71. The growth rate of potential GDP is the sum of two other growth rates. These other growth rates are
a.
population and resource base.
b.
goods output and services output.
c.
labor input and labor hours worked.
d.
labor input and labor productivity.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
72. Adding together the growth rate of labor input and the growth rate of labor productivity yields the growth rate of
a.
nominal GDP.
b.
actual GDP.
c.
potential GDP.
d.
final GDP.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
73. The growth rates of actual and potential GDP
a.
are similar in both the short and long run.
b.
are similar in the short run but not the long run.
c.
are similar in the long run but not the short run.
d.
are different in both the short and long run.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
74. When the growth rates of actual and potential GDP diverge, they usually diverge because
a.
b.
c.
d.
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
75. Growth in potential GDP depends on
a.
the labor force growth rate, capital stock growth rate, and rate of technical progress.
b.
government spending, growth in prices, and labor productivity.
c.
cyclical fluctuations and growth in the capital stock.
d.
growth in real GDP, nominal GDP, and the population.
a
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
76. One basic way to boost the nation’s growth rate is to
a.
increase wages paid to labor.
b.
slow the rate of technical progress.
c.
reduce the population growth rate.
d.
accumulate more capital
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
77. Labor productivity is calculated by dividing GDP by
a.
population.
b.
the price level.
c.
capital stock
d.
labor force.
Easy
United States – BPROG: Analytic
The Growth Rate of Potential GDP
78. To measure how productive workers in the economy are, the best measure to use would be
a.
real GDP.
b.
GDP divided by the population.
c.
GDP divided by the nation’s capital stock.
d.
GDP divided by hours worked.
Easy
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
79. If the population increase in India is smaller than the increase in Indian real GDP, then GDP per capita will
a.
decrease.
b.
increase.
c.
remain constant.
d.
increase more slowly than real GDP.
Moderate
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
80. If economic output is increased by increasing the number of people working in the economy, then
a.
both GDP per capita and labor productivity will increase.
b.
both GDP per capita and labor productivity will decrease.
c.
GDP per capita will increase.
d.
Labor productivity will increase.
c
Difficult
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
81. The growth rate of potential GDP depends on
a.
the rate of technical progress.
b.
the growth rate of the capital stock.
c.
the growth rate of the labor force.
d.
all of the above.
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
82. GDP equals hours of work times
a.
labor force.
b.
output per hour.
c.
population.
d.
capital stock.
Easy
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
83. Labor productivity times hours of work equals
a.
per capita GDP.
b.
capital stock.
c.
population.
d.
GDP.
Easy
DISC: The study of economics, an – DISC: The study of economics, and definitions in
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
84. In the United States, labor productivity is approximately
a.
$73 per hour.
b.
$94 per hour.
c.
$102 per hour.
d.
$110 per hour.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Growth Rate of Potential GDP
85. The growth rate of potential GDP is the sum of the growth rates of
a.
labor force and population.
b.
labor force and labor productivity.
c.
labor force and capital stock.
d.
labor productivity and capital stock.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
The Growth Rate of Potential GDP
86. A new technological innovation would increase
a.
the labor force.
b.
labor hours worked.
c.
labor productivity.
d.
population growth.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
87. Prior to the Great Recession of 2007-2009, labor input in the U.S. was growing at nearly:
a.
1 percent per year
b.
2 percent per year.
c.
2.5 percent per year.
d.
3 percent per year.
a
Easy
United States – Analytic – BB-Legal
Measuring the Economy
The Growth Rate of Potential GDP
88. In the contemporary United States, labor productivity has been growing at approximately
a.
1.5 percent per year
b.
2.0 percent per year.
c.
2.6 percent per year.
d.
3.9 percent per year.
c
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Growth Rate of Potential GDP
89. Throughout the period from 1996 to 2010, U.S. Real GDP growth has been
a.
constant.
b.
declining.
c.
steadily increasing.
d.
fluctuating.
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Growth Rate of Potential GDP
90. Over long periods of time, the growth rates of actual and potential GDP have been
a.
diverging.
b.
similar.
c.
declining together.
d.
usually far apart.
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Growth Rate of Potential GDP
91. Which of the following groups would be most optimistic about the effects of economic growth?
a.
Environmentalists
b.
Psychologists
c.
Economists
d.
All would be similar in their views
c
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
92. Economic growth is most likely to solve the problems of
a.
environmental pollution.
b.
world poverty.
c.
emotional stress.
d.
social alienation.
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
93. Americans would probably be supportive of
a.
strict controls on hours of work.
b.
limits on income potential.
c.
mandatory work limits.
d.
loose controls on economic activities.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
94. Faster economic growth imposes an opportunity cost in the form of
a.
reduced current consumption.
b.
a larger capital stock.
c.
increased investment.
d.
increased future income.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Growth Rate of Potential GDP
95. When real GDP grows more slowly than potential GDP,
a.
nominal GDP rises.
b.
the unemployment rate falls.
c.
labor productivity falls.
d.
the unemployment rate rises.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
96. If the labor force grows faster than the number employed, the
a.
unemployment rate will fall.
b.
unemployment rate will rise.
c.
labor force rate will rise.
d.
employment rate will rise.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
97. The unemployment rate is the number of unemployed people, expressed as
a.
a ratio of total employed to the population.
b.
a ratio of unemployed to the total employed.
c.
a percentage of the labor force.
d.
a percentage of the population.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
98. If part of the labor force is unemployed, the foregone goods and services are
a.
lost until the unemployed find jobs.
b.
are replaced by unemployment insurance.
c.
are lost forever.
d.
are replaced by an equal amount of imports.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
99. As the unemployment rate rises,
a.
real GDP also rises.
b.
nominal GDP rises.
c.
the employment rate rises.
d.
lost national output rises.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
100. The shortfall between actual real GDP and potential GDP
a.
decreases as the unemployment rate rises.
b.
increases as the unemployment rate rises.
c.
increases as the employment rate rises.
d.
decreases as the labor force increases.
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Goal of Low Unemployment
101. The relationship between industrial capacity percentage and
a.
the unemployment rate is indirect.
b.
the unemployment rate is direct.
c.
real GDP is indirect.
d.
nominal GDP is indirect.
a
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
102. Compared to the unemployed during the Great Depression, persons unemployed in today’s economy are
a.
worse off due to higher price levels.
b.
worse off due to higher rates of unemployment in the 1990s.
c.
better off due to unemployment insurance.
d.
better off due to lower price levels.
c
Moderate
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Human Costs of High Unemployment
103. Which of the following groups would have the highest unemployment rates?
a.
married men
b.
white workers
c.
college graduates
d.
teenagers
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Human Costs of High Unemployment
104. Which of the following groups would have the lowest unemployment rates?
a.
high-school dropouts
b.
married men
c.
nonwhite teenagers
d.
nonwhite women
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Human Costs of High Unemployment
105. In 2009, which of the following countries had the lowest average unemployment rates?
a.
Canada
b.
France
c.
Italy
d.
Germany
e.
United States
a
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Human Costs of High Unemployment
106. In 2009 the average unemployment rate in U.S. averaged
a.
4.6 percent.
b.
5.4 percent.
c.
7.2 percent.
d.
9.3 percent.
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
The Human Costs of High Unemployment
107. Persons who have given up looking for work are classified as
a.
unemployed.
b.
discouraged workers.
c.
in the labor force.
d.
temporarily unemployed.
Easy
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Counting the Unemployed: The Official Statistics
108. People who failed to look for a job are classified as
a.
unemployed.
b.
underemployed.
c.
out of the labor force.
d.
part time employed.
c
Easy
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Counting the Unemployed: The Official Statistics
109. Discouraged workers are included in the
a.
labor force category.
b.
unemployed category.
c.
not in the labor force category.
d.
employed category.
c
Moderate
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Counting the Unemployed: The Official Statistics
110. The unemployment rate is equal to
a.
the number unemployed divided by the labor force.
b.
the number unemployed divided by the population.
c.
the number unemployed divided by the number employed.
d.
the labor force divided by the population.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Counting the Unemployed: The Official Statistics
111. If the discouraged workers were included in the labor force,
a.
the unemployment rate would fall.
b.
the labor force would decrease.
c.
the employment rate would rise.
d.
the unemployment rate would rise.
United States – Analytic – BB-Legal
Labor markets
Counting the Unemployed: The Official Statistics
112. The term frictional unemployment refers to persons who are out of work
a.
due to technological change.
b.
due to strikes or lockouts.
c.
and have given up looking for work.
d.
because they are between jobs.
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
113. Someone who is out of work because they are between jobs is experiencing
a.
frictional unemployment.
b.
structural unemployment.
c.
seasonal unemployment.
d.
cyclical unemployment.
a
Easy
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
114. One of the factors contributing to the existence of frictional unemployment is
a.
automation.
b.
labor union strikes.
c.
occupational mobility.
d.
falling real GDP.
c
Easy
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
115. Recent research suggests that the federal minimum wage law
a.
clearly causes significant unemployment.
b.
causes unemployment for teenagers.
c.
causes unemployment for high wage workers.
d.
may not cause much, if any, unemployment.
Moderate
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
116. One of the social benefits of frictional unemployment is that
a.
workers get time off from work.
b.
economic growth is limited.
c.
workers move from less to more valuable firms.
d.
wage rates decrease.
c
Moderate
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
117. When various firms fail because their output is not demanded by society, workers may suffer
a.
structural unemployment.
b.
frictional unemployment.
c.
seasonal unemployment.
d.
cyclical unemployment.
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
118. Technological change or the effects of automation cause
a.
structural unemployment.
b.
frictional unemployment.
c.
seasonal unemployment.
d.
cyclical unemployment.
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
119. The use of automated teller machines (ATMs) has caused some bank tellers to lose their jobs. This is an example of
a.
cyclical unemployment.
b.
seasonal unemployment.
c.
frictional unemployment.
d.
structural unemployment.
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
120. Structural unemployment arises when
a.
marginal productivity of labor becomes zero.
b.
there is a cyclical change in the economy.
c.
jobs are eliminated by changes in the economy.
d.
people change their jobs.
United States – Analytic – BB-Legal
Labor markets
Types of Unemployment
121. Structural unemployment may be particularly severe for
a.
younger workers
b.
college graduates.
c.
older workers.
d.
workers with “high tech” skills.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Types of Unemployment
122. Richard loses his job at the railroad due to a downturn in general business conditions. He is experiencing
a.
structural unemployment.
b.
cyclical unemployment.
c.
seasonal unemployment.
d.
frictional unemployment.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Types of Unemployment
123. Which of the following scenarios best illustrates the concept of cyclical unemployment?
a.
Grace loses her job because of new automated machinery.
b.
Sean quits his job to look for work that is more fun.
c.
Ellen quits looking for work because she doesn’t think she can find a suitable job.
d.
Marian loses her job because of a recession.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Types of Unemployment
124. The reduction of structural unemployment in the United States’ economy may require
a.
an increase in the minimum wage.
b.
a reduction in government spending.
c.
an decrease in interest rates.
d.
increased spending on worker retraining.
Difficult
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Types of Unemployment
125. Full employment is defined by most economists as the minimization of
a.
cyclical unemployment.
b.
frictional unemployment.
c.
seasonal unemployment.
d.
structural unemployment.
a
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Types of Unemployment
126. The unemployment rate that many economists believe represents full employment is
a.
0 percent.
b.
0-4 percent.
c.
4-6 percent.
d.
6-8 percent.
e.
8-10 percent
c
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
How Much Employment is “Full Employment”?
127. Full employment implies which of the following is reduced to zero?
a.
cyclical unemployment only
b.
frictional unemployment only
c.
frictional and structural unemployment only
d.
frictional, structural, and cyclical unemployment
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
How Much Employment is “Full Employment”?
128. The program of unemployment insurance in the United States was created during the
a.
Great Depression.
b.
Reagan recession.
c.
Kennedy administration.
d.
Great Society.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Unemployment Insurance: The Invaluable Cushion
129. The most likely group of the following that would be eligible for unemployment insurance benefits is
a.
new college graduates looking for their first job.
b.
mothers returning to the labor force after caring for young children.
c.
workers who quit their jobs.
d.
experienced workers recently laid off.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Unemployment Insurance: The Invaluable Cushion
130. The principal benefit of unemployment insurance is that it
a.
reduces the occurrence of unemployment in the economy.
b.
replaces income lost due to unemployment.
c.
increases labor force participation.
d.
helps reduce the period of unemployment.
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
Unemployment Insurance: The Invaluable Cushion
131. Unemployment insurance has an important macroeconomic effect because it
a.
props up aggregate supply.
b.
props up aggregate demand.
c.
props up aggregate exports.
d.
helps balance the federal budget.
United States – Analytic – BB-Legal
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Unemployment Insurance: The Invaluable Cushion
132. The principal effect of unemployment insurance on the entire U.S. economy is
a.
that it spreads the costs of unemployment.
b.
that it eliminates the social costs of unemployment.
c.
that it reduces the social costs of unemployment.
d.
the reduction in the federal debt.
United States – Analytic – BB-Legal
Labor markets
Unemployment Insurance: The Invaluable Cushion
133. During inflationary periods
a.
the real value of money rises.
b.
the real value of money remains constant.
c.
the real value of money falls.
d.
the purchasing power of money rises.
United States – Analytic – BB-Legal
Markets, market failure, and ext – Markets, market failure, and externalities
The Goal of Low Inflation
134. The real wage rate is defined as the wage rate divided by
a.
the interest rate.
b.
the money supply.
c.
nominal GDP.
d.
the price level.
United States – Analytic – BB-Legal
The study of economics, and defi – The study of economics, and definitions of economics
The Goal of Low Inflation
135. The reason that inflation rarely harms workers is that
a.
wages rise at the same time prices rise.
b.
wages fall when prices rise.
c.
nominal income falls as prices rise.
d.
the minimum wage rate automatically rises when the price level rises.
United States – Analytic – BB-Legal
Markets, market failure, and ext – Markets, market failure, and externalities
The Goal of Low Inflation
136. Since 1948, the history of real wage rates generally shows that
a.
prices and wages have risen at the same rate.
b.
prices have risen at a slower rate than wages.
c.
prices have risen faster than wages.
d.
real wages have remained constant over the period.
United States – Analytic – BB-Legal
Markets, market failure, and ext – Markets, market failure, and externalities
The Goal of Low Inflation
137. When inflation occurs,
a.
real wages must necessarily fall.
b.
real wages must necessarily rise.
c.
workers will experience falling real incomes.
d.
workers’ real income may rise or fall.
United States – Analytic – BB-Legal
Markets, market failure, and ext – Markets, market failure, and externalities
The Goal of Low Inflation
138. If wages rise by 12 percent at the same time prices rise by 3 percent, then the increase in real wages is equal to
a.
12 percent.
b.
9 percent.