Question 1

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 set by the Full Employment and Balanced Growth Act of 1978 is commonly referred to as the "natural rate of unemployment" and is defined as the lowest level of unemployment that can be sustained without causing inflation. It is a theoretical concept and not a specific numerical target. Therefore, it is only rarely achieved and varies based on economic conditions.

Question 2

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

Accepted Answer

This is a true statement. The Employment Act of 1946, also known as the Full Employment Act, was signed into law by President Harry Truman and established the federal government's responsibility to promote maximum employment, production, and purchasing power.

Question 3

Most recessions last approximately three years.

Accepted Answer

The length of a recession can vary greatly and is determined by a variety of economic factors. Some recessions may last only a few months, while others can last several years.

Question 4

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 answer of If the unemployment rate is 6 percent,that...

Question 5

The unemployment rate is usually zero except during recessions.

Accepted Answer

The unemployment rate is not usually zero, it fluctuates based on various economic factors and is not limited to just recessions.

Question 6

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 a lower standard of living as individuals have less income to spend on goods and services, and it decreases the overall output of the economy.

Question 7

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 peaked at around 25 percent. This was the highest unemployment rate in the country's history, and it took many years for the economy to recover.

Question 8

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

An expansion is characterized by rising output, and is the phase of the business cycle immediately following a trough. Peaks mark the end of an expansion, and are followed by a downturn into a recession or depression.

Question 9

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 rate of unemployment, often referred to as the "natural rate of unemployment" or "NAIRU" (Non-Accelerating Inflation Rate of Unemployment), has been difficult to achieve consistently due to various economic fluctuations, recessions, and structural changes in the economy over the last few decades.

Question 10

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

Accepted Answer

Periodic fluctuations in real GDP are called business cycles. Option B, recessions, refers specifically to the contraction phase of a business cycle. Options C, peaks, and E, troughs, represent the highest and lowest points of a business cycle respectively. Option D, expansions, refers to the growth phase of a business cycle.

Question 11

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

The average expansion in the U.S. economy has typically lasted longer than the average recession over the last half of the twentieth century. Expansions often span several years, while recessions are generally shorter in duration.

Question 12

Periodic fluctuations in GDP are called business cycles.

Accepted Answer

Periodic fluctuations in GDP are the defining characteristic of business cycles.

Question 13

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

The official unemployment rate in the United States has never reached 0 percent in the last 80 years. While it has reached historic lows, such as 2.5 percent in May 1953, it has never reached 0 percent.

Question 14

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, set the target unemployment rate for the United States economy at 4 percent.

Question 15

During a recession,both output and unemployment fall.

Accepted Answer

During a recession, output falls while unemployment rises. This is because businesses are producing less due to decreased demand, which leads to layoffs and higher unemployment.

Question 16

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 periods of decreasing output, which are usually accompanied by lower employment, reduced consumer spending, and other negative economic indicators.

Question 17

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 indicates that the economy is growing but an unemployment rate of 7 percent suggests that the economy is not achieving full employment. Therefore, the economy is not operating at its full economic potential.

Question 18

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

Hiring 1,000 new workers suggests an increase in the nation's output level as more labor is available to produce goods or services. Unemployment is likely to decrease, but not exactly by 1,000 individuals, due to factors like job turnover, underemployment, and the possibility of some new hires already being employed elsewhere.

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 low, it means that most people who are willing and able to work have jobs. This suggests that the economy is doing well, demand for goods and services is high, and businesses are likely producing output at a high rate.

Question 20

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

Accepted Answer

It is not feasible or desirable to achieve an unemployment rate of zero as there will always be natural unemployment due to factors such as job transitions, seasonal fluctuations, and technological advancements. In fact, a small amount of unemployment is even necessary for a healthy economy as it allows for a flexible labor market and promotes competition and innovation.

Quiz 17: What Macroeconomics Tries to Explain

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

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

Most recessions last approximately three years.

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

The unemployment rate is usually zero except during recessions.

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

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

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

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.

Periodic fluctuations in real GDP are called

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 GDP are called business cycles.

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

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

During a recession,both output and unemployment fall.

Recessions are identified by

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

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

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

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