ECON 232 Chapter 8 Study Quiz
1.
In which of the following industries or sectors of the economy is output likely to be most strongly affected by the business cycle?
A.
military goods
B.
producer's durables (machinery, equipment, etc.)
C.
textile products (clothing)
D.
agricultural commodities (wheat, corn, etc.)
2.
Kimberly 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. Kimberly presently is:
cyclically unemployed.
structurally unemployed.
frictionally unemployed.
not a member of the labor force.
3.
Real GDP per capita is found by:
adding real GDP and population.
subtracting population from real GDP.
dividing real GDP by population.
dividing population by real GDP.
4.
Answer the next question(s) on the basis of the following information for a specific year in a hypothetical economy for which Okun's law is applicable: Potential Real GDP = $200 billion Natural rate of unemployment = 6 percent Actual rate of unemployment = 12 percent
R-1 REF08075
If the unemployment rate in the above economy declined to 6 percent, we could conclude that:
only structural unemployment remained.
the economy's production possibilities curve shifted outward.
the economy had moved from a point inside its production possibilities curve to a point on or near the curve.
nominal GDP would rise but real GDP would fall.
5.
An annual rate of inflation of 7 percent will double the price level in about 15 years.
True
False
6.
Which of the following statements is correct? Unanticipated inflation:
arbitrarily "taxes" fixed-income groups.
increases the real value of savings.
increases the purchasing power of the dollar.
benefits creditors at the expense of debtors.
7.
"Wait unemployment" and "search unemployment" are both types of:
cyclical unemployment.
hidden unemployment.
frictional unemployment.
structural unemployment.
8.
Given the annual rate of inflation, the "rule of 70" allows one to:
determine whether the inflation is demand-pull or cost-push.
calculate the accompanying rate of unemployment.
determine when the value of a real asset will approach zero.
calculate the number of years required for the price level to double.
9.
If the economy's real GDP doubles in 18 years, we can:
not say anything about the average annual rate of growth.
conclude that its average annual rate of growth is about 5.5 percent.
conclude that its average annual rate of growth is about 2 percent.
conclude that its average annual rate of growth is about 4 percent.
10.
In the United States, the rate of unemployment is highest for:
white teenagers.
black teenagers.
married women.
unmarried women.
11.
If the price level doubles in a 23-year period, we can conclude that the average annual rate of inflation over that period was about 3 percent.
12.
Inflation is undesirable because it:
arbitrarily redistributes real income and wealth.
invariably leads to hyperinflation.
usually is accompanied by declining real GDP.
reduces everyone's standard of living.
13.
About ________ of U.S. economic growth comes from improved productivity (as opposed to added inputs).
one-fourth.
one-third.
one-half.
two-thirds.
14.
Official unemployment statistics:
understate unemployment because individuals receiving unemployment compensation are counted as employed.
understate unemployment because "discouraged workers" are not counted as unemployed.
include cyclical and structural unemployment, but not frictional unemployment.
overstate unemployment because workers who are involuntarily working part time are counted as being employed.
15.
If both the real interest rate and the nominal interest rate are 3 percent, then the:
inflation premium is zero.
real GDP must exceed the nominal GDP.
nominal GDP must exceed real GDP.
inflation premium also is 3 percent.
16.
Which of the following is correct?
The unemployment rates of men and women workers are roughly the same.
Unemployment rates for black and white workers are approximately the same.
Teenagers experience approximately the same unemployment rates as do adults.
Laborers are less vulnerable to unemployment than are professional workers.
17.
During the past ten years the annual rate of inflation in the United States has averaged less than 1 percent.
18.
Economic growth is best defined as an increase in:
either real GDP or real GDP per capita.
nominal GDP.
total consumption expenditures.
wealth in the economy.
19.
In the United States, business cycles have occurred against a backdrop of a long-run trend of:
declining unemployment.
stagnant productivity growth.
rising real GDP.
rising inflation.
20.
R-2 REF08005
Refer to the above table. Between years 1 and 2, real GDP per capita grew by __________ percent in Alta:
3
4
5
10
21.
Refer to the above table. Between years 2 and 3:
Alta's real GDP grew more rapidly than Zorn's real GDP.
real GDP fell in Zorn.
population growth reduced Alta's real GDP growth to zero.
population fell in Alta's.
22.
Inflation initiated by increases in wages or other resource prices is labeled:
demand-pull inflation.
demand-push inflation.
cost-push inflation.
cost-pull inflation.
23.
Growth is advantageous to a nation because it:
promotes faster population growth.
lessens the burden of scarcity.
eliminates the economizing problem.
slows the growth of wants.
24.
Inflation affects:
both the level and the distribution of income.
neither the level nor the distribution of income.
the distribution, but not the level, of income.
the level, but not the distribution, of income.
25.
Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:
3 percent.
6 percent.
7 percent.
9 percent.
26.
The GDP gap measures the:
difference between NDP and GDP.
amount by which actual GDP exceeds potential GDP.
amount by which potential GDP exceeds actual GDP.
amount by which nominal GDP exceeds real GDP.
27.
The United States' economy is considered to be at "full employment" when:
90 percent of the total population is employed.
90 percent of the labor force is employed.
100 percent of the labor force is employed.
about 5 percent of the labor force is unemployed.
28.
Answer the next question(s) on the basis of the following information about a hypothetical economy: Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer Price Index = 110
R-3 REF08064
Refer to the above information. If the members of the underground economy are presently counted as part of the unemployed when in fact they are employed, the official unemployment rate is overstated by:
0 percentage points.
2 percentage points.
5 percentage points.
6 percentage points.
29.
Part-time workers are counted as:
unemployed and therefore the official unemployment rate may overstate the level of unemployment.
unemployed and therefore the official unemployment rate may understate the level of unemployment.
fully employed and therefore the official unemployment rate may overstate the level of unemployment.
fully employed and therefore the official unemployment rate may understate the level of unemployment.
30.
Which of the following constitute the unemployment occurring at the natural rate of unemployment?
frictional and cyclical unemployment
structural and frictional unemployment
cyclical and structural unemployment
frictional, structural, and cyclical unemployment.
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