. an increase in non-adjusted GDP can be caused by changes in either price or quantity.

an increase in non-adjusted GDP can be caused by changes in either price or quantity.

All three types of unemployment: are good for the economy. are difficult on households. create a shortage of workers in the workforce. are always the same level. are bad for the economy.

are difficult on households.

GDP is a good, but not the best, measure of: average living standards. environmental quality. income inequality. the cost of living. the percentage change in the overall level of prices.

average living standards.

A school of thought is a: cohesive way of thinking about a subject. large, single-concept focus at a university. university where creativity in thinking is of primary focus. branch of psychology dedicated to mental processes. trend of new educational programs.

cohesive way of thinking about a subject.

One argument against unemployment insurance is that it: can be extended by the government during times of recession. creates an indirect incentive that can make it more attractive for workers to stay unemployed. is only available during recessions. creates an indirect incentive that can make it less attractive for workers to stay unemployed. limits the effects of a recession.

creates an indirect incentive that can make it more attractive for workers to stay unemployed.

An unemployment rate that is above the natural rate indicates ________ unemployment, and we say that the economy is producing ________ the full employment output level. cyclical; at more than frictional; at cyclical; at less than frictional; at more than cyclical; at

cyclical; at less than

During a recession, fewer individuals fly across the country for vacations. As a result, many pilots and flight attendants lose their jobs. The pilots and flight attendants would be classified as: frictionally unemployed. structurally unemployed. discouraged workers. cyclically unemployed. overemployed.

cyclically unemployed.

The best measure of the average living standards of people in the country is the: amount of final goods and services produced per person. average price of final goods and services produced. amount of final goods and services produced. dollar value of final goods and services produced. dollar value of final goods and services produced per person.

dollar value of final goods and services produced per person.

Between 1980 and 2010, steel industry employment in the United States has: fallen by around 55%. risen by almost 90%. fallen by around 70%. fallen by only 10%. stayed constant.

fallen by around 70%.

During healthy economic periods, cyclical unemployment: will equal the natural rate of unemployment. rises. will equal structural unemployment. will equal frictional unemployment. falls toward zero.

falls toward zero.

GDP is best defined as the total market value of all ___________ produced within a country within a given time. goods services goods and services final goods final goods and services

final goods and services

Brian Murphy is a political consultant for a candidate in Massachusetts. Mr. Murphy's candidate is defeated in the November election, and as a result, Mr. Murphy finds himself unemployed. Mr. Murphy's unemployment is classified as ___________ unemployment. structural frictional cyclical discouraged long-term

frictional

Unemployment caused by delays in matching available jobs and workers is called _________ unemployment. seasonal discouraged cyclical frictional structural

frictional

During healthy economic periods, only _________ unemployment exist(s). frictional cyclical structural structural and cyclical frictional and structural

frictional and structural

Which of the following lists the three types of unemployment? frictional, structural, and cyclical frictional, structural, and practical frictional, unavailable, and structural cyclical, practical, and unavailable practical, structural, and cyclical

frictional, structural, and cyclical

Keynesian economics include all of the following EXCEPT: by not being able to adjust to varying levels of demand and supply, markets are rarely efficient in organizing economic activity. general non-intervention by government, that is, "laissez faire" (allow to do). money is important as a medium of exchange, but printing excess money will not lead to inflation, at least in the short run. if government intervention is necessary, it should be with the goal of increasing economic activity, mainly by the government spending money it does not have. regular government intervention to assure stability and growth in the economy.

general non-intervention by government, that is, "laissez faire" (allow to do).

Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because: the economy tends to be stable and at full employment. savings is a crucial part of economic growth and investment. governments can promote full employment by stimulating aggregate demand. the long run is more important than the short run, and economic policy works only in the long run. prices are flexible and allow the economy to quickly return to full employment.

governments can promote full employment by stimulating aggregate demand.

It has been shown that increases in the money supply are directly related to the rate of inflation. If the previous statement is true, then: high inflation will normally be associated with large decreases in the money supply. real GDP rises whenever the money supply increases. nations that increase their money supplies most rapidly will be the most prosperous. high inflation will normally be associated with large increases in the money supply. costs to print money will rise when the money supply falls.

high inflation will normally be associated with large increases in the money supply.

Government policies such as unemployment compensation and government regulations related to hiring and firing employees result in _________ unemployment. higher structural lower frictional higher frictional lower cyclical lower structural

higher frictional

Anything that lengthens the job search process _________ unemployment. decreases frictional increases cyclical decreases structural increases structural increases frictional

increases frictional

When GDP increases, national income ________ and national output __________. is unaffected; is unaffected is unaffected; decreases increases; is unaffected increases; increases decreases; decreases

increases; increases

The Internet has enabled workers and companies to find each other more quickly and to make better matches with substantially lower costs. The result is ___________ unemployment. lower structural lower frictional higher structural lower cyclical higher frictional

lower frictional

Joe owns a crab shack. When he produces and sells ________ meals in a given day, his income earned will ________. more; stay the same fewer; stay the same fewer; increase more; increase more; decrease

more; increase

In macroeconomics: output and income are very different concepts. income is measured in dollars but output is not. output is greater than income. output and income are essentially identical. output is less than income.

output and income are essentially identical.

If non-adjusted GDP is declining, then it must be the case that: prices must be increasing more rapidly than production. fewer goods and services are being produced. prices are falling at a greater rate than production is rising. prices must be lower on average. production is rising at a greater rate than prices are falling.

prices are falling at a greater rate than production is rising.

Between two given years, if real GDP and non-adjusted GDP grow at the same rate, then: quantities must have remained constant between the two years. the price level increased. prices must have remained constant between the two years. prices and quantities must have grown at the same rate between the two years. prices and quantities must have remained constant between the two years.

prices must have remained constant between the two years.

To evaluate the change in average living standards over time, it is best to use: GDP. the inflation rate. real GDP per capita. real GDP. GDP per capita.

real GDP per capita.

Economic growth is best measured by changes in: the unemployment rate. the inflation rate. real GDP. the number of jobs. non-adjusted GDP.

real GDP.

Precepts of the classical school of economics include all of the following EXCEPT: if government intervention is necessary, it should be with the goal of increasing economic activity. by adjusting to varying levels of demand and supply, markets are usually efficient in organizing economic activity. general non-intervention by government, that is, "laissez faire" (allow to do). money is important as a medium of exchange, but printing excess money will lead to inflation. regular government intervention to assure stability and growth in the economy.

regular government intervention to assure stability and growth in the economy.

Workers who lose their jobs because of market innovations are considered: discouraged workers. cyclically unemployed. structurally unemployed. employed. frictionally unemployed.

structurally unemployed.

Workers who lose their jobs because the skill sets they possess are no longer required in the economy are considered to be: discouraged workers. overemployed. structurally unemployed. frictionally unemployed. cyclically unemployed.

structurally unemployed.

The Great Depression lasted most of which decade? the 1940s the 1950s the 1920s the 1930s the 1910s

the 1930s

Inflation occurs when: the prices of some goods rise and prices of some goods fall, but more goods have price increases than decreases. all prices in the economy fall. the overall level of prices rises. the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases. all prices in the economy rise.

the overall level of prices rises.

The difference between non-adjusted GDP and real GDP is: the price level. average output growth. real output growth. long-run trend GDP. nominal output growth.

the price level.

During economic downturns: real gross domestic product (GDP) rises. household income rises. output rises. the unemployment rate declines. the unemployment rate rises.

the unemployment rate rises.

In a given year, if real GDP equals non-adjusted GDP, then: the growth in output was equal to the growth in the price level. the growth in output was greater than the growth in the price level. output did not grow. there was no inflation. output was over-adjusted for inflation.

there was no inflation.

Cyclical unemployment is: when workers stop looking for jobs because they feel no jobs are available for them. unemployment caused by time delays in matching available jobs and workers. unemployment caused by economic downturns. unemployment caused by changes in the industrial makeup of an economy. not one of the three types of unemployment.

unemployment caused by economic downturns.

Frictional unemployment is: unemployment caused by changes in the industrial makeup of an economy. when a worker stops looking for a job because he or she feels no job is available for him or her. unemployment caused by time delays in matching available jobs and workers. not one of the three types of unemployment. unemployment caused by economic downturns.

unemployment caused by time delays in matching available jobs and workers.

A government program that reduces the hardship of being out of work by guaranteeing that unemployed workers receive a percentage of their former incomes while they are unemployed is referred to as: employment insurance. unemployment insurance. natural unemployment. structural unemployment. frictional unemployment.

unemployment insurance.

Official unemployment is identified as when a worker: who is not currently employed stops searching for a job because he or she feels there is no job available for him or her. retires from his or her job. who is not currently employed stops searching for a job. who is not currently employed is searching for a job unsuccessfully. leaves his or her job to attend school full-time.

who is not currently employed is searching for a job unsuccessfully.

In November 2009, the United States was in a deep recession. To help keep the economy afloat, the government extended the period of time one could receive unemployment insurance to 99 weeks. This policy had an unintended consequence because: workers spent more time searching for the perfect job, which increased frictional unemployment. employers were more hesitant to fire workers, which increased the unemployment rate. employers were more hesitant to fire workers, which reduced the unemployment rate. workers searched for jobs for longer, which reduced the unemployment rate. many workers quit their jobs so they could receive unemployment insurance.

workers spent more time searching for the perfect job, which increased frictional unemployment.

Frictional unemployment is present in an economy because: firms often lay off workers due to economic recession. workers take time to decide which jobs are best for them. there are often changes in the industrial makeup of an economy. workers often need to update their skills. the unemployment rate is too low.

workers take time to decide which jobs are best for them.