Ch.9 Quiz Answers

3 October 2022
4.7 (114 reviews)
21 test answers

Unlock all answers in this set

Unlock answers (17)
question
(Last Word) In response to the Great Recession, Congress extended the maximum period for drawing unemployment benefits from 26 to 99 weeks. While this was done to help workers financially and to help the economy by stimulating demand, it had what unintended consequence? It drove the unemployment rate lower than the lowest prerecession rate. It encouraged millions of unemployed workers to return to school, driving up projected future rates of labor productivity. It prompted inefficiently long searches that kept the unemployment rate higher. It significantly increased the rate of inflation.
answer
It prompted inefficiently long searches that kept the unemployment rate higher.
question
During a severe recession, we would expect output to fall the most in: the construction industry. agriculture. the health care industry. the clothing industry.
answer
the construction industry.
question
Demand-pull inflation: occurs when prices of resources rise, pushing up costs and the price level. is also called cost-push inflation. occurs only when the economy has reached its absolute production capacity. occurs when total spending exceeds the economy's ability to provide output at the existing price level.
answer
occurs when total spending exceeds the economy's ability to provide output at the existing price level.
question
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates? Trough. Peak. Expansion. Recession.
answer
Expansion
question
Cost-push inflation may be caused by: a decline in per unit production costs. an increase in resource availability. a negative supply shock. a decrease in wage rates.
answer
a negative supply shock.
question
Recurring upswings and downswings in an economy's real GDP over time are called: output yo-yos. business cycles. total product oscillations. recessions.
answer
business cycles
question
What is the primary reason that changes in total spending lead to cyclical changes in output and employment? Changes in total spending cause supply shocks that cause cyclical variation. Prices are flexible in the long run. Prices are sticky in the short run. Government is unable to respond by changing the amount of money in circulation.
answer
Prices are sticky in the short run.
question
The government agency responsible for collecting and reporting unemployment data is the: Bureau of Economic Research. Bureau of Economic Analysis. Bureau of Labor Statistics. Bureau of Unemployment.
answer
Bureau of Labor Statistics.
question
The type of unemployment associated with recessions is called: frictional unemployment. structural unemployment. seasonal unemployment. cyclical unemployment.
answer
cyclical unemployment.
question
Official unemployment statistics: understate unemployment because individuals receiving unemployment compensation are counted as employed. understate unemployment because discouraged workers are not counted as unemployed. overstate unemployment because workers who are involuntarily working part time are counted as being employed. include cyclical and structural unemployment but not frictional unemployment
answer
understate unemployment because discouraged workers are not counted as unemployed.
question
For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of: Taylor's rule. Okun's law. Say's law. the Coase theorem.
answer
Okun's Law
question
The production of durable goods varies more than the production of nondurable goods because: durables purchases are postponable. the producers of nondurables have monopoly power. producers of durables are highly competitive. durables purchases are nonpostponable.
answer
durables purchases are postponable.
question
The United States' economy is considered to be at full employment when: about 4-5 percent of the total population is unemployed. 90 percent of the labor force is employed. 100 percent of the labor force is employed. about 4-5 percent of the labor force is unemployed.
answer
about 4-5 percent of the labor force is unemployed.
question
Most economists agree that the immediate cause of most business cycle variation is: an unexpected change in the level of total spending. the invention of new products. the growth and subsequent bursting of financial bubbles. an unexpected change in the productivity of workers.
answer
an unexpected change in the level of total spending.
question
Cost-push inflation: reduces real output. increases real output. reduces the unemployment rate. raises the natural rate of unemployment.
answer
reduces real output.
question
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: structural unemployment. frictional unemployment. seasonal unemployment. cyclical unemployment.
answer
structural unemployment.
question
The phase of the business cycle in which real GDP declines is called: a recession. the trough. an expansion. the peak.
answer
a recession.
question
In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output? Capital goods. Military goods. Textile products. Agricultural commodities.
answer
Capital Goods
question
During a period of hyperinflation: people tend to hold goods rather than money. creditors gain because their loans are repaid with dollars of higher value. income is redistributed away from borrowers. the real value of the national currency rises.
answer
people tend to hold goods rather than money
question
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: cyclically unemployed. structurally unemployed. frictionally unemployed. not a member of the labor force.
answer
frictionally unemployed
question
Economic Joke: I would tell you a joke about economics...
answer
but there is not enough demand