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- 1. Multiple Choice
An example of frictional unemployment is a(n):
worker at a fast food restaurant who quits work and attends college full time
autoworker who is temporarily laid off from an automobile company due to a decline in sales
geologist who is permanently laid off from an oil company due to a new technological advance
autoworker who is not working because he is currently on strike from his job at the production factory
real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California
- 2. Multiple Choice
The aggregate price level is:
the average price of commodities
the overall level of wages in the economy
the overall level of prices in the economy
the average price of shares on the stock market
the average rate of inflation
- 3. Multiple Choice
An Intermediate good would be:
A professors salary
lumber used in building a house
a new boat purchased by a professor to be used on vacation
the natural gas used to heat the professors home
government purchases of military equipment
- 4. Multiple Choice
Which one of the following transactions is included in a current year's GDP as investment spending?
Anton purchased his friends condo
Melanie bought a new washing machine for her condominium
Maggie bought a play gym set for her day care business
ABC company purchased 10,000 shares of IBM stock
Ronnie bought a new BMW
- 5. Multiple Choice
Which of the following annual rates of inflation would most likely be called hyperinflation?
5%
2000%
25%
15%
13%
- 6. Multiple Choice
When the economy is in recovery, cyclical unemployment is _____________ and the actual unemployment rate is _________ the natural rate of unemployment
falling; rising and greater than
equal to zero; rising and greater than
falling; falling closer to
equal to zero; rising and equal to
rising; equal to
- 7. Multiple Choice
Unemployment that results when there are more people seeking jobs in a labor market than there are jobs available is considered
frictional unemployment
seasonal unemployment
structural unemployment
cyclical unemployment
natural unemployment
- 8. Multiple Choice
An example of investment spending is:
the purchase of a stock shares by a mutual fund
the amount of funds raised by the government in the financial markets
the purchase of a freezer by an ice cream parlor
the purchase of government bonds by a private household
the payment of dividends to a corporations shareholders
- 9. Multiple Choice
Which of the following represents the best scenario for a bank lending money to its customer?
fixed interest rate of 12% with 7% inflation
fixed interest rate of 19% with 15% inflation
fixed interest rate of 8% with 1% inflation
fixed interest rate of 10% with 7% inflation
fixed interest rate of 11% with 5% inflation
- 10. Multiple Choice
In 2007, the Bureau of Labor Statistics calculated the unemployment rate to be 7.5%. If the frictional unemployment was 1% and the structural unemployment was 1.5%, then the natural rate of unemployment would be
5%
7.5%
4.5%
1%
5.5%
- 11. Multiple Choice
The presence of discouraged workers in the economy tends to
raise the official unemployment rate
lower the official unemployment rate
have no impact on the official unemployment rate
lower the number of people who are frictionally unemployed
increase the number of people who are structurally unemployed
- 12. Multiple Choice
Gross domestic product is the market value of an economy's total production of _______ for a given time period.
stocks and bonds
intermediate goods and services
consumer goods and services
goods and services
final goods and services
- 13. Multiple Choice
If the labor force totals 100 million persons and 90 million are actively working, then the unemployment rate is ________.
5%
1%
90%
11%
10%
- 14. Multiple Choice
Minimum wage laws, labor unions, and efficiency wages can cause
falling wages and more structural unemployment
falling wages and less frictional unemployment
rising wages but more frictional unemployment
rising wages and less cyclical unemployment
rising wages but more structural unemployment
- 15. Multiple Choice
Sally works twenty hours a week for an accounting firm. She would like to work forty hours a week and expects that she will in the future. Sally is a(n):
unemployed worker
underemployed worker
discouraged worker
full time worker
marginally employed worker
- 16. Multiple Choice
Gross domestic product is defined as
consumer spending + government transfers + investment spending + exports – imports.
consumer spending + government purchases + investment spending + imports– exports.
consumer spending + government purchases + financial spending + exports – imports.
consumer spending + government purchases + investment spending + exports – imports.
disposable income + taxes + investment spending + exports + imports.
- 17. Multiple Choice
A process that brings the inflation rate down, is called:
hyperinflation
stagflation
deflation
speculation
disinflation
- 18. Multiple Choice
During a typical recession:
there is no relationship between unemployment and the growth rate of real GDP
unemployment increases and the growth rate of real GDP decreases
unemployment increases and the growth rate of real GDP increases
unemployment decreases and the growth rate of real GDP increases
unemployment and the growth rate of real GDP both decrease
- 19. Multiple Choice
Suppose the real interest rate is 2.1% and the nominal interest rate is 5.4%. Then the expected inflation rate is:
-3.3%
3.3%
7.5%
5.4%
2.1%
- 20. Multiple Choice
Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. This type of unemployment is known as:
Cyclical Unemployment
Natural Unemployment
Seasonal Unemployment
Frictional Unemployment
Structural Unemployment
- 21. Multiple Choice
Dora earned a salary of $60,000 in 2013, but she accepted a new job in 2014 that paid her a salary of $72,000. If the rate of inflation between 2013 and 2014 was 5%, we can determine that her real salary _____ by approximately _____.
decreased; 2%
increased; 20%
increased; 10%
increased; 15%
decreased; 5%
- 22. Multiple Choice
Unemployment rates tend to decrease when:
there is an expansion in the economy
discouraged workers become active job seekers
A contraction in the economy occurs
Underemployed workers become unemployed
the business cycle is approaching the trough
- 23. Multiple Choice
Over the last year, Eli has been working very hard and his employer has taken notice by giving him a 6% raise in his salary. During this last year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:
increased by 2%
increased by 6%
increased by 10%
decreased by 4%
stayed constant
- 24. Multiple Choice
Which of the following is true?
Unexpected inflation benefits lenders but does not affect borrowers.
Unexpected inflation benefits borrowers but does not affect lenders.
Unexpected deflation benefits lenders but does not affect borrower
Unexpected inflation benefits borrowers and hurts lenders.
unexpected inflation benefits lenders and hurts borrowers.
- 25. Multiple Choice
An example of a government transfer is a(n):
expenditure on an interstate highway
bequest from a deceased relative.
Social Security payment.
salary earned as an economist with a government agency
salary for members of the armed forces.
- 26. Multiple Choice
Which one of the following price indices is commonly used to measure the cost of living?
GDP deflator
consumer price index
human development index
producer price index
wholesale price index
- 27. Multiple Choice
Employment in the labor force is defined as
the total labor force
the total population of working minus the number of person unemployed
The total number of people actually working
the total population of working age
the total number of persons not unemployed
- 28. Multiple Choice
A person who is out of work, would like to work, but has given up looking for work, is often called
employed
retired or disabled
a marginally productive worker
unemployed
a discouraged worker
- 29. Multiple Choice
If actual unemployment is 6.2% and the natural rate of unemployment is 4%, cyclical unemployment is
10.2%
2.2%
6.2%
4%
3.2%
- 30. Multiple Choice
Which of the following most accurately describes how to calculate the unemployment rate
(unemployed/population) × 100
(unemployed/labor force) × 100
[(unemployed – employed)/labor force] × 100
(unemployed/employed) × 100
[(unemployed+employed/employed)] × 100
- 31. Multiple Choice
Nominal GDP is:
the future dollar GDP
the inflation adjusted GDP
the constant dollar GDP
The current dollar GDP
the real GDP minus depreciation
- 32. Multiple Choice
You read in the newspaper that the CPI in 2008 was 120, you will conclude that a typical market basket in 2008 would have cost
120 percent more than the same market basket purchased in 2007.
120 percent more than the same market basket purchased in the base year.
20 percent less than the same market basket purchased in the base year.
20 percent more than the same market basket purchased in the base year.
20 percent more than the same market basket purchased in 2007.
- 33. Multiple Choice
A minimum wage in a labor market is set _____ the equilibrium wage and creates a _____ of labor.
above; surplus
below; surplus
above; shortage
equal to; an efficient allocation
below; shortage
- 34. Multiple Choice
Double counting would occur if:
new construction was counted as investment spending
GDP was calculated by adding together C, IG, G, XN
imports were subtracted from GDP
used goods were included in the GDP calculation
inventories were added to the GDP calculation
- 35. Multiple Choice
Contractionary fiscal policy would most likely be used during...
recessions
depressions
periods of sustained inflation
anytime we have a GDP gap
times where the economy is operating at full employment
- 36. Multiple Choice
Which of the following are responsible for making fiscal policy decision?
The Federal Reserve
The Supreme Court
The National Council of Economic Advisors
The President and Congress
The National Security Adviser
- 37. Multiple Choice
What would you conclude about an economy characterized by increasing gross domestic product (GDP), low unemployment, and increasing inflation?
The economy is in a slow down
The economy is in the expansion phase of a business cycle
The government needs to fix the unemployment problem
The Federal Reserve should expand the money supply
We're all screwed; time to prepare for the incoming apocalypse
- 38. Multiple Choice
What is the value of current gross domestic product adjusted for inflation
Real GDP
Nominal GDP
Deflation
Inflation
Disinflation
- 39. Multiple Choice
Which of the following goods would be considered scarce?
I. Education
II. Gold
III. Time
I only
II only
III only
I an III
I, II, and III
- 40. Multiple Choice
= C + G + I + NX
What does the C represent?
Investment
Government Spending
Consumer Spending
GDP
Net Exports
- 41. Multiple Choice
Of the following groups, the one hurt MOST by unanticipated inflation is
Workers with cost-of-living adjustment contracts
People who have invested savings in variable rate returns
Banks who have made short-term adjustable rate mortgages
Retirees who are living on fixed incomes
Mr. Empey who doesn't have enough money as it is
- 42. Multiple Choice
A situation in which a worker is employed, but not in the desired capacity—or is working less than full time even though they would prefer to work more hours—is known as
Frictionally Unemployed
Unemployed
Structurally Unemployed
Underemployed
Employed
- 43. Multiple Choice
The best measure for comparing a country's aggregate output over time is
nominal GDP
real GDP
nominal GDP per capita
real GDP per capita
average GDP per capita
- 44. Multiple Choice
A person who moved to a new state and took two months to find a new job experienced which type of unemployment?
frictional
structural
cyclical
natural
none of the above
- 45. Multiple Choice
What type of unemployment is created by a recession?
frictional
structural
cyclical
natural
none of the above
- 46. Multiple Choice
Who is your favorite teacher in Killeen High School?
Mr. Empey
Mrs. Snyder/Berg
Some Science Teacher (No)
Some Math Teacher (No)
Some English Teacher (No)
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