1. Which of the following explains why production rises in most years?
a.
increases in the labor force
b.
increases in the capital stock
c.
advances in technological knowledge
d.
All of the above are correct.
2. A relatively mild period of falling incomes and rising unemployment is called a(n)
a.
depression.
b.
recession.
c.
expansion.
d.
business cycle.
3. During a recession the economy experiences
a.
rising employment and income.
b.
rising employment and falling income.
c.
rising income and falling employment.
d.
falling employment and income.
4. During recessions
a.
workers are laid off.
b.
factories are idle.
c.
firms may find they are unable to sell all they produce.
d.
All of the above are correct.
5. Most economists use the aggregate demand and aggregate supply model primarily to analyze
a.
short-run fluctuations in the economy.
b.
the effects of macroeconomic policy on the prices of individual goods.
c.
the long-run effects of international trade policies.
d.
productivity and economic growth.
6. Which of the following is not correct?
a.
The model of aggregate demand and aggregate supply is used by most economists to analyze short-run
fluctuations.
b.
During a recession firms cut back production and workers are laid off.
c.
A recession is a period of declining real incomes and declining unemployment.
d.
A depression is a severe recession.
7. During a recession, unemployment
a.
increases.
b.
decreases.
c.
is equal to the natural rate of unemployment.
d.
is frictional unemployment minus structural unemployment.
8. On average, over the last 50 years, real GDP has grown by about
a.
3 percent per year.
b.
2 percent per year.
c.
1 percent per year.
d.
4 percent per year.
9. In October 2009, the official unemployment rate rose to
a.
10%.
b.
8%.
c.
6%
d.
4%.