question

1) Due to slowing growth in China and other developing countries, Caterpillar ________ the

answer

A) decreased; increased

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2) The economy has gone into a recession. You have majored in computer science and, because

answer

C) No, the recession will most likely be short-lived and I can get a job after it is over.

question

3) The unemployment rate is an important economic statistic that can tell us about the health of

answer

B) that stock prices are more likely to fall.

question

4) The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily

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A) employed

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5) The Bureau of Labor Statistics would categorize a retiree who is not working as

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D) out of the labor force.

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6) The labor force equals the number of people

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C) employed plus unemployed.

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7) Suppose that homemakers are included as employed in the labor force statistics, rather than

answer

B) increase the measured labor force participation rate.

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8) Refer to Table 9-1. The unemployment rate for this simple economy equals

answer

B) (100/1,100) × 100.

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9) Refer to Table 9-1. The labor force participation rate for this simple economy equals

answer

C) (1,100/15,000) × 100.

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10) The unemployment rate equals the number of unemployed divided by the ________, all times

answer

B) labor force

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11) Suppose the government launches a successful advertising campaign that convinces workers

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B) the labor force participation rate to decrease.

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12) Someone who is available for work but has not actively looked for work in the previous four

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C) not in the labor force.

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13) The labor force participation rate equals the

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C) (labor force divided by working-age population) × 100.

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14) Which of the following labor market statistics best indicates the amount of labor that is

answer

C) labor force participation rate

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15) The labor force participation rate is defined as

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E) the percentage of the working-age population in the labor force.

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1) Frictional unemployment is the result of

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B) the search process of matching workers with jobs.

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2) The advice to "keep searching, there are plenty of jobs around here for which you are

answer

A) frictional unemployment

question

3) A student who just graduated from college but has not found a job would most likely be

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A) frictionally unemployed.

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4) Cyclical unemployment is the result of

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D) a slowdown in the economy.

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5) Structural unemployment is the result of

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A) a persistent mismatch between the skills and characteristics of workers and the requirements

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6) In 2013, Caterpillar laid off employees who produced mining machinery at its South

answer

A) structurally unemployed.

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7) According to the text, economists consider full employment to occur when

answer

D) the unemployment rate consists of only frictional and structural unemployment.

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8) If cyclical unemployment is eliminated in the economy, then

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A) the economy is considered to be at full employment.

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9) Full employment is not considered to be zero unemployment, because

answer

D) people do not find jobs instantaneously.

question

10) The natural rate of unemployment is the amount of unemployment

answer

A) associated with the business cycle.

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11) During the Great Depression, cyclical unemployment increased as the recession continued.

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C) had no effect on the natural rate of unemployment.

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12) If you have trouble finding a job because of a slowdown in the overall economy, we would

answer

C) cyclically unemployed.

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13) Most of the unemployment that occurred during the Great Depression was

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C) cyclical unemployment.

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14) The short-term unemployment arising from the process of matching workers with jobs is

answer

A) frictional unemployment.

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15) Workers laid off as a result of a recession suffer

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C) cyclical unemployment.

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16) What are the three main kinds of unemployment?

answer

D) structural, frictional, and cyclical

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17) The natural rate of unemployment is made up of

answer

D) frictional and structural unemployment.

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18) An increase in cyclical unemployment will result in

answer

B) an increase in the unemployment rate.

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1) An increase in unemployment insurance payments would, in effect, ________ the amount of

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B) increase; frictional

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2) Which of the following would increase the unemployment rate?

answer

C) an increase in unemployment insurance payments

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3) Which of the following would decrease the unemployment rate?

answer

D) government aid to retrain unemployed workers

question

4) Which of the following policies would reduce structural unemployment?

answer

B) a job retraining program

question

5) Which of the following policies would reduce frictional unemployment?

answer

D) building an online job database that helps workers find jobs

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6) An unemployment insurance program has which of the following effects?

answer

C) It increases the amount of time spent searching for a job.

question

7) The United States has ________ social insurance programs, and generally has a ________

answer

A) less generous; lower

question

8) If the minimum wage is set above the market wage,

answer

B) unemployment will rise.

question

9) Efficiency wages cause unemployment because

answer

D) firms pay wages that are above the market wage, causing the quantity of labor demanded to

question

10) The U.S. unemployment insurance program

answer

A) increases the amount of time the unemployed spend searching for a job.

question

11) By offering training to workers whose firms laid them off because of competition from foreign

answer

B) structural unemployment.

question

12) Establishing a state employment agency that speeds up the process of matching unemployed

answer

A) frictional unemployment.

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13) An efficiency wage

answer

A) is higher than the market wage and tends to increase productivity.

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14) Refer to Figure 9-1. Based on the graph of the labor market above, if a minimum wage of $8

answer

B) The quantity of labor demanded by firms will fall.

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15) Refer to Figure 9-1. Based on the graph of the labor market above, if a minimum wage is set at

answer

D) None of the above will occur.

question

1) The average price of goods and services in the economy is also known as

answer

A) the price level.

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2) If the price level rose in three consecutive years from 100 to 120 to 140, then the annual

answer

C) decrease.

question

3) Which of the following is true about the consumer price index?

answer

B) It assumes that consumers purchase the same amount of each product in the market basket

question

4) Which of the following price indices comes closest to measuring the cost of living of the typical

answer

C) consumer price index

question

5) Which of the following would be the best measure of the cost of living?

answer

D) consumer price index

question

6) The consumer price index is the

answer

C) average of the prices of the goods and services purchased by a typical urban family of four.

question

7) Refer to Table 9-2. Assume the market basket for the consumer price index has two products

answer

B) 116.

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8) Refer to Table 9-3. Assume the market basket for the consumer price index has three products

answer

D) 121.

question

9) Refer to Table 9-4. Assume the market basket for the consumer price index has two products

answer

D) 141.

question

10) The percent increase in the CPI from one year to the next is a measure of the

answer

D) inflation rate.

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11) Assume the average annual CPI values for 2012 and 2013 were 207.3 and 215.3, respectively.

answer

C) 3.86

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12) Refer to Table 9-5. Consider the following values of the consumer price index for 2012 and

answer

D) 3.9 percent.

question

13) Refer to Table 9-6. Consider the following values of the consumer price index for 1996, 1997,

answer

C) 2.5 percent.

question

14) The "new product bias" in the consumer price index refers to the idea that

answer

D) new products' prices often decrease after their initial introduction, and the CPI is adjusted

question

15) The consumer price index implicitly assumes that the demand curve for each good and

answer

C) vertical.

question

16) Refer to Table 9-8. Suppose that the data in the table above reflect the price levels in the

answer

E) 20%

question

17) Refer to Table 9-9. Suppose that the data in the table above reflect the price levels in the

answer

E) 13%

question

1) Which of the following statements describes the experiences of the Whirlpool Corporation

answer

B) long-run growth interrupted by periods of business cycle recession

question

2) Technological advances generally result in

answer

B) increased life expectancy.

question

3) A good measure of the standard of living is

answer

A) real GDP per capita.

question

4) Since 1900, real GDP per capita has ________ and this measure ________ the actual growth in

answer

A) increased; understates

question

5) Since 1900, real GDP in the United States has grown

answer

A) more rapidly than the population.

question

6) If real GDP per capita measured in 2009 dollars was $6,000 in 1950 and $48,000 in 2013, we

answer

C) 8

question

7) If real GDP in a small country in 2012 is $8 billion and real GDP in the same country in 2013 is

answer

C) is 3.75%.

question

8) If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate

answer

A) 4.7%

question

9) If you invest $10,000 in a bond that earns 8% interest per year, how many years will it take to

answer

D) 8 years and 9 months

question

10) If the growth rate of real GDP rises from 3% to 4% per year, then the number of years

answer

A) 23.3 years to 17.5 years.

question

11) Refer to Table 10-1. Using the table above, what is the approximate growth rate of real GDP

answer

C) 3%

question

12) Refer to Table 10-1. Using the table above, what is the approximate average annual growth

answer

C) 2%

question

13) Which of the following increases labor productivity?

answer

C) inventions of new machinery, equipment, or software

question

14) What two factors are the keys to determining labor productivity?

answer

C) technology and the quantity of capital per hour worked

question

15) Refer to Table 10-2. Using the table above, what is the approximate growth rate of real GDP

answer

D) 4%

question

16) Refer to Table 10-2. Using the table above, what is the approximate growth rate of real GDP

answer

B) -1%

question

17) Refer to Table 10-2. Using the table above, what is the approximate average annual growth

answer

D) 4%

question

1) Increasing the amount of consumption spending and reducing the amount of savings ________

answer

D) decreases; decreases

question

2) A firm can fund an expansion of its operations by

answer

A) issuing bonds.

question

3) Liquidity refers to

answer

B) the ease with which a financial security can be traded for cash.

question

4) Which of the following is most liquid?

answer

D) a dollar bill

question

5) Financial securities that represent promises to repay a fixed amount of funds are known as

answer

A) bonds.

question

6) One difference between stocks and bonds is that

answer

D) stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a

question

7) In a closed economy, which of the following components of GDP is not included?

answer

C) net exports

question

8) In a closed economy, which of the following equations reflects investment? (Y = GDP, C =

answer

A) Y - C - G

question

9) In a closed economy, private saving is equal to which of the following? (Y = GDP, C =

answer

D) Y + TR - C - T

question

10) In a closed economy, public saving is equal to which of the following? (Y = GDP, C =

answer

C) T - G - TR

question

11) Refer to Scenario 10-1. Based on the information above, what is the level of private saving in

answer

A) $3 trillion

question

12) Refer to Scenario 10-1. Based on the information above, what is the level of public saving?

answer

D) negative $1 trillion (a deficit of $1 trillion)

question

13) In a closed economy, public saving plus private saving is equal to

answer

A) investment.

question

14) There is a government budget surplus if

answer

A) T - TR > G.

question

15) When the government runs a budget deficit, we would expect to see that

answer

B) investment will fall.

question

16) Refer to Figure 10-1. Which of the following is consistent with the graph depicted above?

answer

B) Technological change increases the profitability of new investment.

question

17) Refer to Figure 10-3. Which of the following is consistent with the graph depicted above?

answer

A) Taxes are changed so that real interest income is taxed rather than nominal interest income.

question

18) Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure

answer

C) The real interest rate is 3 percent, and the quantity of loanable funds is $150 million.

question

19) Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure

answer

D) supply; fall; increasing; decreasing

question

20) Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real

answer

B) There is a surplus of loanable funds in the market.

question

21) Refer to Figure 10-6. The market is in equilibrium. If the government budget deficit rises,

answer

B) The quantity of loanable funds demanded by firms will fall below $120 million.

question

1) Which of the following explains the cause of the change in the unemployment rate at the end

answer

A) Firms are hesitant to rehire laid off workers, as they continue to operate below capacity.

question

2) During the expansion phase of the business cycle, which of the following eventually increases?

answer

D) all of the above

question

3) During the recession phase of the business cycle,

answer

B) interest rates are usually falling.

question

4) The period between a business cycle peak and a business cycle trough is called

answer

B) recession.

question

5) From 1991 until 2001, the United States was in a period of

answer

A) expansion.

question

6) The period of expansion ends with a ________ and the period of recession ends with a

answer

A) business cycle peak; business cycle trough

question

7) What is the name of the organization that defines business cycle peaks and troughs in the

answer

C) the National Bureau of Economic Research

question

8) As the economy nears the end of an expansion, which of the following do we typically see?

answer

C) rising interest rates

question

9) As the economy nears the end of a recession, which of the following do we typically see?

answer

B) increased spending on capital goods by firms

question

10) The demand for durable goods

answer

B) declines by a greater percentage than does GDP during a recession.

question

11) Purchases of which of the following goods would be dramatically reduced during a

answer

D) refrigerators

question

12) During a recession, spending on ________ tends to fall more dramatically than spending on

answer

B) durable goods; nondurable goods

question

13) As the economy nears the end of an expansion, interest rates usually ________ and wages

answer

A) rise; rapidly

question

14) A recession begins with a(n) ________ in spending by firms on capital goods and a(n)

answer

D) decrease; decrease

question

15) Which of the following goods would see the largest decline in demand during a recession?

answer

A) automobiles

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