Question 1

Describe the four phases of the business cycle.

Accepted Answer

The answer of Describe the four phases of the business...

Question 2

Deﬂation is generally considered by economists to be a positive economic situation because it
creates strong job growth.

Accepted Answer

Deﬂation is not considered a positive economic situation because it is associated with a decrease in prices and consumer spending, a slowdown in economic growth, and possible job losses.

Question 3

What is meant by the term "business cycle" as described by economists?

Accepted Answer

The answer of What is meant by the term "business...

Question 4

(Last Word) One reason that many jobs are going unﬁlled today is because when advertising a
position, employers ask that applicants have a college degree, whether or not it is actually
necessary for the job.

Accepted Answer

Many employers require a college degree as a prerequisite for certain jobs, even if the skills required for the job could be learned through vocational training or other means. Therefore, qualified candidates who don't possess a college degree are overlooked, leaving many job openings unfilled.

Question 5

The unemployment rate among teenagers tends to be lower than the unemployment rate among
adults.

Accepted Answer

This statement is false. The unemployment rate among teenagers is typically higher than the unemployment rate among adults due to their limited work experience and competition for entry-level jobs.

Question 6

Unanticipated inﬂation beneﬁts creditors and savers.

Accepted Answer

Unanticipated inflation harms creditors and savers because the money they receive back in the future will be worth less than the amount they lent or saved.

Question 7

When there is demand-pull inﬂation, people's total spending in the economy will be falling.

Accepted Answer

When there is demand-pull inflation, people's total spending in the economy will be increasing. This is because there is an increase in demand for goods and services, which drives up prices.

Question 8

(Last Word) All of the following are explanations for why many job openings were going unﬁlled after the Great Recession except
A) skills mismatches between the worker and the employer.
B) employers set unreasonably high recruiting criteria.
C) less geographic relocation of the labor force.
D) the fact that some amount of frictional unemployment always exists.
E) the extensive array of vocational programs offered at high schools today.

Accepted Answer

The extensive array of vocational programs offered at high schools today is not a valid explanation for why many job openings were going unﬁlled after the Great Recession. The other options listed (skills mismatches, unreasonably high recruiting criteria, less geographic relocation, and frictional unemployment) are all potential explanations.

Question 9

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in
that economy.

Accepted Answer

If the economy's actual GDP is greater than its potential GDP, it means that the economy is producing more than its maximum capacity. This can lead to inflationary pressures and may indicate that the economy is operating at or near full employment.

Question 10

(Last Word) Today, community colleges are being asked to expand vocational programs to help businesses ﬁnd the skilled labor they need by offering classes like
A) social studies and foreign languages.
B) English and biology.
C) chemistry and history.
D) welding and electronics.

Accepted Answer

The article mentions that community colleges are being asked to expand vocational programs to help businesses find skilled labor, and specifically highlights welding and electronics as examples of such programs. Therefore, the best choice is D. The other choices do not align with the goal of helping businesses find skilled labor.

Question 11

Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high
and growing spending that produces high levels of output, full employment, and economic growth.

Accepted Answer

This statement expresses the view of those who support the Phillips curve theory, which posits a trade-off between inflation and unemployment. They argue that a moderate level of inflation can spur economic growth by stimulating demand and lowering real wages. However, this view is not universally accepted among economists, and some believe that high inflation can have harmful effects on the economy, such as reducing purchasing power and discouraging savings and investment.

Question 12

Inﬂation means that the prices of all items in the economy are increasing.

Accepted Answer

Inflation does not mean that the prices of all items in the economy are increasing. It refers to a sustained and general increase in prices for goods and services over a period of time. Some prices may increase more than others, while others may even decrease. It is measured by the Consumer Price Index (CPI), which tracks the prices of a basket of goods and services over time.

Question 13

Lenders will be willing to reduce the nominal interest rates on loans if the expected inﬂation
increases.

Accepted Answer

Lenders will be unwilling to reduce the nominal interest rates on loans if the expected inflation increases because that would mean a decrease in the real interest rate they would receive on the loan. Lenders will actually increase the nominal interest rates in response to higher expected inflation.

Question 14

The percentage change in real income can be approximated by subtracting the percentage change
in the price level from the percentage change in nominal income.

Accepted Answer

This statement is true according to the equation for calculating real income: Real income = (Nominal income/Price level) x 100. Therefore, the percentage change in real income can be approximated by subtracting the percentage change in the price level from the percentage change in nominal income.

Question 15

If the CPI rises from 125 to 140 from one year to the next, then the rate of inﬂation is 15 percent.

Accepted Answer

The rate of inflation is calculated as the percentage increase in the CPI from one period to the next. In this case, it would be $\frac{(140 - 125)}{125} \times 100 = 12\%$.

Question 16

Cost-push inﬂation increases real output and employment.

Accepted Answer

Cost-push inflation occurs when production costs increase, causing firms to raise prices. This can lead to a decrease in real output and employment as consumers have less purchasing power and firms may reduce production due to higher costs.

Question 17

Deﬂation is when the inﬂation rate turns negative.

Accepted Answer

Deﬂation occurs when the general price level decreases, resulting in a negative inflation rate.

Question 18

Demand-pull inﬂation is usually accompanied by low unemployment and higher real output.

Accepted Answer

Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, which means there is more demand for goods and services than what can be produced. This may lead to firms increasing their production levels, which can result in higher real output and may also require hiring more workers, leading to low unemployment. Therefore, demand-pull inflation is usually accompanied by low unemployment and higher real output.

Question 19

(Last Word) Like previous generations, the current generation of Americans are willing to move at
least once or twice from one part of the country to another for employment opportunities.

Accepted Answer

The answer of (Last Word) Like previous generations, the current...

Question 20

Proponents of zero inﬂation argue that even mild inﬂation (1 to 3 percent) reduces the economy's
real output.

Accepted Answer

Proponents of zero inflation argue that even mild inflation can reduce the economy's real output.

Quiz 9: Business Cycles, Unemployment, and Inflation

Describe the four phases of the business cycle.

Deﬂation is generally considered by economists to be a positive economic situation because it creates strong job growth.

What is meant by the term "business cycle" as described by economists?

(Last Word) One reason that many jobs are going unﬁlled today is because when advertising a position, employers ask that applicants have a college degree, whether or not it is actually necessary for the job.

The unemployment rate among teenagers tends to be lower than the unemployment rate among adults.

Unanticipated inﬂation beneﬁts creditors and savers.

When there is demand-pull inﬂation, people's total spending in the economy will be falling.

(Last Word) All of the following are explanations for why many job openings were going unﬁlled after the Great Recession except

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

(Last Word) Today, community colleges are being asked to expand vocational programs to help businesses ﬁnd the skilled labor they need by offering classes like

Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high and growing spending that produces high levels of output, full employment, and economic growth.

Inﬂation means that the prices of all items in the economy are increasing.

Lenders will be willing to reduce the nominal interest rates on loans if the expected inﬂation increases.

The percentage change in real income can be approximated by subtracting the percentage change in the price level from the percentage change in nominal income.

If the CPI rises from 125 to 140 from one year to the next, then the rate of inﬂation is 15 percent.

Cost-push inﬂation increases real output and employment.

Deﬂation is when the inﬂation rate turns negative.

Demand-pull inﬂation is usually accompanied by low unemployment and higher real output.

(Last Word) Like previous generations, the current generation of Americans are willing to move at least once or twice from one part of the country to another for employment opportunities.

Proponents of zero inﬂation argue that even mild inﬂation (1 to 3 percent) reduces the economy's real output.