Deck 10: Economics Growth and Business Cycles

Question 1

A country has a total population of 100 million.Out of this, 60 million people are of working age.Out of this 60 million people, 43.2 million people are employed and 4.8 million are unemployed.The unemployment rate in the country is______ .?

A)10 percent
B)?16.67 percent
C)?8 percent
D)?13.3 percent

Answer 1

10 percent

Question 2

If output grew 3.9 percent last year and hours worked grew 1.3 percent,then by how much did labor productivity grow over the year?

A)0.3 percent
B)2.6 percent
C)3.0 percent
D)5.2 percent

Answer 2

B

Question 3

The labor force consists of

A)those employed plus those on temporary layoff.
B)those employed plus those unemployed.
C)the working-age population minus those who are in the military or institutionalized.
D)the working-age population plus those who are in the military or institutionalized.

Answer 3

B

Question 4

If the population of a country is 320 million, the working-age population is 215 million, the labor force is 145 million, and the number of people who are employed is 137 million, then the unemployment rate is

A)3.7 percent.
B)5.5 percent.
C)63.7 percent.
D)94.5 percent.

Question 5

15 million people in a country are employed and 2.5 million are unemployed while 1 million are retired workers.The size of the country's labor force is

A)15 million.
B)18.5 million
C)17.5 million
D)11.5 million.

Question 6

​A country has a working population of 85 million.Out of the 85 million people, 51 million are employed and 17 million are unemployed.The labor-force participation rate of the country is

A)​80 percent
B)60 percent
C)​20 percent
D)​75 percent

Question 7

In 2004, the number of unemployed people in a country decreased from 8.8 million to 8.1 million, while the labor force increased from 146.5 million to 147.4 million.By how much did the unemployment rate decrease?

A)0.5 percentage point
B)0.7 percentage point
C)0.9 percentage point
D)1.1 percentage point

Question 8

Country X has a population of 70 million, of which 32 million are employed and 8 million are unemployed but looking for employment.The size of the labor force in Country X is .

A)40 million
B)32 million
C)38 million
D)62 million

Question 9

Labor productivity is calculated as

A)output minus net exports.
B)the average product of labor minus the marginal product of labor.
C)total factor productivity divided by the amount of capital.
D)output produced by labor divided by hours worked.

Question 10

In 2004, the number of people in the working-age population in a country increased from 221.2 million to 223.4 million, while the labor force increased from 146.5 million to 147.4 million.By how much did the labor-force participation rate change?

A)−0.2 percentage point
B)0.0 percentage point
C)0.2 percentage point
D)0.4 percentage point

Question 11

In 2001, the number of unemployed people in a country increased from 5.7 million to 8.3 million, while the labor force increased from 141.5 million to 142.3 million.By how much did the unemployment rate increase?

A)1.8 percentage points
B)2.6 percentage points
C)3.25 percentage points
D)5.8 percentage points

Question 12

If the population in a country is 182 million, the working-age population is 134 million, the number of employed people is 73 million, and the number of unemployed people is 14 million, then the unemployment rate in the country is

A)3.7 percent.
B)7.7 percent.
C)10.4 percent.
D)16.1 percent.

Question 13

If the working-age population in a country is 215 million, the labor force is 145 million, and the number of employed people is 137 million, then the labor-force participation rate in the country is

A)2.5 percent.
B)67.4 percent.
C)45.3 percent.
D)94.5 percent.

Question 14

If the population in a country is 182 million, the working-age population is 134 million, the number of employed people is 73 million, and the number of unemployed people is 14 million, then the labor-force participation rate in the country is

A)47.8 percent.
B)64.9 percent.
C)73.6 percent.
D)82.1 percent.

Question 15

If output grew 2.8 percent last year and labor productivity grew 1.1 percent, then by how much did hours worked grow over the year?

A)1.1 percent
B)1.3 percent
C)1.7 percent
D)3.9 percent

Question 16

In 2001, the number of people in the working-age population in a country increased from 212.6 million to 215.1 million, while the labor force increased from 141.5 million to 142.3 million.By how much did the labor-force participation rate change?

A)−0.4 percentage point
B)−0.2 percentage point
C)0.0 percentage point
D)0.2 percentage point

Question 17

Suppose a country has a population of 61 million, of which 37 million are in the working-age population.Of those, 11 million are not in the labor force and 23 million are employed.The labor-force participation rate is

A)42.6 percent.
B)60.7 percent.
C)70.3 percent.
D)88.5 percent.

Question 18

Labor productivity multiplied by the number of hours worked gives

A)the hourly wage rate.
B)the average product of labor.
C)total factor productivity.
D)total output.

Question 19

Suppose a country has a population of 61 million, of which 37 million are in the working-age population.Of those, 11 million are not in the labor force and 23 million are employed.The unemployment rate is

A)12.7 percent.
B)11.5 percent.
C)8.1 percent.
D)4.9 percent.

Question 20

In which period was the rate of output growth the fastest in the U.S.economy?

A)1929−1949
B)1949−1970
C)1970−1982
D)1982−2010

Question 21

In which of the following periods was output growth the fastest in the U.S.economy?

A)Long boom period
B)Economic liftoff period
C)Great Depression period
D)Reorganization period

Question 22

$\text { Consider the following production function }$ Y = A×K^a×L^1?a. If a = 0.3, and over the past year total factor productivity grew 2.3 percent, capital grew 2 percent, and labor grew 3 percent, what was the growth rate of output?

A)0 percent
B)5 percent
C)2 percent
D)7 percent

Question 23

Consider the following production function $Y = A \times K ^ { a } \times L ^ { 1 - a }$ ?. If a = 0.5, over the past year output grew by 2 percent, total factor productivity grew 1 percent , and labor grew by 1 percent, capital grew by

A)1 percent.
B)0.5 percent
C)2 percent.
D)2.5 percent.

Question 24

Consider the following production function? Y = A×K^a×L^1?a.
If a = 0.4, and over the past year output grew 4 percent, capital grew 2 percent, and labor grew 1 percent, what was the growth rate of total factor productivity (TFP)?

A)1.0 percent
B)2.0 percent
C)2.4 percent
D)2.6 percent

Question 25

If hours worked grew 1.5 percent last year and labor productivity grew 2.2 percent, then by how much did output grow over the year?

A)−0.7 percent
B)0.7 percent
C)3.7 percent
D)4.3 percent

Question 26

The long boom period in the U.S.occurred from

A)1929−1949.
B)1949−1970.
C)1970−1982.
D)1983−2007.

Question 27

In which of the following periods was output growth the slowest in the U.S.economy?

A)Long boom period
B)Economic liftoff period
C)Post 2009
D)Reorganization period

Question 28

In which of the following periods was labor productivity growth the fastest in the U.S.economy?

A)Long boom
B)Economic liftoff period
C)Great Depression
D)Reorganization period

Question 29

Consider the following production function Y = A×K^a×L^1?a.
If a = 0.4, and over the past year output grew 4 percent, total factor productivity (TFP) grew 2.6 percent, and labor grew 1 percent, what was the growth rate of capital?

A)4 percent
B)3 percent
C)2 percent
D)1 percent

Question 30

If output grew 5.5 percent and labor productivity grew 2 percent during a decade, the number of hours worked grew by ______over the year.

A)3.50 percent.
B)?2.25 percent.
C)?7.50 percent.
D)?1.0 percent.

Question 31

Consider the following production function? Y = A×K^a×L^1?a.
If a = 0.3, and over the past year total factor productivity (TFP) grew 2.3 percent, capital grew 2 percent, and output grew 5 percent, what was the growth rate of labor?

A)2 percent
B)3 percent
C)4 percent
D)5 percent

Question 32

In which of the following periods was unemployment the highest in the U.S.economy?​

A)Great Depression
B)Economic liftoff period
C)Long boom period
D)Reorganization period

Question 33

Consider the following production function Y = A×K^a×L^1?a.
If a = 0.4, and over the past year output grew 4 percent, total factor productivity (TFP) grew 2.6 percent, and capital grew 2 percent, what was the growth rate of labor?

A)4 percent
B)3 percent
C)2 percent
D)1 percent

Question 34

In which of the following periods was total factor productivity growth the fastest in the U.S.economy?

A)Long boom
B)Economic liftoff period
C)Great Depression
D)Reorganization period

Question 35

$\text { Consider the following production function }$ Y = A×K^a×L^1?a. If a = 0.4, and over the past year total factor productivity (TFP) grew 2.6 percent, capital grew 2 percent, and labor grew 1 percent, what was the growth rate of output over the year?

A)2 percent
B)3 percent
C)4 percent
D)5 percent

Question 36

In which of the following periods was labor productivity growth the slowest in the U.S.economy?

A)Long boom
B)Economic liftoff period
C)1995−2005
D)Reorganization period

Question 37

The reorganization period in the U.S.occurred from

A)1929−1949.
B)1949−1970.
C)1971−1982.
D)1982−present.

Question 38

The change in output that is not accounted for by either changes in the amount of capital or the amount of labor is known as

A)total factor productivity.
B)real output.
C)gross domestic value added.
D)attributable to net exports.

Question 39

The economic liftoff period in the U.S.occurred from

A)1929−1949.
B)1950−1970.
C)1970−1982.
D)1982−present.

Question 40

Consider the following production function? $Y = A \times K ^ { a } \times L ^ { l - a }$ If a = 0.4, over the past year output grew 4 percent, total factor productivity grew 2 percent, and capital grew 3 percent, labor grew by

A)1.33 percent
B)2.5 percent
C)3.2 percent
D)3.88 percent

Question 41

A period when output, income, and employment are rising is known as

A)a recession.
B)an expansion.
C)a deflationary period.
D)a trough.

Question 42

According to monetarists, the main source of fluctuations in economic activity is

A)changes in the amount of money in the economy.
B)waves of optimism and pessimism that cause business investment in capital goods to fluctuate.
C)changes in the prices of oil and other resources.
D)changes in productivity.

Question 43

The shortest economic expansion in U.S.history occurred in the

A)1960s.
B)1970s.
C)1980s.
D)1990s.

Question 44

Which of the following statements is true?

A)Recessions occur at regular intervals.
B)Each phase of the business cycle is of equal length.
C)Several economic variables move together during recessions.
D)The length of each phase of the business cycle can be predicted in advance.

Question 45

Business cycle refers to the

A)rise and fall of firms in a particular industry.
B)rise and fall of industries in the economy.
C)short-run fluctuation of international trade as a proportion of GDP.
D)short-term movement of output and other key economic variables around their long-term trends.

Question 46

The last depression in the United States occurred in

A)the 1900s.
B)the 1930s.
C)the 1960s.
D)the 1990s.

Question 47

According to Keynesians, the main source of the business cycle is

A)changes in the amount of money in the economy.
B)waves of optimism and pessimism.
C)changes in the prices of oil and other resources.
D)changes in productivity.

Question 48

The longest economic expansion in U.S.history occurred in the

A)1960s.
B)1970s.
C)1980s.
D)1990s.

Question 49

Which of the following is likely to happen according to monetarists if money supply in an economy decreases suddenly?​

A)​Output and employment falls
B)​The interest rate falls
C)​Investment rises
D)​Consumption rises

Question 50

In which of the following periods was total factor productivity growth the slowest in the U.S.economy?

A)Long boom
B)Economic liftoff period
C)1995−2005
D)Reorganization period

Question 51

The end of an expansion when output, income, and employment begin to decline is referred to as

A)a depression.
B)an inflationary period.
C)a peak.
D)a trough.

Question 52

In the long boom period in the U.S., there have been ______recessions.

A)0
B)3
C)4
D)6

Question 53

A particularly bad recession (in which output declines much more than usual for a recession) is called

A)an inflationary period.
B)a downturn.
C)a peak.
D)a depression.

Question 54

Which of the following happens after an economy reaches a peak?

A)Output begins to decline.
B)The growth rate of population begins to rise.
C)Income begins to rise.
D)Unemployment begins to fall.

Question 55

A period when output, income, and employment are falling is known as

A)a recession.
B)an expansion.
C)a peak.
D)a trough.

Question 56

Which of the following happens when an economy is in a trough?

A)Income begins to rise.
B)Output begins to fall.
C)Employment begins to fall.
D)Population growth rate begins to rise.

Question 57

Which of the following is likely to happen according to monetarists if money supply increases?

A)Unemployment will increase
B)Output will increase
C)Consumption will fall
D)Investment will fall

Question 58

The group that determines the peaks and troughs of business cycles is a part of the

A)Department of Commerce.
B)Bureau of Labor Statistics.
C)National Bureau of Economic Research.
D)Center for International Business Cycle Research.

Question 59

The growth rate of output and employment in a country started declining after rising sharply for three years.In which stage of the business cycle is the country currently operating?

A)Peak
B)​Trough
C)​Expansion
D)​Depression

Question 60

A period when a recession ends and an expansion begins is known as

A)a depression.
B)an inflationary period.
C)a peak.
D)a trough.

Question 61

Suppose a country has a population of 122 million, of which 71 million are in the working-age population.Of those, 16 million are not in the labor force and 50 million are employed.
a.Calculate the number of people who are in the labor force.
b.Calculate the number of people who are unemployed.
c.Calculate the labor-force participation rate.
d.Calculate the unemployment rate.

Question 62

Which of the following causes an upward shift in aggregate demand?

A)An increase in the aggregate price level
B)An increase in government spending
C)A sudden fall in productivity
D)A rise in the demand for money

Question 63

Which of the following is likely to lead to a recession according to Keynesian economists?

A)An decrease in money supply
B)An increase in the price of oil
C)A decrease in the rate of inflation
D)A fall in spending by consumers

Question 64

According to real business cycle (RBC) theory, the main source of the business cycle is

A)changes in the amount of money in the economy.
B)waves of optimism and pessimism that cause business investment in capital goods to fluctuate.
C)changes in the prices of oil and other resources.
D)changes in productivity.

Question 65

Describe classical economists.

Question 66

The growth rate of compensation per hour was slowest during the

A)long boom period.
B)economic liftoff period.
C)Great Depression.
D)reorganization period.

Question 67

Which of the following is likely to cause a recession according to real business cycle theorists?

A)A fall in fuel prices
B)A fall in aggregate demand
C)A sudden fall in productivity
D)A fall in money supply

Question 68

Explain how compensation per hour has changed in the periods of economic liftoff, reorganization, and the long boom.What explanations can you offer for the changes?

Question 69

Classical economists believe that the economy

A)is unable to return to equilibrium because wages and prices are sticky and do not adjust right away.
B)will not return to equilibrium without government intervention.
C)is unable to return to equilibrium because wages and prices are flexible.
D)will return to equilibrium quickly without the need for government intervention.

Question 70

Research by Stock and Watson on the cause of the increased stability of output growth in the long boom suggests that the main cause of the stability

A)was improved monetary policy.
B)was efficient financial markets.
C)was unknown.
D)was better inventory management by firms.

Question 71

Explain how a sudden change in productivity could lead to a change in economic output.Give an example.

Question 72

Explain the four major theories of the causes of the business cycle.

Question 73

Country Z is passing through a recession.Which group of economists is likely to believe that a shift of the aggregate demand curve has caused the recession?

A)Keynesians
B)Monetarists
C)Real Business Cycle theorists
D)Neoclassicists

Question 74

Output and employment in Country Y has fallen below its equilibrium level.Which of the following groups of economists is likely to believe that output and employment will return to its equilibrium level without government intervention?

A)Keynesian economists
B)Post-modern economists
C)Monetarists
D)Classical economists

Question 75

Compensation of workers is defined as

A)wages and salaries plus benefits earned by the workers.
B)wages and salaries earned by the worker.
C)non-monetary benefits earned by the workers.
D)the tax rates which are applicable on the wages earned by the workers.

Question 76

Compensation of workers per hour in the U.S.grew the fastest in the

A)long boom.
B)economic liftoff period.
C)Great Depression.
D)reorganization period.

Question 77

In the country of Aargh, in the equation for TFP,
Y = A × K^a × L^1?a,
the coefficient is a = 0.2.The capital stock is growing 6 percent per year, employment is growing 1 percent per year, and output is growing 4 percent per year.In the country of Blargh, the coefficient is a = 0.25, the capital stock is growing 10 percent per year, employment is growing 2 percent per year, and output is growing 5 percent per year.In which country is TFP growing the fastest? In which country is output per worker growing the fastest? Explain your answer and show all your calculations.

Question 78

Suppose a country has a population of 76 million, of which 53 million are in the working-age population.Of those, 3 million are unemployed and 46 million are employed.
a.Calculate the number of people who are in the labor force.
b.Calculate the number of people who are not in the labor force.
c.Calculate the labor-force participation rate.
d.Calculate the unemployment rate.

Question 79

The difference between labor productivity growth and growth in compensation per hour has been the greatest in the

A)long boom period.
B)economic liftoff period.
C)Great Depression period.
D)reorganization period.