Economics Ch. 9

question

Cost-push inflation may be caused by
answer

a negative supply shock
question

Real income is found by
answer

dividing nominal income by price index
question

Real income can be determined by
answer

deflating nominal income for inflation
question

Suppose that a person’s nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105. The person’s real income will
answer

rise by about 15 percent
question

Cost-push inflation
answer

reduces real output
question

Cost of living adjustment clauses
answer

tie wage increases to change in the price level
question

During a period of hyperinflation
answer

people tend to hold goods rather than money
question

Inflation is undesirable because it
answer

redistributes real income and wealth
question

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is
answer

3 percent
question

Recurring upswings and downswings in an economy’s real GDP over time are called
answer

business cycles
question

In the United States, business cycles have occurred against a backdrop of a long-run trend of:
answer

rising real GDP
question

As it relates to economic growth, the term long-run trend refers to:
answer

business activity that occurs over 50 or 100 years
question

In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?
answer

capital goods
question

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:
answer

capital goods and durable consumer goods
question

The phase of the business cycle in which real GDP declines is called
answer

a recession
question

The phase of the business cycle in which real GDP is at a minimum is called
answer

the trough
question

A recession is defined as a period in which
answer

real domestic output falls
question

In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
answer

Expansion
question

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
answer

Prices are sticky in the short run
question

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 The labor force in Scoob is:
answer

102 million
question

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 The unemployment force in Scoob is:
answer

6.9 percent
question

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 If the natural rate of unemployment in Scoob is 5 percent then
answer

cyclical unemployment is about 2 percent
question

The United States’ economy is considered to be at full employment when:
answer

about 4 to 5 percent of the labor force is unemployed
question

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree. With degree in hand, she is now searching for a position in management. Kara presently is:
answer

frictionally unemployed
question

The natural rate of unemployment is
answer

when the economy is at its potential output
question

The labor force includes
answer

employed workers and persons who are officially unemployed
question

Alex works in his own home as a homemaker and full time caretaker of his children. Officially, he is
answer

not in the labor force
question

Official unemployment statistics
answer

understate unemployment
question

Part time workers who want full time work are counted as
answer

fully employed
question

Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:
answer

6 percent
question

The unemployment rate is the
answer

percentage of the labor force that is unemployed
question

A college graduate using the summer following graduation to search for a job would best be classified as:
answer

a part of frictional unemployment
question

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:
answer

structural unemployment
question

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?
answer

Structural and frictional unemployment
question

The type of unemployment associated with recessions is called:
answer

cyclical unemployment
question

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result:
answer

the official unemployment rate will remain unchanged
question

At the economy’s natural rate of unemployment:
answer

the economy achieves its potential output
question

During the recession is the unemployment rate in the US was about
answer

25 percent
question

Which of the following types of unemployment is directly associated with insufficient overall demand for goods and services?
answer

cyclical unemployment
question

The GDP gap measures the difference between
answer

actual GDP and potential GDP
question

A large negative GDP gap implies
answer

a high rate of unemployment
question

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion, potential GDP is:
answer

$510 billion
question

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun’s law, the negative GDP gap as a percent of potential GDP is:
answer

8 percent
question

Full employment output is also called
answer

potential output
question

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:
answer

okun’s law
question

Inflation means that
answer

prices on average are rising but some may be falling
question

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:
answer

delfation of 3.33 percent
question

If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is:
answer

11 percent
question

Demand-pull inflaiton
answer

occurs when total spending exceeds the economy’s ability to provide output at the existing price level
question

The phrase “too much money chasing too few goods” best describes:
answer

demand pull inflation
question

Inflation initiated by increases in wages or other resource prices is labeled:
answer

cost-push inflation

Get instant access to
all materials

Become a Member