Question 1

Most recessions last approximately three years.

Accepted Answer

Most recessions do not last three years, as the duration of a recession can vary greatly depending on various economic factors and policies. Some recessions may only last a few months, while others can last several years.

Question 2

How many times in the last 80 years has the official unemployment rate in the United States reached 0 percent?
A) 0
B) 1
C) 2
D) 3
E) 4

Accepted Answer

It is impossible for the official unemployment rate to reach 0 percent in any economy, as some level of unemployment is considered normal and natural. Therefore, the answer is 0.

Question 3

If real GDP is increasing at a 2 percent annual rate while the unemployment rate is 7 percent,the economy is
A) not achieving full economic potential
B) experiencing an increase of 2 percent in real annual per capita GDP
C) experiencing a slump
D) experiencing high prices and low inflation
E) producing along its production possibilities frontier

Accepted Answer

A 2 percent annual increase in real GDP is below the historical average for the US economy, and an unemployment rate of 7 percent indicates that there is still a significant amount of labor market slack. Therefore, the economy is not achieving full economic potential.

Question 4

The Employment Act of 1946 directed the federal government to pursue the three objectives of maximizing employment,production,and purchasing power.

Accepted Answer

The Employment Act of 1946 did indeed direct the federal government to pursue the three objectives of maximizing employment, production, and purchasing power.

Question 5

Because it lowers the amount of output per person,unemployment results in
A) a shift in the economy's production possibilities frontier
B) increased workers' incomes
C) optimism about economic growth
D) a lower standard of living
E) rapid inflation

Accepted Answer

Unemployment leads to lower productivity and income levels for individuals, which can ultimately result in a lower standard of living for the population overall.

Question 6

If a factory hires 1,000 new workers,the nation's output level is probably
A) increasing and unemployment is likely to increase
B) increasing and unemployment is likely to decrease by 1000 individuals
C) fluctuating
D) stable
E) increasing and unemployment is likely to decrease by less than 1,000 individuals

Accepted Answer

The answer of If a factory hires 1,000 new workers,the...

Question 7

The U.S.economy experienced fluctuations in employment and output over the last half of the twentieth century.However,the length of the average recession has been about the same as the length of the average expansion.

Accepted Answer

Historically, economic expansions in the U.S. have tended to last longer than recessions, with expansions often lasting several years while recessions are typically shorter in duration.

Question 8

Periodic fluctuations in real GDP are called
A) business cycles
B) recessions
C) peaks
D) expansions
E) troughs

Accepted Answer

Business cycles refer to the periodic fluctuations in real GDP over a period of time. These cycles consist of alternating periods of expansion and recession, with peaks and troughs marking the high and low points of the cycle. Therefore, the correct choice is A) business cycles.

Question 9

During the Great Depression of the 1930s,the unemployment rate in the United States peaked at around
A) 5 percent
B) 10 percent
C) 12 percent
D) 25 percent
E) 50 percent

Accepted Answer

During the Great Depression, the unemployment rate in the United States reached a peak of 25 percent in 1933. This was the highest unemployment rate in U.S. history. The economic conditions worsened as many businesses closed down and people lost their jobs leading to widespread poverty and homelessness. The high unemployment rate persisted until the late 1930s and only improved with the massive industrial production for World War II.

Question 10

During a recession,both output and unemployment fall.

Accepted Answer

During a recession, output typically falls due to decreased demand for goods and services, but unemployment typically rises due to businesses cutting jobs and reducing their workforce.

Question 11

One macroeconomic goal is to achieve an unemployment rate of zero.

Accepted Answer

It is not possible to achieve a zero unemployment rate, as there will always be some level of frictional and structural unemployment in the economy. A low and stable unemployment rate is a more realistic and achievable goal.

Question 12

The unemployment rate is usually zero except during recessions.

Accepted Answer

The statement is incorrect. The unemployment rate is never zero, as there is always some amount of frictional and structural unemployment present in the economy even during periods of economic growth. The natural rate of unemployment, which is the rate at which the economy is considered to be at full employment, is typically around 4-5%.

Question 13

The phase of the business cycle characterized by rising output is called a(n)
A) peak
B) recession
C) depression
D) trough
E) expansion

Accepted Answer

The phase of the business cycle characterized by rising output is known as an expansion. This is the period when the economy is growing rapidly, businesses are hiring more workers, and consumer spending is increasing. During an expansion, there is an increase in economic activity, and the prices of goods and services tend to rise. This phase ends when the economy reaches its peak, after which it starts to contract.

Question 14

If the unemployment rate is 6 percent,that means that 6 percent of
A) the population is not working
B) potential workers do not have jobs
C) the workforce is searching for work but has not found a job at that time
D) the individuals who are looking for work cannot find jobs
E) the population is not looking for a job

Accepted Answer

The unemployment rate measures the percentage of the labor force that is actively seeking employment but is unable to find work.

Question 15

Periodic fluctuations in GDP are called business cycles.

Accepted Answer

This is true. Business cycles refer to the regular pattern of economic expansion (growth) and contraction (recession) that occur over time in most economies.

Question 16

The Full Employment and Balanced Growth Act of 1978 set the target unemployment rate for the United States economy at 4 percent.

Accepted Answer

The Full Employment and Balanced Growth Act of 1978, also known as the Humphrey-Hawkins Act, did set the target unemployment rate for the United States economy at 4 percent.

Question 17

Recessions are identified by
A) severe and long-lasting phases of decreased output
B) high employment
C) constant output
D) decreasing output
E) low unemployment

Accepted Answer

Recessions are identified by decreasing output, which can be seen through declines in gross domestic product (GDP) or industrial production.

Question 18

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

Accepted Answer

The target unemployment rate set by the Full Employment and Balanced Growth Act (1978) is 4%, but the actual rate has fluctuated due to economic cycles, often exceeding this target.

Question 19

If the unemployment rate has reached an all-time low,the production of output is probably
A) high
B) low
C) fluctuating
D) stable
E) inefficient

Accepted Answer

When the unemployment rate is at an all-time low, there is likely a shortage of available workers, indicating that the economy is performing well and demand for goods and services is high. This often leads to an increase in production output in order to meet the demand.

Question 20

In the Full Employment and Balanced Growth Act of 1978,Congress set a target rate of unemployment.The nation achieves this target rate
A) in most years
B) at least once a year
C) only rarely
D) in election years
E) at least once every five years

Accepted Answer

The target rate of unemployment set by the Full Employment and Balanced Growth Act of 1978 was rarely achieved by the nation. This is because achieving full employment is a complex and multifaceted issue that is influenced by various economic, social, and political factors. While the government can implement policies and programs to support job creation and reduce unemployment, there are no guarantees that these efforts will always be successful. Additionally, economic downturns and other external factors can create challenges that prevent full employment from being achieved on a consistent basis.

Quiz 5: What Macroeconomics Tries to Explain

Most recessions last approximately three years.

How many times in the last 80 years has the official unemployment rate in the United States reached 0 percent?

If real GDP is increasing at a 2 percent annual rate while the unemployment rate is 7 percent,the economy is

The Employment Act of 1946 directed the federal government to pursue the three objectives of maximizing employment,production,and purchasing power.

Because it lowers the amount of output per person,unemployment results in

If a factory hires 1,000 new workers,the nation's output level is probably

The U.S.economy experienced fluctuations in employment and output over the last half of the twentieth century.However,the length of the average recession has been about the same as the length of the average expansion.

Periodic fluctuations in real GDP are called

During the Great Depression of the 1930s,the unemployment rate in the United States peaked at around

During a recession,both output and unemployment fall.

One macroeconomic goal is to achieve an unemployment rate of zero.

The unemployment rate is usually zero except during recessions.

The phase of the business cycle characterized by rising output is called a(n)

If the unemployment rate is 6 percent,that means that 6 percent of

Periodic fluctuations in GDP are called business cycles.

The Full Employment and Balanced Growth Act of 1978 set the target unemployment rate for the United States economy at 4 percent.

Recessions are identified by

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

If the unemployment rate has reached an all-time low,the production of output is probably

In the Full Employment and Balanced Growth Act of 1978,Congress set a target rate of unemployment.The nation achieves this target rate