Question 1

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

Accepted Answer

A)  increases by about 2%.
B)  increases by about 4%.
C)  decreases by about 6%.
D)  decreases by about 2%.E) B) and C)
F) None of the above

Question 2

In the depth of the Great Depression, the unemployment rate in Canada was about:

Accepted Answer

A)  15 percent.
B)  33 percent.
C)  20 percent.
D)  40 percent.E) B) and D)
F) None of the above

Question 3

The best example of a "frictionally unemployed" worker is one who:

Accepted Answer

A)  reduces productivity by causing frictions in a business.
B)  is laid off during a recessionary period in the economy.
C)  is in the process of voluntarily switching jobs.
D)  is discouraged and not actively seeking work.E) A) and B)
F) B) and C)

Question 4

A statement that is often used to describe demand-pull inflation is:

Accepted Answer

A)  a rising tide lifts all boats.
B)  money is easily earned, but not easily saved.
C)  too much spending chasing too few goods.
D)  there is no such thing as a free lunch.E) A) and C)
F) B) and C)

Question 5

Too much spending chasing too few goods best describes:

Accepted Answer

A)  the GDP gap.
B)  demand-pull inflation.
C)  the inflation premium.
D)  cost-push inflation.E) None of the above
F) A) and C)

Question 6

Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:

Accepted Answer

A)  10 percent.
B)  7 percent.
C)  4 percent.
D)  2 percent.E) None of the above
F) B) and C)

Question 7

Which of the following is correct?

Accepted Answer

A)  Real and nominal incomes always move in the same direction.
B)  Inflation increases the purchasing power of the dollar and necessarily reduces one's nominal income.
C)  Inflation reduces the purchasing power of the dollar and necessarily reduces one's real income.
D)  Inflation reduces the purchasing power of the dollar, but does not necessarily reduce one's real income.E) C) and D)
F) B) and D)

Question 8

Inflation rates in Canada in recent years:

Accepted Answer

A)  are relatively higher than the rates in other industrial countries.
B)  are relatively the same as the rates in other industrial countries.
C)  are relatively lower than the rates in some other industrial countries.
D)  are double digit and comparable with the rates in Kenya and Venezuela.E) A) and C)
F) A) and B)

Question 9

Hyperinflation does not have a devastating impact on real output and employment.

Accepted Answer

A) True 
 B)False

Question 10

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Accepted Answer

A)  the changes in population, innovations and money supply.
B)  the changes in the level of total spending, productivity, irregular innovations and money supply.
C)  the changes in the population.
D)  the changes in the standards of living.E) All of the above
F) None of the above

Question 11

Which of the following is the phase that follows the peak of a business cycle?

Accepted Answer

A)  Recession
B)  Expansion
C)  Trough
D)  ContractionE) None of the above
F) A) and B)

Question 12

When the unemployment rate is relatively high, we can conclude that:

Accepted Answer

A)  the economy is in the expansion phase of the business cycle.
B)  potential GDP is in excess of actual GDP.
C)  actual GDP is in excess of potential GDP.
D)  actual GDP is equal to potential GDP.E) B) and C)
F) A) and B)

Question 13

The descriptions give the responses of four individuals to Statistics Canada.1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year, but was unsuccessful and quit looking for work.Refer to the above information.Which individual is structurally unemployed?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) A) and C)
F) B) and D)

Question 14

The unemployment rate is the:

Accepted Answer

A)  ratio of unemployed to employed workers.
B)  number of employed workers minus the number of workers who are not in the labour force.
C)  percentage of the labour force which is out of work.
D)  percentage of the total population which is out of work.E) All of the above
F) B) and D)

Question 15

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million.The unemployment rate for this economy is:

Accepted Answer

A)  4.6 percent.
B)  5.8 percent.
C)  6.4 percent.
D)  7.8 percent.E) A) and D)
F) A) and B)

Question 16

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

Accepted Answer

A)  frictional.
B)  structural.
C)  cyclical.
D)  natural.E) A) and B)
F) B) and D)

Question 17

Which of the following is the phase that follows the recessionary phase of a business cycle?

Accepted Answer

A)  Trough
B)  Expansion
C)  Peak
D)  ContractionE) C) and D)
F) B) and C)

Question 18

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

Accepted Answer

A)  rise by about 8 percent.
B)  fall by about 8 percent.
C)  fall by about 7 percent.
D)  fall by about 15 percent.E) B) and C)
F) A) and C)

Question 19

Kimberly 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.Kimberly presently is:

Accepted Answer

A)  cyclically unemployed.
B)  structurally unemployed.
C)  frictionally unemployed.
D)  not a member of the labour force.E) A) and B)
F) A) and C)

Question 20

Which of the following is the phase that follows the expansionary phase of a business cycle?

Accepted Answer

A)  Recession
B)  Expansion
C)  Peak
D)  ContractionE) A) and B)
F) A) and C)

Exam 9: B: Business Cycles, Unemployment, and Inflation

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

Correct Answer
verified

Which of the following is the phase that follows the expansionary phase of a business cycle?

Correct Answer
verified

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

Correct Answer
verified

Inflation rates in Canada in recent years:

Correct Answer
verified

When the unemployment rate is relatively high, we can conclude that:

Correct Answer
verified

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

Correct Answer
verified

The best example of a "frictionally unemployed" worker is one who:

Correct Answer
verified

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Correct Answer
verified

Which of the following is the phase that follows the recessionary phase of a business cycle?

Correct Answer
verified

Which of the following is the phase that follows the peak of a business cycle?

Correct Answer
verified

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million.The unemployment rate for this economy is:

Correct Answer
verified

Which of the following is correct?

Correct Answer
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Correct Answer
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In the depth of the Great Depression, the unemployment rate in Canada was about:

Correct Answer
verified

Too much spending chasing too few goods best describes:

Correct Answer
verified

A statement that is often used to describe demand-pull inflation is:

Correct Answer
verified

Kimberly 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.Kimberly presently is:

Correct Answer
verified

The unemployment rate is the:

Correct Answer
verified

Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:

Correct Answer
verified

Hyperinflation does not have a devastating impact on real output and employment.

Correct Answer
verified

Exam 9: B: Business Cycles, Unemployment, and Inflation

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

Correct AnswerverifiedShow Answer

Which of the following is the phase that follows the expansionary phase of a business cycle?

Correct AnswerverifiedShow Answer

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

Correct AnswerverifiedShow Answer

Inflation rates in Canada in recent years:

Correct AnswerverifiedShow Answer

When the unemployment rate is relatively high, we can conclude that:

Correct AnswerverifiedShow Answer

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

Correct AnswerverifiedShow Answer

The best example of a "frictionally unemployed" worker is one who:

Correct AnswerverifiedShow Answer

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Correct AnswerverifiedShow Answer

Which of the following is the phase that follows the recessionary phase of a business cycle?

Correct AnswerverifiedShow Answer

Which of the following is the phase that follows the peak of a business cycle?

Correct AnswerverifiedShow Answer

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million.The unemployment rate for this economy is:

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the depth of the Great Depression, the unemployment rate in Canada was about:

Correct AnswerverifiedShow Answer

Too much spending chasing too few goods best describes:

Correct AnswerverifiedShow Answer

A statement that is often used to describe demand-pull inflation is:

Correct AnswerverifiedShow Answer

Kimberly 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.Kimberly presently is:

Correct AnswerverifiedShow Answer

The unemployment rate is the:

Correct AnswerverifiedShow Answer

Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:

Correct AnswerverifiedShow Answer

Hyperinflation does not have a devastating impact on real output and employment.

Correct AnswerverifiedShow Answer

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