Question 1

A lender need not be penalized by inflation if the

Accepted Answer

If the lender correctly anticipates inflation and increases the nominal interest rate accordingly, they can still earn a real rate of return that is not negatively impacted by inflation. The other answer choices do not ensure that the lender will not be penalized by inflation.

Question 2

Statement I: The last deflation in the United States was from 1929 to 1933,when prices fell 50 percent.
Statement II: The years 1981 and 1982 were years of disinflation.

Accepted Answer

The answer of Statement I: The last deflation in the...

Question 3

We have had a downward trend in the unemployment rate since the 1980's until the increase occurring in

Accepted Answer

The unemployment rate decreased steadily from the 1980s until the 2007-2008 financial crisis, after which it sharply increased in 2009. Therefore, the correct choice is D.

Question 4

Discouraged workers are officially

Accepted Answer

Discouraged workers are classified as not being in the labor force, as they have given up on finding employment and therefore are not actively seeking work.

Question 5

Tired of looking for work with nothing to show for it,Bill has given up on the job search.Bill is

Accepted Answer

A discouraged worker is someone who has given up on looking for work due to a long period of unsuccessful job search. Bill's situation matches this definition, as he has stopped searching for work due to lack of success.

Question 6

Statement I: Cyclical unemployment is the term given to workers who have been laid off because their skills are no longer in demand.
Statement II: At any given time about five percent of the labor force is frictionally unemployed.

Accepted Answer

The answer of Statement I: Cyclical unemployment is the term...

Question 7

What does NOT occur in a fully employed economy?

Accepted Answer

In a fully employed economy, there are no cyclical unemployment, which is the unemployment that occurs due to a recession or a downturn in the business cycle.

Question 8

Statement I: The depression phase of the conventional three-phase business cycle is usually accompanied by an unemployment rate of at least 20 percent.
Statement II: The so-called index of leading economic indicators has generally begun to decline two or three months after business cycle peaks.

Accepted Answer

The answer of Statement I: The depression phase of the...

Question 9

The term recession refers to

Accepted Answer

A recession is defined as a period of decline in real GDP (gross domestic product) for two consecutive quarters, or six months. This means that the economy is producing less goods and services than it had in the past, indicating a slowdown in economic activity.

Question 10

Business cycles

Accepted Answer

Business cycles have been a recurring source of debate and study throughout the history of economic theory.

Question 11

Suppose many college faculty members lose their jobs because universities begin to rely more heavily on computerized instruction.The dismissed teachers are appropriately called

Accepted Answer

Structural unemployment is when workers lose their jobs due to a change in the structure of an industry or economy, such as new technology or changes in consumer demand. In this scenario, the use of computerized instruction represents a change in the structure of the education industry that is leading to the loss of teaching jobs. Thus, the dismissed teachers are appropriately called structurally unemployed.

Question 12

Which of the following would not be hurt by unanticipated inflation?

Accepted Answer

Those who became debtors when inflation was lower are likely to benefit from unanticipated inflation as the value of their debts will decrease in real terms. A higher inflation rate means that the value of money declines, making it easier for debtors to pay back their loans. Therefore, D is the correct choice, as the other options would all be negatively affected by unanticipated inflation.

Question 13

_____ results from shifts in the demand for goods and services or changes in technology in the economy.

Accepted Answer

Structural unemployment results from shifts in the demand for goods and services or changes in technology in the economy causing certain job types to become irrelevant or unnecessary.

Question 14

Statement I: The term-discouraged workers refer to people without jobs who have given up looking for work.
Statement II: A person who voluntarily quits work and begins looking for another job is classified as frictionally unemployed.

Accepted Answer

Both statements are accurate. Discouraged workers are indeed individuals who have stopped looking for employment due to repeated failures, and frictional unemployment refers to people temporarily unemployed while transitioning between jobs.

Question 15

A worker who loses a job at a petroleum refinery because consumers and business firms switch from the use of oil to natural gas is an example of

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of workers and the requirements of the available jobs. In this case, the worker was employed in the petroleum industry but lost their job due to a shift in the industry towards natural gas, indicating a structural change in the demand for labor.

Question 16

Use the following choices regarding the various types of unemployment to describe this situation.Tired of the same job,day-in and day-out,Delores quit her job and is looking for more challenging work.

Accepted Answer

Delores voluntarily left her job in search of better opportunities, which is a common example of frictional unemployment. Frictional unemployment occurs when workers are between jobs, searching for new employment opportunities.

Question 17

Full employment implies that

Accepted Answer

Full employment does not imply a zero unemployment rate; rather, it acknowledges the existence of frictional and structural unemployment. It means the economy is operating at its maximum sustainable employment level, where only cyclical unemployment is absent.

Question 18

Structural unemployment occurs when

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of the workers and the job openings available in the labor market. This type of unemployment is not related to the business cycle or seasonal factors like high school graduation. It is often caused by changes in technology or shifts in the economy, which can lead to certain industries or jobs becoming obsolete, leaving workers with outdated skills searching for employment in a market that requires different qualifications.

Question 19

The Consumer Price Index measures

Accepted Answer

The Consumer Price Index (CPI) measures changes in the price of a market basket of consumer goods, including food, transportation, housing, and entertainment. This index reflects the cost of living and inflation trends, and is used to adjust income and government benefits such as Social Security. It does not measure changes in the money supply, all prices, the cost of consumer credit, or average prices charged in retail stores.

Question 20

The unemployment rate is a fraction whose numerator is

Accepted Answer

The unemployment rate is calculated by taking the number of unemployed individuals and dividing it by the total labor force (which includes both employed and unemployed individuals). Therefore, the numerator of the fraction is the number of unemployed individuals.

Quiz 10: Economic Fluctuations, unemployment, and Inflation