Business Cycles, Unemployment, and Inflation Quiz

For each of the following items, indicate to which major group of the CPI the item belongs:

Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last couple of weeks, Marcus noticed an increase in the price of burritos. The price of burritos rose from $5.50 per burrito last month to $6.60 per burrito this month. Assume that Marcus has a fixed income of $165 that he can spend on burritos. How many burritos can Marcus afford to buy at the new price of $6.60?

In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment. a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by. c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox. d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills. e. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours. f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to. g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year. h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.

Historical data show that during the recession of 1990-1991, the natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%. Using this information, which of the following statements is correct regarding these two short recessions?

In each of the following examples, identify whether the person is counted in the official labor force or not. a. Cynthia owns and operates her own retail store. b. Elder has recently moved to a retirement community in Florida where he enjoys his "golden years" as a retiree. c. Drew lost his job at the bank last year. He spent 6 months applying for every job possible before giving up 2 months ago. d. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is unable to extend her hours. e. Latisha is an ambitious 15-year-old who spends her summer working as a lifeguard at a local pool. f. Bill is currently serving a prison sentence, and works making license plates. g. Tyrell just graduated college with a business degree. He is currently looking for a banking job in the major city he just moved to. h. John and his wife just had their second child. They decided that it was best for John to leave his job and care for their new child.

Using the graph below, identify the different stages of the business cycle. Assume that A, B, and C represent consecutive years. a. A time period when the economy is growing toward full employment is known as It is depicted in the graph as b. A time period characterized by full or near-full employment is known as It is depicted in the graph as c. A time period with two consecutive quarters of declining output is known as It is depicted in the graph as d. A time period when employment and real output are at their lowest levels is known as It is depicted in the graph as

Search and wait unemployment is another way to describe

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called

In calculating the unemployment rate, part-time workers are

The unemployment rate is interpreted as the percentage of the

The rate of unemployment when the economy is fully employed is called the

Wait unemployment and search unemployment are both types of

A trough in the business cycle occurs when

According to the Bureau of Labor Statistics, to be officially unemployed a person must

Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people cyclically unemployed for the year 2004.

The natural rate of unemployment

The recurrent ups and downs in the level of economic activity extending over several years are referred to as

The GDP gap measures the amount by which

In the expansion phase of a business cycle

In the United States, business cycles have occurred against a backdrop of a long-run trend of

Which of the following is the correct way to calculate the unemployment rate?

The unemployed are those people who

Use the following diagram to answer the next question. The straight line E drawn through the wavy lines would provide an estimate of the rev: 05_30_2018

"Full employment" refers to the situation when there is

Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people structurally unemployed for the year 2005.

A peak in the business cycle

Which of the following groups declares the start and end of recessions in the U.S.?

The Great Recession that started in 2007 was triggered by shocks in which of the following economic sectors?

Which of the following statements is true about causes of business cycle fluctuations?

A recession is a decline in

The labor force includes

Use the following diagram to answer the next question. The diagram illustrates the pattern of

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are

A mismatch between the geographic location of workers and the location of job openings would result in which type of unemployment?

Use the table below to answer the next question. Year Employed Structural Frictional Cyclical Unemployed 2003 1,800 50 100 50 200 2004 2,400 100 100 300 2005 2,000 150 180 500 2006 2,660 40 0 140 Determine the number of people frictionally unemployed for the year 2006.

The unemployment rate of full-employment is also called the

Unexpected inflation arbitrarily

Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is

The CPI compiled by the Bureau of Labor Statistics is used in the computations for the

What is the main problem with mild inflation according to some economists?

Inflation caused by a rise in the prices of inputs is referred to as

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unexpected inflation occurs in the economy, then

The inflation rate measures the percentage growth rate of

Inflation caused by an increase in aggregate spending is referred to as

Core inflation refers to the inflation picture after stripping away the

What is an advantage of mild inflation according to some economists?

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the Consumer Price Index for the economy in year 2?

Inflation is a rise in

Which of the following groups has traditionally benefited from unexpected inflation?

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?