MACRO EXAM 2 pt. II – Flashcards
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Which phase of the business cycle would be most closely associated with an economic contraction?
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Recession
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A through in the business cycle occurs when
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Employment and output reach their lowest levels
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A recession is a decline in:
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Real GDP that lasts six months or longer
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The Great Recession in 2007 was triggered by shocks in which of the following economic sectors?
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Real estate and financial markets
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The production of nondurable consumer goods is more stable than:
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the production of durable consumer goods
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the unemployment rate is interpreted as the percentage of the:
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Labor force that are not employed
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Full-time homemakers and retirees are classified in the BLS data as:
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Not in the labor force
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The unemployed are those who are:
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not employed but is seeking work
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UR%=
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[Unemployed/labor force]x100
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If the total population is 200 million. The labor force has 100 million and 92 million are employed, what's the unemployment rate?
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8%
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In calculating the unemployment rate, the "discouraged" workers who are not seeking employment are:
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Excluded from the labor force
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In calculating the unemployment rate, part-time workers are:
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Included because they get paid for work
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Official unemployment rate statistics may:
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Understate the amount of unemployed because of the presence of "discouraged" workers who are not actively seeking employment
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The best example f a "frictionally unemployed" worker is one who:
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Is in the process of voluntarily switching jobs
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a worker who loses a job at a call center because the company moved the call center to another country is an example of:
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Structural unemployment
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New college graduates still looking for their first jobs would be classified in the BLS data as:
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Frictionally unemployed
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Unemployment that occurs when there is deficient demand for the goods and services of an economy is called:
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Cyclical unemployment
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Structural unemployment is unemployment resulting from:
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changes in the structure of consumer demand or technology
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Search and wait unemployment is another way to describe:
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Frictional unemployment
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"Full employment" refers to the situation when there is:
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No cyclical unemployment
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The full-employment rate of unemployment is also called the:
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Natural rate of unemployment
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Potential GDP is the output that wold be produced if the economy was experiencing:
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Full employment
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The GDP gap measures the amount of which:
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Potential GDP exceeds actual GDP
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Inflation is a rise in:
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The general level of prices over time
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If the Consumer Price Index for a certain year is 120, this means that the average price of consumer items in that year was:
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20% higher than the average price in the base period 1982-84
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If the Consumer Price Indeex was 170 in one year and 180 in the next year, then the rate of inflation is approximately:
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5.9%
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For a given amount of nominal income, the real income will:
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Fall if the price level rises.
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Unanticipated inflation tends to penalize:
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People who save money in financial institutions
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If unanticipated inflation occurs, then:
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lenders are hurt and borrowers benefit.
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Inflation is:
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The redistributive effects of inflation are arbitrary with respect to people and groups in society
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If the bank's annual interest rate is 6% and the inflation rate is 4%, what would the bank most likely charge as an annual interest rate?
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10%
