question

frictional unemployment occurs when

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a worker between an employer and employee

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when unemployment rises above the natural rate it reflects the existence of ___ unemployment

answer

cyclical

question

a federal program aimed the unemployment workers of the declining coal and steel industries is designed reduce which type of unemployment

answer

structural

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in recent years, economists have come to believe that'll employment in the US economy occurs at an unemployment rate between

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4.5 and 5.5 percent

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which of the following people is structurally unemployed

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clem, a skilled forest maker, lost his job when his factory shut down due to a permanent reduction in the demand for corsets

question

which of the following is true

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- at full employment, the economy is producing at its potential output - if unemployment is greater than its natural rate, the economy is producing at less than its potential output - at the natural rate of unemployment, the economy is considered to be at full employment - if we are less than full employment, some cyclical unemployment exists

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the natural rate of unemployment

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is the sum of both frictional and structural unemployment when they are at a maximum

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according to Okun's law, a 2 percent increase in cyclical unemployment reduces output by almost

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4 percent

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cyclical unemployment arises when

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business activity in the macroeconomy declines

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if the economy is operating with full employment, which of the following is essentially eliminated

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cyclical unemployment

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why are creditors harmed by unexpected inflation

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creditors are paid back money with less spending power than when it was originally loaned out

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which of the following groups would not tend to lose from unexpected inflation

answer

those whose wages have cost of living adjustment clauses in their contracts

question

the GDP deflator represents a somewhat _____ measure of prices that the CPI and the GDP deflator tends to be ____ violate than the CPI

answer

broader; less

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in the typical CPI shopping basket, which of the categories below represents the largest percentages of consumer spending

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housing

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during an inflationary period those most likely to suffer reduced wealth are those who are holding their wealth in

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currency

question

economists use the term "business cycle" to refer to

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fluctuations in economic activity measured by GDP or unemployment

question

an unanticipated period of deflation will

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redistribute income from borrowers to lenders

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the costs imposed on a firm from changing listed prices are called

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the menu costs of inflation

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inflation exists whenever

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the overall price level is rising

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which of the following is true

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the expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude

question

which of the following observations concerning leading economics indicators is true

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they provide warnings of likely downturns

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which of the following observations concerning phases of a business cycle is not correct

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maximum amount of unemployment occurs exactly at the trough

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the period of declining growth between the peak of the business cycle and the trough is called the

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contractionary phase

question

economists usually use the term "recession" to refer to

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a significant reduction in output and employment lasting more than a few months

question

the type of unemployment that occurs because of a recession is called

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cyclical unemployment

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which of the following describes the historical record of the business cycles in the united states

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periods of contraction seem to have gotten shorter over time

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in the expansion phase of the business cycle

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- output is rising -investment is rising - consumer and business confidence is high - unemployment is falling

question

unemployment rises in _____ and falls in ____

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contractions; expansions

question

given a fixed nominal interest rate on a loan unanticipated inflation

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decreases the burden of paying off the loan

question

real gross domestic product is the total value of all

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final goods and services adjusted for inflation

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a full-time college student who is enrolled in school full-time and not seeking employment is considered

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out of the labor force

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a forestry worker who is out of work because of the temporarily low demand for wood products associated with recession is defined as

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cyclically unemployed

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the index of leading economic indicators usually turns downward

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prior to economic contractions

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deflation exists whenever

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the overall price level falls

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which of the following groups are typically harmed by unexpected inflation

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- lenders -pensioners on fixed incomes

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why do economists prefer using the term economic fluctuation rather than business cycle

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lack of regularity of a cycle

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a country's currency unit changes in purchasing power

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when there is either inflation or deflation

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which of the following individuals would be considered unemployed

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none of the answers

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which of the following groups of people would be included in the official unemployment rate

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workers temporarily laid off from jobs to which they expect to return

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the total labor force consists of

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the number of employed persons plus the number of unemployed persons

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which of the following refers to extremely high rates of inflation for sustained periods of time

answer

hyperinflation

question

if the economy is operating at the natural rate of unemployment which of the following is essentially eliminated

answer

cyclical unemployment

question

if the number of employed persons in a country equals 24 million the number of unemployed persons equals 8 million and the number of persons overage 16 in the population equals 40 million the unemployment rate equals

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25 percent unemployment rate= 8/ 24+8 = .25

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an individual who voluntarily leaves one job and spends a period of time seeking another is considered

answer

frictionally unemployed

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inflation

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- can decrease the value of a nation's currency relative to other nations - can cause a redistribution of income from creditors to borrowers - may discourage investment and economic growth

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if there are discouraged workers

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the unemployment rate will tend to overstate the true level of unemployment

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the cost incurred when individuals reduce their money holding because of inflation is termed as the

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shoe-leather cost

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offering employees an efficiency wage may

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- reduce turnover - lead to a reduction in training costs - boost employee morale - attract the most production workers

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the term full employment implies an unemployment rate of

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approximately 5%

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Fred has lost his factory job, replaced by welding robots and soon plans to go to technical school to learn computer repair because he cannot find a similar job to the one he lost. the type of unemployment facing Fred is:

answer

structural

question

the unemployment rate is calculated as

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the number of unemployed persons divided by the number of employed plus unemployed persons

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the development of a nationwide computerized job bank listing of all job openings would be most likely to reduce

answer

frictional unemployment

question

GDP is

answer

the value of all final goods and services produced domestically within a given period

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final goods or services used to compute GDP refer to

answer

goods and services purchased by the ultimate users

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intermediate products

answer

produced domestically are not directly reflected in a nation's GDP

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consumption is the purchase of goods and services by

answer

households

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consumption is the largest single component of GDP. in recent years it represents approximately ____ percent of GDP

answer

70

question

the expenditure method of measuring GDP is calculated by adding up

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- the final goods and services produced domestically during a given period - consumption + investment + government spending + (export and imports) - domestic production of final goods and services for consumers, firms, government, and the international sector

question

net exports are defined as

answer

exports minus imports

question

transfer payments are included in which category under the expenditure approach to GDP accounting

answer

transfer payments are not directly included in GDP calculations

question

what is the measure of the income received by owners of resources used in making final goods and services

answer

factor payments

question

which of the following is not part of US GDP

answer

the value of a Toyota manufactured in Japan and sold in the united states

question

given a constant rate of growth of real GDP what would cause a fall in real GDP per capita

answer

a rate of population growth that is greater than the rate of growth of real GDP

question

the prosperity of a nation today is typically measured by its

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output per capita

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a country will roughly double its GDP in twenty years if its annual growl rate is

answer

3.5 percent

question

as more capital per worker is added, per worker production function generally becomes

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later because capital is subject to diminishing marginal returns

question

the faster the rate of technological progress

answer

the greater the rate of economic growth

question

in a fully employed economy, invention and discovery

answer

are achieved through sacrifices in current consumption

question

which of the following best describes the relationships between economic growth and literacy

answer

increased literacy stimulates economic growth by raising labor productivity and as the economy grows people consume more education

question

GDP is

answer

the value of all final goods and services produced domestically within a given period of time

question

the goods and services that are used in the production of other goods and services are called

answer

intermediate goods

question

which of the following products are not included current US GDP

answer

a ford mustang produced last year and sold this year

question

GDP does not directly include

answer

the value of intermediate goods sold during period

question

the total dollar value of purchases in the economy is far larger than GDP primarily because

answer

GDP excludes the value of intermediate goods exchanged

question

the largest single expenditure component of GDP is

answer

consumption

question

the most volatile GDP category under the expenditure approach is

answer

investment

question

the investment component of GDP includes

answer

construction of a new steel mill

question

if a nation's imports exceed its exports

answer

GDP will be less than the sum of consumption, investment and government purchases

question

the services rendered by a special agent wit the federal bureau of investigation is included in which expenditure category of GDP

answer

government purchases

question

in 2008, US nominal GDP totaled approximately

answer

$14.3 trillion

question

if the price index is now 120, it means

answer

prices are 20 percent higher than in the base year

question

estimates of the size of the underground economy range from

answer

4 to 20 percent

question

which of the following factors that affect our well-being does GDP fail to adequately account for

answer

- changes in the quality of goods - externalities - leisure - non market transactions

question

measures of well-being include

answer

- life expectancy - infant mortality rates - literacy rates - pollution levels

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