Macroeconomics Chapter 6 Quiz

C

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment? Answers: A. Structural B. Natural C. Cyclical D. Frictional

A

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate? Answers: A. 6 percent. B. 9 percent. C. 4 percent. D. 27 percent.

D

A peak in the business cycle: Answers: A. occurs when the unemployment rate is its greatest. B. is a temporary minimum point. C. occurs when the inflation rate is its lowest. D. is a temporary maximum point.

B

A statement that is often used to describe demand-pull inflation is: Answers: A. "A rising tide lifts all boats". B. "Too much money chasing too few goods". C. "It is important to have some skin in the game". D. "Money is easily earned, but not easily saved".

A

A worker who loses a job at a call center because business firms switch the call center to another country is an example of: Answers: A. structural unemployment. B. cyclical unemployment. C. frictional unemployment. D. disguised unemployment.

B

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then: Answers: A. both lenders and borrowers benefit. B. lenders are hurt, but borrowers benefit. C. borrowers are hurt, but lenders benefit. D. both lenders and borrowers are hurt.

C

Assuming the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, the unemployment rate is: Answers: A. 6 percent. B. 4 percent. C. 8 percent. D. 10 percent.

B

If the Consumer Price Index was 166.6 in one year and 172.2 in the next year, then the rate of inflation from one year to the next year was: Answers: A. 5.4 percent. B. 3.4 percent. C. 6.0 percent. D. 4.1 percent.

A

If the GDP gap is negative, then: Answers: A. actual GDP is less than potential GDP. B. the unemployment rate is falling. C. potential GDP is less than actual GDP. D. the inflation rate is rising.

A

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are: Answers: A. excluded. B. included. C. treated the same as part-time workers. D. included in the labor force.

D

Inflation caused by a rise in per-unit production costs is referred to as: Answers: A. hyperinflation. B. unanticipated inflation. C. demand-pull inflation. D. cost-push inflation.

C

Inflation caused by an increase in aggregate spending is referred to as: Answers: A. demand-push inflation. B. hyperinflation. C. demand-pull inflation. D. cost-push inflation.

D

Inflation is a rise in: Answers: A. real GDP. B. the standard of living over time. C. industrial production. D. the general level of prices over time.

D

Refer to the above diagram, the phase of the business cycle from points A to D are, respectively: Answers: A. peak, recession, expansion, trough. B. trough, recovery, expansion, peak. C. expansion, recession, trough, peak. D. peak, recession, trough, expansion.

C

Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, the official unemployment rate would: Answers: A. be unchanged. B. increase. C. decline. D. increase in the short run but eventually decline.

A

The best example of a "frictionally unemployed" worker is one who: Answers: A. is in the process of voluntarily switching jobs. B. reduces productivity by causing frictions in a business. C. is laid off during a recessionary period in the economy. D. is discouraged and not actively seeking work.

A

The descriptions give the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has has 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 defense spending. She has been looking for similar jobs, but no company seems interested in her aircraft design skills. 4. Ricardo lost his job last year when his company downsized. He tried to find another job for a year but was unsuccessful and quit looking for work. Which one best describes the frictional unemployment? Answers: A. 1 B. 2 C. 3 D. 4

D

The unemployment rate in an economy is 12 percent. The civilian labor force is 50 million. The number of employed workers in the economy is: Answers: A. 24 million. B. 6 million. C. 42 million. D. 44 million.

C

Unanticipated inflation arbitrarily: Answers: A. "benefits" those who save money. B. "subsidizes" those who receive fixed money incomes. C. "taxes" those who receive fixed money incomes. D. "penalizes" those who borrow money.

A

Which statement is correct? Answers: A. The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle. B. During a recession spending on capital goods increases. C. Real output and employment usually show little variance 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 accuracy.