978-1259723223 Test Bank TBChap029 Part 2

29–21

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

Top i c :

Unemployment

53.

In the depth of the Great Depression, the unemployment rate in the United States was about

54. Full-Time Employed = 80

Part-Time Employed = 25

Unemployed = 15

Discouraged Workers = 5

Members of Underground Economy = 6

Consumer Price Index = 110

Refer to the given information about a hypothetical economy. The unemployment rate is

55. Full-Time Employed = 80

Part-Time Employed = 25

Unemployed = 15

Discouraged Workers = 5

Members of Underground Economy = 6

Consumer Price Index = 110

Refer to the given information about a hypothetical economy. If members of the underground

economy are currently counted as part of the unemployed

when in fact they are employed, the

official unemployment rate is overstated by about

56. Full-Time Employed = 80

Part-Time Employed = 25

Unemployed = 15

Discouraged Workers = 5

Members of Underground Economy = 6

Consumer Price Index = 110

Refer to the given information about a hypothetical economy. The rate of inflation

29–23

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push inflation and demand-pull inflation.

Test Bank: I

Top i c :

Inflation

Type: Table

57.

Which of the following types of unemployment is directly associated with insufficient overall

demand for goods and services?

58.

The GDP gap measures the difference between

59.

A large negative GDP gap implies

29–24

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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: 29-02 Illustrate how unemployment is measured and explain the

different types of unemployment.

Test Bank: I

Top i c :

Unemployment

60.

The aggregate cost of unemployment can be measured by the

61.

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion, potential GDP

is

62.

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP

is

63.

If potential GDP is $330 billion and there is a positive GDP gap of $30 billion, actual GDP

is

64.

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion, actual GDP

is

29–26

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

Top i c :

Unemployment

65.

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate

of unemployment is 9 percent. According to Okun’s law, the

negative GDP gap as a percentage

of potential GDP is

66.

The relationship between the size of the negative GDP gap and the unemployment rate is

67.

If actual GDP is less than potential GDP,

29–27

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D. the actual unemployment rate will be higher than the natural unemployment rate.

68.

Full–employment output is also called

69. Potential Real GDP = $200 Billion

Natural Rate of Unemployment = 6

Percent

Actual Rate of Unemployment = 12 Percent

Refer to the accompanying data, which is for a specific year in a hypothetical economy for which

Okun’s law is applicable. The size of the negative GDP

gap as a percentage of potential GDP

for the economy is

29–28

written consent of McGraw-Hill Education.

Test Bank: I

Top i c :

Unemployment

Type: Table

70. Potential Real GDP = $200 Billion

Natural Rate of Unemployment = 6

Percent

Actual Rate of Unemployment = 12 Percent

Refer to the accompanying data, which is for a specific year in a hypothetical economy for which

Okun’s law is applicable.The amount of output being

forgone by the economy is

71. Potential Real GDP = $200 Billion

Natural Rate of Unemployment = 6

Percent

Actual Rate of Unemployment = 12 Percent

Refer to the accompanying data, which is for a specific year in a hypothetical economy for which

Okun’s law is applicable.If the unemployment rate in the

economy fell to 6 percent, we could

conclude that

29–29

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Type: Table

72.

Okun’s law

73.

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2

percentage point negative GDP gap occurs. This is a statement

of

74.

Unemployment rates in industrialized nations

29–30

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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

Top i c :

Unemployment

75.

Compared to other industrial nations, unemployment rates in the United States

76.

Inflation means that

77.

If the consumer price index falls from 120 to 116 in a particular year, the economy has

experienced

29–31

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B.

inflation of 3.33 percent.

C. deflation of 3.33 percent.

D. deflation of 4 percent.

78.

The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore, the rate of

inflation in 2002 was about

79.

The annual rate of inflation can be found by subtracting

29–32

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push inflation and demand-pull inflation.

Test Bank: I

Top i c :

Inflation

80.

If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in

that year is

81.

As applied to the price level, the “rule of 70″ indicates that the number of years required for

the price level to double can be found by

82.

Between 1980 and 2000, the price level approximately doubled. The average annual rate of

inflation over this 20-year period was about

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D. 2.8 percent.

83.

Given the annual rate of inflation, the “rule of 70″ allows one to

84.

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

in about

85.

If the rate of inflation is 12 percent per year, the price level will double in about

86.

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

87.

Demand-pull inflation

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Learning Objective: 29-03 Explain how inflation is measured and distinguish between cost–

push inflation and demand-pull inflation.

Test Bank: I

Top i c :

Inflation

88.

Demand-pull inflation

89.

The phrase “too much money chasing too few goods” best describes

90.

Unlike demand-pull inflation, cost-push inflation

29–36

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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: 29-03 Explain how inflation is measured and distinguish between cost–

push inflation and demand-pull inflation.

Test Bank: I

Top i c :

Inflation

91.

Inflation initiated by increases in wages or other resource prices is labeled

92.

Cost-push inflation

93.

Cost-push inflation may be caused by

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B.

a decrease in wage rates.

C. a negative supply shock.

D. an increase in resource availability.

94.

Rising per-unit production costs are most directly associated with

95.

Which of the following would most likely occur during the expansionary phase of the

business cycle?

29–38

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Top i c :

Inflation

96.

Core inflation measures

97.

Inflation, as measured by percentage changes in the CPI,

98.

Which of the following would most likely concern policymakers?

29–39

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Difficulty :

02 Medium

Learning Objective: 29-03 Explain how inflation is measured and distinguish between cost–

push inflation and demand-pull inflation.

Test Bank: I

Top i c :

Inflation

99.

Real income is found by

100.

Which of the following formulas is correct? Percentage change in

101.

Real income can be determined by

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C.

dividing the annual rate of inflation into the number “70.”

D. deflating nominal income for inflation.

102.

Suppose that a person’s nominal income rises from $10,000 to $12,000 and the consumer

price index rises from 100 to 105. The person‘s real income

will

103.

Recently, a labor union argued that the standard of living of its members was falling. A

critic of the union argued that this could not possibly be true

because the union had been

receiving increases in the nominal incomes of its members through collective bargaining. Is the

critic correct?