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29-21
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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: 29-02 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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
29-33
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
29-35
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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: 29-03 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
29-37
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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
29-40
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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?
