Fluent Essays

Question 1 Using the graph below, identify the different stages of the business cycle. Assume that A, B, and C represent consecutive years. a. A time period when the economy is growing toward full employment is known as an expansion. It is depicted in the graph as B through C . b. A time period characterized by full or near-full employment is known as a peak  It is depicted in the graph as A. c. A time period with two consecutive quarters of declining output is known as a recession . It is depicted in the graph as A through B  d. A time period when employment and real output are at their lowest levels is known as a trough  It is depicted in the graph as B  Question 2 Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last couple of weeks, Marcus noticed an increase in the price of burritos. The price of burritos rose from $5.50 per burrito last month to $6.60 per burrito this month. Assume that Marcus has a fixed income of $165 that he can spend on burritos. How many burritos can Marcus afford to buy at the new price of $6.60? 25 burritos Question 3 In each of the following examples, identify whether the person is counted in the official labor force or not. a. Cynthia owns and operates her own retail store. In the labor force  b. Elder has recently moved to a retirement community in Florida where he enjoys his "golden years" as a retiree. Not in the labor force  c. Drew lost his job at the bank last year. He spent 6 months applying for every job possible before giving up 2 months ago. Not in the labor force  d. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is unable to extend her hours. In the labor force  e. Latisha is an ambitious 15-year-old who spends her summer working as a lifeguard at a local pool. Not in the labor force f. Bill is currently serving a prison sentence, and works making license plates. Not in the labor force  g. Tyrell just graduated college with a business degree. He is currently looking for a banking job in the major city he just moved to. In the labor force Question 4 For each of the following items, indicate to which major group of the CPI the item belongs: a. Tuition payments to your university: Education and communication Correct b. A new desk for your dorm room or apartment: Housing  c. An airline ticket to Florida to be used during spring break: Transportation  d. A 12-pack of beer to be used during spring break: Food and beverages  e. Tickets to a local concert: Recreation  f. A late night visit to the emergency room: Medical  Question 5 In the United States, business cycles have occurred against a backdrop of a long-run trend of Multiple Choice rising inflation. rising real GDP. stagnant productivity growth. declining unemployment. Question 6 Use the table below to answer the next question.     Year Employed Structural Frictional Cyclical Unemployed   2003 1,800 50 100 50 200   2004 2,400 100 100 300   2005 2,000 150 180 500   2006 2,660 40 0 140 Determine the number of people frictionally unemployed for the year 2006. Multiple Choice 0  100 -100 200 Question 7 The unemployed are those people who Multiple Choice are not employed but are seeking work. are not working. do not have jobs. are not in the workforce. Question 8 A trough in the business cycle occurs when Multiple Choice cyclical unemployment is at a minimum point. employment and output reach their lowest levels. the inflation rate is at its lowest level. the natural rate of unemployment is at a minimum point. Question 9 The unemployment rate of full-employment is also called the Multiple Choice frictional rate of unemployment. potential rate of unemployment. natural rate of unemployment. cyclical rate of unemployment. Question 10 The rate of unemployment when the economy is fully employed is called the Multiple Choice full-employment rate of unemployment. natural rate of unemployment. frictional rate of unemployment. structural rate of unemployment. Question 11 The labor force includes Multiple Choice employed workers and persons who are officially unemployed. full-time workers but excludes part-time workers. permanent employees but excludes temporary employees. employed workers but excludes persons who are officially unemployed. Question 12 Use the table below to answer the next question.    Year Employed Structural Frictional Cyclical Unemployed   2003 1,800 50 100 50 200   2004 2,400 100 100 300   2005 2,000 150 180 500   2006 2,660 40 0 140 Determine the number of people cyclically unemployed for the year 2004. Multiple Choice 100 200 -100 0 Question 13 According to the Bureau of Labor Statistics, to be officially unemployed a person must Multiple Choice be in the labor force. be 21 years of age or older. have lost a job. be waiting to be called back from a layoff. Question 14 Use the following diagram to answer the next question. The straight line E drawn through the wavy lines would provide an estimate of the Multiple Choice natural rate of unemployment. economic growth trend. recovery trend. recession fluctuation. Question 15 In calculating the unemployment rate, part-time workers are Multiple Choice used to determine the size of the labor force, but not the unemployment rate. counted as unemployed because they are not working full-time. counted as employed because they are receiving payment for work. treated the same as "discouraged" workers who are not actively seeking employment. Question 16 Search and wait unemployment is another way to describe Multiple Choice frictional unemployment. structural unemployment. cyclical unemployment. noncyclical unemployment. Question 17 Use the table below to answer the next question.      Year Employed Structural Frictional Cyclical Unemployed   2003 1,800 50 100 50 200   2004 2,400 100 100 300   2005 2,000 150 180 500   2006 2,660 40 0 140 Determine the number of people structurally unemployed for the year 2005. Multiple Choice 150 0 220  170 Question 18 The GDP gap measures the amount by which Multiple Choice potential GDP differs from actual GDP. actual GDP exceeds equilibrium GDP. nominal GDP exceeds real GDP. actual GDP exceeds national income. Question 19 The unemployment rate is interpreted as the percentage of the Multiple Choice adult population who are unemployed. workforce that have been laid off. able-bodied population who are not working. labor force that are not employed. Question 20 Which of the following statements is true about causes of business cycle fluctuations? Multiple Choice Economists all agree that productivity shocks are the cause of most business cycle changes. There are a wide range of theories as to the underlying causes of business cycle movements. Economists all agree that monetary changes are primarily responsible for business cycle fluctuations. Economists all agree that supply shocks are the cause of most business cycle fluctuations. Question 21 What is an advantage of mild inflation according to some economists? Multiple Choice It helps to close the GDP gap. It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive. It reduces the inflation premium. It makes it easier for firms to adjust real wages downward as demand for their products falls. Question 22 In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the Consumer Price Index for the economy in year 2? Multiple Choice 110 100 120 115 Question 23 Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unexpected inflation occurs in the economy, then Multiple Choice both lenders and borrowers benefit. borrowers are hurt, but lenders benefit. lenders are hurt, but borrowers benefit. both lenders and borrowers are hurt. Question 24 Inflation is a rise in Multiple Choice the standard of living over time. real GDP over time. unemployment over time. the general level of prices over time. Question 25 Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is Multiple Choice unexpected inflation. cost-push inflation. demand-pull inflation. expected inflation. Question 26 Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers? Multiple Choice the Retail Trade survey the GDP Price Index the Wholesale Price Index the Consumer Price Index Question 27 The CPI compiled by the Bureau of Labor Statistics is used in the computations for the Multiple Choice inflation rate. interest rate. unemployment rate. foreign exchange rate. Question 28 Inflation caused by a rise in the prices of inputs is referred to as Multiple Choice hyperinflation. cost-push inflation. unexpected inflation. demand-pull inflation. Question 29 What is the main problem with mild inflation according to some economists? Multiple Choice It diverts productive time towards activities to hedge against inflation. It leads to unexpected deflation. It reduces the size of the GDP gap. It increases frictional and structural unemployment in the economy. Question 30 Core inflation refers to the inflation picture after stripping away the Multiple Choice service-sector prices. food and energy prices. government-regulated prices. capital goods prices.