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GDP is
203.
The higher the rate of unemployment,
204.
If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we
can conclude that
29-82
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: II
Top ic:
Unemployment
205.
If the negative GDP gap were equal to 4 percent of the potential GDP, Okun's law suggests
that the actual unemployment rate would exceed the natural
rate of unemployment by
206.
If the natural rate of unemployment was 6 percent, the current unemployment rate was 10
percent, and the potential GDP was $4,000 billion, then
according to Okun's law the economy
would have sacrificed
207.
Okun's law indicates that for
29-83
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, a 5
percent GDP gap is generated.
C.
a 5 percent GDP gap, a 1 percent increase in the natural unemployment rate is generated.
D.
a 2 percent GDP gap, a 2 percent increase in the actual unemployment rate is generated.
AACSB: Knowledge Application
A c c essibi 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: II
Top ic:
Unemployment
208.
If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5
percent, then Okun's law indicates that the GDP gap is
209.
Unemployment rates for men and women normally are very similar. In the Great Recession
of 2007–09, the unemployment rate for men
29-84
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
different types of unemployment.
Test Bank: II
Top ic:
Unemployment
210.
The rate of unemployment tends to be lowest for
211.
Unemployment rates for skilled workers compared to unemployment rates for unskilled
workers are
212.
Unemployment rates in the United States from 2005 to 2015 were in the range of
29-85
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
1.5 percent to 4.5 percent.
C.
9.8 percent to 12.4 percent.
D.
12.5 percent to 15.7 percent.
AACSB: Knowledge Application
A c c essibi 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: II
Top ic:
Unemployment
213.
"Depression means idleness. And idleness means loss of skills, loss of self-respect,
plummeting morale, family disintegration, and sociopolitical unrest."
This quote describes
some of the
214.
Inflation is a rise in
29-86
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Top ic:
Inflation
215.
When inflation occurs,
216.
The CPI compiled by the Bureau of Labor Statistics is used in the computations for
217.
If the Consumer Price Index for a certain year is 120, this means that the average price of
consumer items in that year was
29-87
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c essibi 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: II
Top ic:
Inflation
218.
The inflation rate measures the percentage growth rate of
219.
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?
220.
Which measure of inflation would include consumer goods and capital goods?
29-88
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B.
the Consumer Price Index
C.
the Retail Trade Survey
D.
the Employment Cost Index
AACSB: Knowledge Application
A c c essibi 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: II
Top ic:
Inflation
221.
If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of
inflation was approximately
222.
If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate
of inflation was approximately
29-89
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Top ic:
Inflation
223.
If the Consumer Price Index was 90 in one year and 100 in the following year, then the rate
of inflation was about
224.
Which of the following statistics can turn negative?
225.
The economy has an annual inflation rate of 3.5 percent. It will take approximately how
many years for the price level to double?
29-90
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 essibi 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: II
Top ic:
Inflation
226.
Over a 10-year period, the Consumer Price Index doubled. On the basis of this information
and using the rule of 70, we can say that the average annual
rate of inflation over this period
was approximately
227.
Inflation rates in the United States from 2005 to 2015 were within the range of about
228.
Inflation rates in the United States reached double-digit rates in the
229.
Which of the following countries experienced deflation for several years in the period
2002–2015?
230.
Inflation caused by an increase in aggregate spending is referred to as
29-92
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: II
Top ic:
Inflation
231.
Inflation that occurs when total spending is greater than the economy's ability to produce
output at the existing price level is
232.
A statement that is often used to describe demand-pull inflation is
233.
Which of the following is a correct statement?
29-93
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 essibi 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: II
Top ic:
Inflation
234.
Inflation caused by a rise in the prices of inputs is referred to as
235.
When oil and energy prices rise, the economy tends to experience
236.
Only two resources, capital and labor, are used in an economy to produce an output of 600
million units. If the total cost of capital resources is $300
million and the total cost of labor
resources is $100 million, then the per-unit production costs in this economy are
237.
When total input costs rise slower than the total units of output produced, then the per-unit
production costs
238.
If you knew that the per-unit production cost was $8 and that the total cost of inputs was
$1,000, then the number of units of output would be
29-95
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: II
Top ic:
Inflation
239.
Cost-push inflation tends to be characterized by all of the following, except
240.
Core inflation refers to the inflation picture after stripping away the
241.
When the government prints money faster than output is expanding, the inflation that will
occur is a form of
29-96
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written consent of McGraw-Hill Education.
D. taxation.
AACSB: Knowledge Application
A c c essibi l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 29-04 Relate how unanticipated inflation can redistribute real income.
Test Bank: II
Top ic:
Redistribution Effects of Inflation
242.
For a given amount of nominal income, the real income will
243.
If the average level of nominal income in a nation is $44,000 and the price level index is
175, the average real income would be about
244.
Real income will rise from one year to the next if nominal income
29-97
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written consent of McGraw-Hill Education.
B.
rises and the price level rises faster.
C.
falls and the price level rises.
D.
falls faster than the price level.
AACSB: Knowledge Application
A c c essibi l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 29-04 Relate how unanticipated inflation can redistribute real income.
Test Bank: II
Top ic:
Redistribution Effects of Inflation
245.
In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2,
the price level was 125 and the average nominal level of
income was $32,000. What happened
to real income from Year 1 to Year 2?
246.
If a person's nominal income increases by 5 percent while the price level increases by 2
percent, then that person's real income
248.
Recently, a teachers' union argued that the standard of living of teachers working for the
school district was falling. The negotiating team for the school
board replied that this was not
true because the teachers had received significant increases in nominal income through collective
bargaining. Could the union statement be correct?
249.
For a person to keep his real income steady at a certain level from one year to the next, his
nominal income must
