Chapter 09 – Business Cycles, Unemployment, and Inflation
1. Recurring upswings and downswings in an economy’s real GDP over time are called:
2. In the United States, business cycles have occurred against a backdrop of a long-run trend
of:
Chapter 09 – Business Cycles, Unemployment, and Inflation
3. Most economists agree that the immediate determinant of the volume of output and
employment is the:
4. As it relates to economic growth, the term long-run trend refers to:
5. In which of the following industries or sectors of the economy will business cycle
fluctuations likely have the greatest effect on output?
Chapter 09 – Business Cycles, Unemployment, and Inflation
6. The industries or sectors of the economy in which business cycle fluctuations tend to affect
output most are:
7. During a severe recession, we would expect output to fall the most in:
8. The phase of the business cycle in which real GDP declines is called:
Chapter 09 – Business Cycles, Unemployment, and Inflation
9. The phase of the business cycle in which real GDP is at a minimum is called:
10. The production of durable goods varies more than the production of nondurable goods
because:
11. A recession is defined as a period in which:
Chapter 09 – Business Cycles, Unemployment, and Inflation
12. In which phase of the business cycle will the economy most likely experience rising real
output and falling unemployment rates?
13. Which of the following statements is true about causes of business cycle fluctuations?
14. Which of the following is not seen by economists as an underlying cause of business cycle
fluctuations?
Chapter 09 – Business Cycles, Unemployment, and Inflation
15. Most economists agree that the immediate cause of most business cycle variation is:
16. An unexpected increase in total spending will cause an increase in GDP:
17. What is the primary reason that changes in total spending lead to cyclical changes in
output and employment?
Chapter 09 – Business Cycles, Unemployment, and Inflation
9-7
18. Innovations such as the microchip and the Internet lead to business cycle variations
because:
19. Which of the following would most likely move the economy into a recession in the short
term?
Answer the question on the basis of the following information about the hypothetical
economy of Scoob. All figures are in millions.
Chapter 09 – Business Cycles, Unemployment, and Inflation
20. Refer to the above information. The labor force in Scoob is:
21. Refer to the above information. The unemployment rate in Scoob is:
22. Refer to the above information. If the natural rate of unemployment in Scoob is 5 percent,
then:
Chapter 09 – Business Cycles, Unemployment, and Inflation
23. The United States’ economy is considered to be at full employment when:
24. In the United States, the rate of unemployment is highest for:
25. Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an
MBA degree. With degree in hand she is now searching for a position in management. Kara
presently is:
Chapter 09 – Business Cycles, Unemployment, and Inflation
26. According to the Bureau of Labor Statistics, to be officially unemployed a person must:
27. The natural rate of unemployment is:
28. The labor force includes:
Chapter 09 – Business Cycles, Unemployment, and Inflation
29. The unemployment rate of:
30. Alex works in his own home as a homemaker and full-time caretaker of his children.
Officially, he is:
31. If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent,
then the:
Chapter 09 – Business Cycles, Unemployment, and Inflation
32. Official unemployment statistics:
33. The presence of discouraged workers:
34. Part-time workers are counted as:
Chapter 09 – Business Cycles, Unemployment, and Inflation
35. Assuming the total population is 100 million, the civilian labor force is 50 million, and 47
million workers are employed, the unemployment rate is:
36. The natural rate of unemployment is the:
37. Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with
company A and will begin a better job next week with company B. Kyle will be considered
as:
Chapter 09 – Business Cycles, Unemployment, and Inflation
38. The unemployment rate is the:
39. Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1
million of them become discouraged over their job prospects and cease to look for work. As a
result of this, all else equal, the official unemployment rate would:
40. Susie has lost her job in a Vermont textile plant because of import competition. She
intends to take a short course in electronics and move to Oregon where she anticipates that a
new job will be available. We can say that Susie is faced with:
Chapter 09 – Business Cycles, Unemployment, and Inflation
41. Cyclical unemployment results from:
42. Which of the following is correct?
43. A college graduate using the summer following graduation to search for a job would best
be classified as:
Chapter 09 – Business Cycles, Unemployment, and Inflation
44. Unemployment involving a mismatch of the skills of unemployed workers and the skills
required for available jobs is called:
45. Structural unemployment:
46. Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to
run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially
counted as:
Chapter 09 – Business Cycles, Unemployment, and Inflation
47. Which of the following constitute the types of unemployment occurring at the natural rate
of unemployment?
48. Wait unemployment and search unemployment are both types of:
49. The type of unemployment associated with recessions is called:
Chapter 09 – Business Cycles, Unemployment, and Inflation
50. Suppose there are 10 million part-time workers and 90 million full-time workers in an
economy. Five million of the part-time workers switch to full-time work. As a result:
51. The government agency responsible for collecting and reporting unemployment data is
the:
52. At the economy’s natural rate of unemployment:
Chapter 09 – Business Cycles, Unemployment, and Inflation
53. In the depth of the Great Depression, the unemployment rate in the United States was
about:
Answer the question on the basis of the following information about a hypothetical economy:
54. Refer to the above information. The unemployment rate is:
Chapter 09 – Business Cycles, Unemployment, and Inflation
55. Refer to the above information. If the members of the underground economy are presently
counted as part of the unemployed when in fact they are employed, the official unemployment
rate is overstated by about:
56. Refer to the above information. The rate of inflation:
57. Which of the following types of unemployment is directly associated with insufficient
overall demand for goods and services?