Question 1

The unemployment rate in an economy is 7.5 percent. The total population of the economy is 250 million and the size of the civilian labor force is 180 million. The number of employed workers in this
Economy is

Accepted Answer

The number of employed workers can be calculated by subtracting the number of unemployed workers from the total labor force. The unemployment rate is 7.5%, so the number of unemployed workers is 7.5% of the civilian labor force (180 million). This gives us 180 million * 7.5% = 13.5 million unemployed workers. Subtracting the unemployed workers from the total labor force gives us 180 million - 13.5 million = 166.5 million employed workers.

Question 2

Which statement is correct?

Accepted Answer

The production of nondurable goods such as food and clothing is relatively stable over the business cycle as they are necessities and demand for them is less volatile. Durable goods such as cars and appliances are more responsive to changes in income and credit conditions and thus, their production is more volatile over the business cycle. A and B are incorrect as different sectors have different degrees of sensitivity to business fluctuations and real output and employment do show significant variance over the business cycle. D is incorrect as recessions can be unpredictable and their severity can vary.

Question 3

What has been the range for the duration in months of U.S. recessions between 1950 and 2009?

Accepted Answer

According to the National Bureau of Economic Research (NBER), the duration of U.S. recessions between 1950 and 2009 ranged from 6 months to 18 months.

Question 4

General sources of shocks that can cause business cycles include the following, except

Accepted Answer

C) is incorrect because unemployment jumps and production drops are consequences of business cycles rather than sources or causes. The other options (A, B, D) are recognized sources of shocks that can lead to business cycles.

Question 5

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million. The unemployment rate for this economy is

Accepted Answer

The unemployment rate can be calculated by dividing the number of unemployed workers (which is the difference between the labor force and the number of employed workers) by the labor force and multiplying by 100. 
Unemployment rate = (Labor force - Employed workers) / Labor force x 100 
= (125 million - 117 million) / 125 million x 100 
= 6.4 percent

Question 6

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be

Accepted Answer

The answer of If the total population is 200 million,...

Question 7

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Accepted Answer

Medical services are considered a necessity and not as sensitive to changes in the business cycle as housing construction, automobile production, and capital goods production. People need medical care regardless of the state of the economy, and therefore medical services are less likely to be affected by the business cycle.

Question 8

During the Great Depression of the 1930s, U.S. real GDP fell by about ____ percent, in comparison to the ____ percent decline during the Great Recession of 2007-09.

Accepted Answer

During the Great Depression of the 1930s, U.S. real GDP fell by about 27 percent, whereas during the Great Recession of 2007-09, it declined by approximately 4.3 percent.

Question 9

Which of the following groups declares the start and end of recessions in the United States?

Accepted Answer

The Business Cycle Dating Committee of the National Bureau of Economic Research is the group that officially declares the start and end of recessions in the United States.

Question 10

Which of the following is the correct way to calculate the unemployment rate?

Accepted Answer

The unemployment rate is defined as the percentage of the labor force that is unemployed. Therefore, the correct way to calculate the unemployment rate is to divide the number of unemployed individuals by the labor force (which is made up of employed and unemployed individuals actively seeking employment) and then multiply by 100 to convert to a percentage.

Question 11

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in
This economy is

Accepted Answer

The unemployment rate is given as 6%, which means that 6% of the labor force is unemployed. 
6% of 150 million (labor force) is 0.06 x 150 million = 9 million. 
Therefore, the number of unemployed workers in this economy is 9 million.

Question 12

The Great Recession that started in 2007 was triggered by shocks in which of the following economic sectors?

Accepted Answer

The Great Recession was triggered by shocks in the real estate and financial markets, specifically the bursting of the housing bubble and the subprime mortgage crisis. These shocks led to a decline in the value of mortgage-backed securities and other financial assets, which in turn led to a widespread credit freeze and a severe contraction in lending and economic activity. The resulting recession lasted from 2007 to 2009 and was the worst economic downturn since the Great Depression.

Question 13

Some economists prefer to use the term business ﬂuctuations rather than business cycles to describe the historical growth record in the United States because

Accepted Answer

The term "business cycles" implies regularity and predictability, which may not always be the case. "Business fluctuations" is a more neutral term that acknowledges the ups and downs of the economy without implying a set pattern.

Question 14

The unemployed are those people who

Accepted Answer

The unemployed are those who are not employed but are actively seeking work. Option A includes those who may not be seeking work, while Option C includes those who may not be seeking work and Option D includes those who are not working but may not necessarily be seeking work.

Question 15

The total adult population of an economy is 175 million, the number of employed is 122 million, and the number of unemployed is 17 million. The percentage of adults who are not in the labor force is

Accepted Answer

The answer of The total adult population of an economy...

Question 16

What has been the range of the decline in real output during recessions in the U.S. between 1950 and 2009?

Accepted Answer

The range of the decline in real output during recessions in the U.S. between 1950 and 2009 was relatively moderate, with the most severe recessions seeing a decline of no more than -4.3 percent, indicating that option A is correct.

Question 17

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, institutionalized, or under 16 years old. There are 188 million who are employed and 12 million who
Are unemployed. What is the unemployment rate?

Accepted Answer

We can use the formula for unemployment rate:

unemployment rate = (number of unemployed / labor force) x 100%

The labor force is the sum of employed and unemployed individuals:

labor force = employed + unemployed

Thus, the labor force in this nation is:

labor force = 188 million + 12 million = 200 million

The number of unemployed individuals is 12 million, so we can plug these values into the formula:

unemployment rate = (12 million / 200 million) x 100% = 6%

Therefore, the unemployment rate in this nation is 6%, which corresponds to choice B.

Question 18

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the

Accepted Answer

Most economists attribute the majority of cyclical changes in the level of real output to unexpected changes in the level of total spending in the economy. When spending increases unexpectedly, firms try to increase their output leading to an increase in the level of real output. Conversely, if spending decreases unexpectedly, firms try to reduce their output leading to a decrease in the level of real output. Therefore, the level of total spending is considered the immediate cause of most cyclical changes in real output.

Question 19

The unemployment rate is interpreted as the percentage of the

Accepted Answer

The unemployment rate is calculated as the percentage of the labor force that is not employed. The labor force is defined as those who are either employed or actively seeking work. Therefore, option A (adult population who are unemployed) and option C (able-bodied population who are not working) are both incorrect as they do not take into account the labor force definition. Option D (workforce that have been laid off) is also incorrect as it only considers a small portion of the unemployed population and does not include those who are not working for other reasons such as being unable to find a job or choosing not to work.

Question 20

Full-time homemakers and retirees are classiﬁed in the BLS data as

Accepted Answer

Full-time homemakers and retirees are not actively seeking employment and are not part of the labor force, therefore they are classified as not in the labor force according to BLS data.

Quiz 9: Business Cycles, Unemployment, and Inflation

The unemployment rate in an economy is 7.5 percent. The total population of the economy is 250 million and the size of the civilian labor force is 180 million. The number of employed workers in this Economy is