Question 1

Rising per-unit production costs are most directly associated with

Accepted Answer

A)   frictional unemployment.
B)   structural unemployment.
C)   demand-pull inﬂation.
D)   cost-push inﬂation.E) All of the above
F) None of the above

Question 2

If Fred's annual real income rises by 8 percent each year, his annual real income will double in about

Accepted Answer

A)   8 to 9 years.
B)   10 to 11 years.
C)   5 to 6 years.
D)   19 to 20 years.E) B) and C)
F) A) and B)

Question 3

What are the effects of cost-push inﬂation on real output?

Accepted Answer

Unexpected increases in the prices of ke...

Question 4

Compared to other industrial nations, inﬂation rates in the United States are

Accepted Answer

A)   signiﬁcantly higher.
B)   signiﬁcantly lower.
C)   signiﬁcantly higher than those in Europe and signiﬁcantly lower than those in Japan.
D)   neither signiﬁcantly higher nor signiﬁcantly lower.E) A) and B)
F) A) and C)

Question 5

The phrase "too much money chasing too few goods" best describes

Accepted Answer

A)   the GDP gap.
B)   demand-pull inﬂation.
C)   the inﬂation premium.
D)   cost-push inﬂation.E) A) and B)
F) C) and D)

Question 6

Unanticipated inﬂation beneﬁts debtors at the expense of creditors.

Accepted Answer

A) True 
 B)False

Question 7

If both the real interest rate and the nominal interest rate are 3 percent, then the

Accepted Answer

A)   inﬂation premium is zero.
B)   real GDP must exceed the nominal GDP.
C)   nominal GDP must exceed the real GDP.
D)   inﬂation premium also is 3 percent.E) None of the above
F) A) and B)

Question 8

During a severe recession, we would expect output to fall the most in

Accepted Answer

A)   the health care industry.
B)   the clothing industry.
C)   agriculture.
D)   the construction industry.E) A) and B)
F) A) and D)

Question 9

The GDP gap measures the difference between

Accepted Answer

A)   NDP and GDP.
B)   NI and PI.
C)   actual GDP and potential GDP.
D)   nominal GDP and real GDP.E) C) and D)
F) B) and D)

Question 10

An unexpected increase in total spending will cause an increase in GDP

Accepted Answer

A)   if prices are sticky.
B)   if prices are fully ﬂexible.
C)   regardless of whether prices are sticky or fully ﬂexible.
D)   only if prices are stuck in the long term.E) A) and B)
F) A) and C)

Question 11

Inﬂation is undesirable because it

Accepted Answer

A)   arbitrarily redistributes real income and wealth.
B)   invariably leads to hyperinﬂation.
C)   usually is accompanied by declining real GDP.
D)   reduces everyone's standard of living.E) All of the above
F) None of the above

Question 12

Cost-push inﬂation increases real output and employment.

Accepted Answer

A) True 
 B)False

Question 13

What has been the range of the decline in real output during recessions in the U.S. between 1950 and 2009?

Accepted Answer

A)   -0.2 percent to -4.3 percent
B)   -5.1 percent to -9.8 percent
C)   -10.4 percent to -14.6 percent
D)   -15.0 percent to -19.9 percentE) All of the above
F) B) and C)

Question 14

A recession is deﬁned as a situation where the average price level in the economy is increasing.

Accepted Answer

A) True 
 B)False

Question 15

When the economy goes into a recession and ﬁrms require less labor, managers tend to

Accepted Answer

A)   reduce wages to reﬂect the lower demand for labor.
B)   avoid cutting wages, for fear of drops in worker productivity.
C)   lay off workers and keep wages of the remaining workers constant.
D)   keep all of their workers by spreading work more thinly.E) A) and D)
F) All of the above

Question 16

Potential Real GDP $200 Billion  Natural Rate of Unemployment 6% Actual Rate of Unemployment 12%\begin{array} { | l | c | } \hline 	ext { Potential Real GDP } & \$ 200 	ext { Billion } \\hline 	ext { Natural Rate of Unemployment } & 6 \% \\hline 	ext { Actual Rate of Unemployment } & 12 \% \\hline\end{array} Potential Real GDP  Natural Rate of Unemployment  Actual Rate of Unemployment ​$200 Billion 6%12%​​  Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. The amount of output being forgone by the economy is

Accepted Answer

A)   $12 billion.
B)   $15 billion.
C)   $18 billion.
D)   $24 billion. E) A) and D)
F) A) and C)

Question 17

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

Accepted Answer

A)   the peak.
B)   an expansion.
C)   a recession.
D)   the trough.E) B) and C)
F) A) and B)

Question 18

A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Accepted Answer

A)   structural
B)   cyclical
C)   frictional
D)   naturalE) None of the above
F) A) and B)

Question 19

An annual rate of inﬂation of 7 percent will double the price level in about 15 years.

Accepted Answer

A) True 
 B)False

Question 20

The percentage change in one's real income can be approximated by

Accepted Answer

A)   the percentage change in price level divided by the percentage change in nominal income.
B)   the percentage change in nominal income divided by the percentage change in price level.
C)   the percentage change in price level minus the percentage change in nominal income.
D)   the percentage change in nominal income minus the percentage change in the price level.E) A) and B)
F) A) and C)

Exam 9: Business Cycles, Unemployment, and Inflation

Compared to other industrial nations, inﬂation rates in the United States are

Correct Answer
verified

What are the effects of cost-push inﬂation on real output?

Correct Answer
verified
Unexpected increases in the prices of ke...
View Answer

Unanticipated inﬂation beneﬁts debtors at the expense of creditors.

Correct Answer
verified

A recession is deﬁned as a situation where the average price level in the economy is increasing.

Correct Answer
verified

A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Correct Answer
verified

Cost-push inﬂation increases real output and employment.

Correct Answer
verified

The percentage change in one's real income can be approximated by

Correct Answer
verified

Inﬂation is undesirable because it

Correct Answer
verified

During a severe recession, we would expect output to fall the most in

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

If both the real interest rate and the nominal interest rate are 3 percent, then the

Correct Answer
verified

If Fred's annual real income rises by 8 percent each year, his annual real income will double in about

Correct Answer
verified

What has been the range of the decline in real output during recessions in the U.S. between 1950 and 2009?

Correct Answer
verified

When the economy goes into a recession and ﬁrms require less labor, managers tend to

Correct Answer
verified

The GDP gap measures the difference between

Correct Answer
verified

The phrase "too much money chasing too few goods" best describes

Correct Answer
verified

An unexpected increase in total spending will cause an increase in GDP

Correct Answer
verified

Rising per-unit production costs are most directly associated with

Correct Answer
verified

An annual rate of inﬂation of 7 percent will double the price level in about 15 years.

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

Compared to other industrial nations, inﬂation rates in the United States are

Correct AnswerverifiedShow Answer

What are the effects of cost-push inﬂation on real output?

Correct AnswerverifiedUnexpected increases in the prices of ke...View AnswerShow Answer

Unanticipated inﬂation beneﬁts debtors at the expense of creditors.

Correct AnswerverifiedShow Answer

A recession is deﬁned as a situation where the average price level in the economy is increasing.

Correct AnswerverifiedShow Answer

A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Correct AnswerverifiedShow Answer

Cost-push inﬂation increases real output and employment.

Correct AnswerverifiedShow Answer

The percentage change in one's real income can be approximated by

Correct AnswerverifiedShow Answer

Inﬂation is undesirable because it

Correct AnswerverifiedShow Answer

During a severe recession, we would expect output to fall the most in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If both the real interest rate and the nominal interest rate are 3 percent, then the

Correct AnswerverifiedShow Answer

If Fred's annual real income rises by 8 percent each year, his annual real income will double in about

Correct AnswerverifiedShow Answer

What has been the range of the decline in real output during recessions in the U.S. between 1950 and 2009?

Correct AnswerverifiedShow Answer

When the economy goes into a recession and ﬁrms require less labor, managers tend to

Correct AnswerverifiedShow Answer

The GDP gap measures the difference between

Correct AnswerverifiedShow Answer

The phrase "too much money chasing too few goods" best describes

Correct AnswerverifiedShow Answer

An unexpected increase in total spending will cause an increase in GDP

Correct AnswerverifiedShow Answer

Rising per-unit production costs are most directly associated with

Correct AnswerverifiedShow Answer

An annual rate of inﬂation of 7 percent will double the price level in about 15 years.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Unexpected increases in the prices of ke...
View Answer

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