Set 4 - Chapters 9 & 10 Flashcards
With mild demand-pull inflation, the economy’s output level would tend to be:
A) Pulled up by the increase in total spending
B) Pulled down by the rising unemployment
C) Pulled down by the decrease in total spending
D) Pulled up by the rising unemployment
Pulled up by the increase in total spending
Real income will rise from one year to the next if nominal income:
A) Rises and the price level rises faster
B) Falls and the price level falls faster
C) Falls and the price level rises
D) Falls faster than the price level
Falls and the price level falls faster
Unemployment rates for men and women normally are very similar. In the Great Recession of 2007-09, the unemployment rate for men:
A) Was much lower than that for women
B) Remained roughly similar to that for women
C) Was slightly lower than that for women
D) Significantly exceeded that for women
Significantly exceeded that for women
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:
A) 10 percent
B) 2 percent
C) 6 percent
D) 4 percent
10 percent
“Full employment” refers to the situation when there is:
A) 0% unemployment rate
B) No cyclical unemployment
C) 100% employment of the labor force
D) No frictional or structural unemployment
No cyclical unemployment
When oil and energy prices rise, the economy tends to experience:
A) Demand-pull inflation
B) Cost-push inflation
C) Natural inflation
D) Unanticipated inflation
Cost-push inflation
The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment.
- Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month, but still has not gotten a job offer.
- George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few months when national economic conditions improve.
- 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 work for a year but no company seems interested in her aircraft design skills.
- Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work.
Refer to the above information. Which individual is cyclically unemployed?
A) Mollie
B) George
C) Jeanette
D) Ricardo
George
The inflation rate measures the percentage growth rate of:
A) Real GDP from one year to the next
B) Real GDP from the base period 1982-84 to a given year
C) The CPI from the base period 1982-84 to a given year
D) The CPI from one year to the next
The CPI from one year to the next
Which statement is correct?
A) Real output and employment generally show little variance over the business cycle
B) Recessions have not been severe because economists and statisticians have been able to predict their occurrence and intensity with high accuracy
C) The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle
D) All sectors of the economy are affected to similar degrees by business fluctuations
The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle
If households consume less at each level of disposable income, they are:
A) Saving less
B) Saving more
C) Spending more
D) Working less
Saving more
If there is a decrease in disposable income in an economy, then:
A) Both the APC and the APS rise
B) The APC falls and the APS rises
C) The APC rises and the APS falls
D) Both the APC and the APS fall
The APC rises and the APS falls
If businesses feel more optimistic about the state of the economy, then this change is likely to:
A) Shift the investment demand curve to the right
B) Cause a movement up the investment demand curve
C) Cause a movement down the investment demand curve
D) Shift the investment demand curve to the left
Shift the investment demand curve to the right
If the natural rate of unemployment was 6 percent, the current unemployment rate was 10 percent, and the potential GDP was $4,000 billion, then according to Okun’s law the economy would have sacrificed:
A) $480 billion in output not produced
B) $240 billion in output not produced
C) $160 billion in output not produced
D) $320 billion in output not produced
$320 billion in output not produced
Which of the following statements is correct?
A) Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle
B) Frictional unemployment is the result of friction between labor and management over how best to perform work
C) Structural unemployment is unemployment resulting from changes in the structure of consumer demand or technology
D) Search unemployment is the broadest unemployment category because it covers all other types of unemployment
Structural unemployment is unemployment resulting from changes in the structure of consumer demand or technology
Cost-push inflation tends to be characterized by all of the following, except:
A) Falling real output
B) Automatically self-limiting
C) Rising general price level
D) Falling unemployment
Falling unemployment
