Chapter 29 Business Cycles, Unemployment, and Inflation A n s w e r K ey
Multiple Choice Questions
1.
Recurring upswings and downswings in an economy‘s real GDP over time are called
2.
In the United States, business cycles have occurred against a backdrop of a long-run trend of
3.
Most economists agree that the immediate determinant of the volume of output and
employment is the
29-2
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written consent of McGraw-Hill Education.
Difficulty:
02 Medium
Learning Objective: 29-01 Describe the business cycle and its primary phases.
Test Bank: I
Topic:
The Business Cycle
4.
As it relates to economic growth, the term long-run trend refers to
5.
In which of the following industries or sectors of the economy will business cycle fluctuations
likely have the greatest effect on output?
6.
The industries or sectors of the economy in which business cycle fluctuations tend to affect
output most are
29-3
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 29-01 Describe the business cycle and its primary phases.
Test Bank: I
Topic:
The Business Cycle
7.
During a severe recession, we would expect output to fall the most in
8.
The phase of the business cycle in which real GDP declines is called
9.
The phase of the business cycle in which real GDP is at a minimum is called
10.
The production of durable goods varies more than the production of nondurable goods
because
11.
A recession is defined as a period in which
12.
In which phase of the business cycle will the economy most likely experience rising real
output and falling unemployment rates?
29-5
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written consent of McGraw-Hill Education.
B.
recession
C.
peak
D.
trough
14.
Which of the following is not seen by economists as an underlying cause of business cycle
fluctuations?
15.
Most economists agree that the immediate cause of most business cycle variation is
16.
An unexpected increase in total spending will cause an increase in GDP
17.
What is the primary reason that changes in total spending lead to cyclical changes in output
and employment?
29-7
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written consent of McGraw-Hill Education.
Topic:
The Business Cycle
18.
Innovations such as the microchip and the Internet lead to business cycle variations because
19.
Which of the following would most likely move the economy into a recession in the short
term?
20.
Unemployed
7
Total Population
145
Employed
95
Discouraged Workers
3
The table contains information about the hypothetical economy of Scoob. All figures are in
millions. The labor force in Scoob is
21.
Unemployed
7
Total Population
145
Employed
95
Discouraged Workers
3
The table contains information about the hypothetical economy of Scoob. All figures are in
millions. The unemployment rate in Scoob is
22.
Unemployed
7
Total Population
145
Employed
95
Discouraged Workers
3
The table contains information about the hypothetical economy of Scoob. All figures are in
millions. If the natural rate of unemployment in Scoob is 5
percent, then
23.
The United States’ economy is considered to be at full employment when
24.
In the United States, the rate of unemployment is highest for
25.
Kara 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. Kara
presently is
26.
According to the Bureau of Labor Statistics, to be officially unemployed a person must
29–11
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written consent of McGraw-Hill Education.
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 29-02 Illustrate how unemployment is measured and explain the
different types of unemployment.
Test Bank: I
Topic:
Unemployment
27.
The natural rate of unemployment is
28.
The labor force includes
29.
The unemployment rate of
29–12
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written consent of McGraw-Hill Education.
D. teenagers is much higher than that of adults.
30.
Alex works in his own home as a homemaker and full-time caretaker of his children.
Officially, he is
31.
If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then
the
32.
Official unemployment statistics
33.
The presence of discouraged workers
34.
Part-time workers who want full-time work are counted as
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written consent of McGraw-Hill Education.
unemployment.
35.
Assuming the total population is 100 million, the civilian labor force is 50 million, and 47
million workers are employed, the unemployment rate is
36.
The natural rate of unemployment is the
37.
Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with
company A and will begin a better job in two weeks with
company B. Kyle will be considered
as
38.
The unemployment rate is the
39.
Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1
million of them become discouraged over their job prospects and
cease to look for work. As a
result of this, all else equal, the official unemployment rate would
29–16
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written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 29-02 Illustrate how unemployment is measured and explain the
different types of unemployment.
Test Bank: I
Topic:
Unemployment
40.
Susie has lost her job in a Vermont textile plant because of import competition. She intends to
take a short course in electronics and move to Oregon,
where she anticipates that a new job will
be available. We can say that Susie is faced with
41.
Cyclical unemployment results from
42.
Which of the following is correct?
43.
A college graduate using the summer following graduation to search for a job would best be
classified as
44.
Unemployment involving a mismatch of the skills of unemployed workers and the skills
required for available jobs is called
29–18
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written consent of McGraw-Hill Education.
Learning Objective: 29-02 Illustrate how unemployment is measured and explain the
different types of unemployment.
Test Bank: I
Topic:
Unemployment
45.
Structural unemployment
46.
Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run
47.
Which of the following constitute the types of unemployment occurring at the natural rate of
unemployment?
29–19
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written consent of McGraw-Hill Education.
C.
cyclical and structural unemployment
D.
frictional, structural, and cyclical unemployment
48.
Wait unemployment and search unemployment are both types of
49.
The type of unemployment associated with recessions is called
50.
Suppose there are 10 million part-time workers and 90 million full-time workers in an
economy. Five million of the part-time workers switch to full-time
work. As a result,
51.
The government agency responsible for collecting and reporting unemployment data is the
52.
At the economy’s natural rate of unemployment,