Question 1

Figure 8-1
 
-In Figure 8-1, the recovery phase of the business cycle can be represented by points:

Accepted Answer

The answer of Figure 8-1
 
-In Figure 8-1, the recovery...

Question 2

At the beginning of a year, decision makers expect the general level of prices to increase at a 3 percent annual rate. The CPI increases from 150 to 154.5 during the year; this is an example of

Accepted Answer

The answer of At the beginning of a year, decision...

Question 3

Frictional unemployment results from

Accepted Answer

Frictional unemployment occurs due to a mismatch between the skills and location of job seekers and the requirements and location of job openings. This can be caused by a lack of information about job opportunities or the time it takes to acquire that information. So, choice D - scarce information about job opportunities and the time it takes to acquire that information is the correct answer.

Question 4

The natural rate of unemployment equals

Accepted Answer

The answer of The natural rate of unemployment equals
...

Question 5

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Accepted Answer

The answer of A person who argues that inflation "robs...

Question 6

Which of the following is true?

Accepted Answer

Inflation will tend to increase the nominal values of both prices and wages. Option A is incorrect because anticipated inflation is an increase in the price level that is expected or predicted. Option B is incorrect because unanticipated inflation is a change in the price level that is not expected or predicted. Option C is incorrect because high and variable inflation makes it difficult for decision makers to anticipate year-to-year changes in inflation accurately.

Question 7

In contrast with unanticipated inflation, anticipated inflation implies that

Accepted Answer

Anticipated inflation means that most decision makers, including businesses and individuals, expected and accounted for the general increase in the price level. This implies that they were able to adjust their behavior and mitigate the negative effects of inflation. The government may or may not have been informed about inflation, and the increase in prices is not necessarily linked to GDP growth. Whether borrowers or lenders expected inflation will depend on individual circumstances.

Question 8

Which of the following is an example of someone with inflationary expectations taking a step designed to insulate themselves from the higher expected rates of inflation?

Accepted Answer

Borrowing at a fixed interest rate protects the borrower from potential increases in interest rates due to inflation. Delaying a purchase (option A) does not involve borrowing and is a form of decreased consumption, not insulation from inflation. Borrowing at an adjustable rate (option C) or variable rate (option D) may result in higher interest payments in the future as inflation increases.

Question 9

The definition of the unemployment rate is

Accepted Answer

The unemployment rate is defined as the percentage of persons in the civilian labor force who are not employed. It is calculated by dividing the number of unemployed persons by the total number of persons in the civilian labor force and multiplying the result by 100. Option A is incorrect because it does not take into account the total number of persons in the country, and option B is too specific as it only includes those in the labor force. Option C is also incorrect as it does not provide any information about the workforce or the labor force participation rate.

Question 10

Figure 8-1
 
-In Figure 8-1, the recession phase of the business cycle can be represented by point(s):

Accepted Answer

The answer of Figure 8-1
 
-In Figure 8-1, the recession...

Question 11

Which of the following is true?

Accepted Answer

Unanticipated inflation is an increase in the general level of prices that was not expected by most decision makers. This can cause problems for decision makers who may have made plans or contracts based on expectations of a different inflation rate. High and variable rates of inflation will not be easy for decision makers to forecast accurately. Anticipated inflation implies that both borrowers and lenders expected the increase in the general level of prices. Inflation can increase the prices of goods and services as well as wage rates.

Question 12

The labor force participation rate is

Accepted Answer

The labor force participation rate is defined as the proportion of the noninstitutionalized population ages 16 and older that is either employed or actively seeking employment. Therefore, choice (B) is the correct answer. Choice (A) is the employment rate, (C) is the employment-population ratio, and (D) is not a valid measure.

Question 13

Inflation is best described as

Accepted Answer

Inflation is a sustained increase in the general level of prices as indicated by a price index. It affects the overall economy and is not limited to the price of a particular good or service.

Question 14

Which of the following is a danger of inflation?

Accepted Answer

Inflation can lead to unpredictable price changes, which can affect individuals who have signed long-term contracts, such as a mortgage or a lease agreement. This can result in unexpected financial burdens for those individuals.

Question 15

At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that

Accepted Answer

The actual rate of inflation based on the increase in CPI is (154.5-150)/150 = 3%. This is lower than the expected rate of 6% at the beginning of the year, indicating that decision makers overestimated the rate of inflation.

Question 16

High and variable rates of inflation will

Accepted Answer

High and variable rates of inflation can distort the information delivered by market prices. This is because inflation makes it more difficult to compare prices over time, making it harder for consumers and businesses to make informed decisions about spending and investment.

Question 17

Figure 8-1
 
-In Figure 8-1, point E represents:

Accepted Answer

The answer of Figure 8-1
 
-In Figure 8-1, point E...

Question 18

At the beginning of a year, decision makers expect the general level of prices to increase at a 5 percent annual rate. The CPI increases from 150 to 157.5 during the year; this indicates that

Accepted Answer

The answer of At the beginning of a year, decision...

Question 19

Which of the following is true?

Accepted Answer

The answer of Which of the following is true?
...

Question 20

Which of the following is true of high and variable rates of inflation?

Accepted Answer

High and variable rates of inflation create uncertainty, making it difficult for people to accurately forecast next year's rate of inflation. This uncertainty can lead to widespread economic effects, such as reduced investment and decreased economic growth.

Quiz 8: Economic Fluctuations, Unemployment, and Inflation

Figure 8-1 -In Figure 8-1, the recovery phase of the business cycle can be represented by points:

At the beginning of a year, decision makers expect the general level of prices to increase at a 3 percent annual rate. The CPI increases from 150 to 154.5 during the year; this is an example of

Frictional unemployment results from

The natural rate of unemployment equals

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Which of the following is true?

In contrast with unanticipated inflation, anticipated inflation implies that

Which of the following is an example of someone with inflationary expectations taking a step designed to insulate themselves from the higher expected rates of inflation?

The definition of the unemployment rate is

Figure 8-1 -In Figure 8-1, the recession phase of the business cycle can be represented by point(s) :

Which of the following is true?

The labor force participation rate is

Inflation is best described as

Which of the following is a danger of inflation?

At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that

High and variable rates of inflation will

Figure 8-1 -In Figure 8-1, point E represents:

At the beginning of a year, decision makers expect the general level of prices to increase at a 5 percent annual rate. The CPI increases from 150 to 157.5 during the year; this indicates that

Which of the following is true?

Which of the following is true of high and variable rates of inflation?