Question 1

Which of the following observations concerning phases of a business cycle is incorrect?

Accepted Answer

A)  ​The maximum amount of unemployment occurs exactly at the trough.
B)  ​The expansion phase is measured from the trough to the peak.
C)  ​The trough is the point in time when output stops declining.
D)  ​The contraction phase is also called recession.E) A) and B)
F) A) and C)

Question 2

The CPI but not the GDP deflator takes into account.

Accepted Answer

A)  ​The prices of imports that consumers buy
B)  ​Investment goods bought by businesses
C)  ​Goods bought by the government
D)  ​None of the aboveE) All of the above
F) C) and D)

Question 3

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Accepted Answer

A) True 
 B)False

Question 4

What would happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:

Accepted Answer

A)  ​24% to 11%.
B)  ​11% to 24%.
C)  ​4% to 3%.
D)  3% to 4%.E) B) and C)
F) A) and D)

Question 5

If the nominal interest rate is 6% and the inflation rate is 3%, the real interest rate is

Accepted Answer

A)  ​2%
B)  ​3%
C)  ​6%
D)  ​9%E) A) and B)
F) A) and C)

Question 6

Cyclical unemployment arises when:

Accepted Answer

A)  ​business activity in the macroeconomy declines.
B)  ​the business cycle enters an expansionary phase.
C)  ​labor unions strike for higher wages.
D)  ​the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply.E) A) and D)
F) B) and C)

Question 7

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

Accepted Answer

A)  ​political correctness
B)  ​number of parameters involved
C)  ​excessive volatility of the cycles
D)  ​lack of regularity of a cycleE) B) and D)
F) None of the above

Question 8

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

Accepted Answer

A)  ​11 percent.
B)  ​14.4 percent.
C)  ​16.8 percent.
D)  ​10.2 percent.E) All of the above
F) A) and B)

Question 9

Many economists believe that skill-biased technical change has increased the incomes of both highly skilled workers and low-skill workers

Accepted Answer

A) True 
 B)False

Question 10

The total labor force equals:

Accepted Answer

A)  ​the number of officially employed persons.
B)  ​the number of officially unemployed persons.
C)  ​the number of officially employed plus unemployed persons.
D)  ​the number of persons aged sixteen and over in the population.E) A) and C)
F) A) and D)

Question 11

The unemployment rate may underestimate the true extent of unemployment if:

Accepted Answer

A)  ​many part-time employees would like to work full-time, but are unable to get the additional work.
B)  ​employees increase the number of hours they work overtime.
C)  ​there are a large number of people working in the underground economy.
D)  ​any of the above occur.E) A) and D)
F) B) and D)

Question 12

Which of the following is not a leading economic indicator?

Accepted Answer

A)  ​Prices of common stock
B)  ​Number of new businesses formed
C)  ​Unemployment rate
D)  ​New orders for plants and equipmentE) A) and C)
F) B) and C)

Question 13

If firms offer an efficiency wage:

Accepted Answer

A)  ​the quantity of labor supplied will exceed the quantity of labor demanded.
B)  ​the quantity of labor demanded will exceed the quantity of labor supplied.
C)  ​the quantity of labor supplied will equal the quantity of labor demanded.
D)  ​absenteeism is expected to increase.E) B) and D)
F) B) and C)

Question 14

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

Accepted Answer

A) True 
 B)False

Question 15

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

Accepted Answer

A)  ​5.3 percent.
B)  ​5.6 percent.
C)  ​6.0 percent.
D)  ​none of the above.E) C) and D)
F) B) and D)

Question 16

​Exhibit 10-1 
-Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.

Accepted Answer

A)  ​100 million.
B)  ​195 million.
C)  ​85 million.
D)  ​180 million.E) C) and D)
F) A) and B)

Question 17

The official unemployment rate may not reflect the true state of unemployment because:

Accepted Answer

A)  ​part-time employees who want to work more hours are treated the same statistically as those who hold full-time jobs.
B)  ​some individuals who want to work may become discouraged and cease actively looking for work.
C)  ​workers laid off from their jobs and looking for new ones are not counted among the unemployed.
D)  ​(a)  and (b)  only.E) C) and D)
F) A) and D)

Question 18

If a worker was miscategorized as structurally unemployed when he was really frictionally unemployed, that would not change the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 19

Given a fixed nominal interest rate on a loan, unanticipated deflation:

Accepted Answer

A)  ​decreases the burden of paying off the loan.
B)  ​increases the burden of paying off the loan.
C)  ​does not alter the burden of paying off the loan.
D)  has an indeterminate effect on the burden of paying off the loan.E) B) and C)
F) A) and B)

Question 20

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary?
​

Accepted Answer

In times of unanticipated inflation, far...

Exam 10: Consumer Choice Theory

Given a fixed nominal interest rate on a loan, unanticipated deflation:

Correct AnswerverifiedShow Answer

Which of the following observations concerning phases of a business cycle is incorrect?

Correct AnswerverifiedShow Answer

​Exhibit 10-1 -Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.

Correct AnswerverifiedShow Answer

If firms offer an efficiency wage:

Correct AnswerverifiedShow Answer

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Correct AnswerverifiedShow Answer

If a worker was miscategorized as structurally unemployed when he was really frictionally unemployed, that would not change the natural rate of unemployment.

Correct AnswerverifiedShow Answer

The official unemployment rate may not reflect the true state of unemployment because:

Correct AnswerverifiedShow Answer

The total labor force equals:

Correct AnswerverifiedShow Answer

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

Correct AnswerverifiedShow Answer

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

Correct AnswerverifiedShow Answer

The CPI but not the GDP deflator takes into account.

Correct AnswerverifiedShow Answer

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the nominal interest rate is 6% and the inflation rate is 3%, the real interest rate is

Correct AnswerverifiedShow Answer

Many economists believe that skill-biased technical change has increased the incomes of both highly skilled workers and low-skill workers

Correct AnswerverifiedShow Answer

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary? ​

Correct AnswerverifiedIn times of unanticipated inflation, far...View AnswerShow Answer

Which of the following is not a leading economic indicator?

Correct AnswerverifiedShow Answer

Cyclical unemployment arises when:

Correct AnswerverifiedShow Answer

What would happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:

Correct AnswerverifiedShow Answer

The unemployment rate may underestimate the true extent of unemployment if:

Correct AnswerverifiedShow Answer

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Exhibit 10-1 -Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.

Correct Answer
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Correct Answer
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In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary?

Correct Answer
verified
In times of unanticipated inflation, far...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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