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ECO 561 WEEK 4 QUIZ

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Question;1. Business cycles occur when output;Hint: Business cycles fluctuate over time;around the linear trend of gross domestic product (GDP).;A. falls below its potential;B. rises above its potential;C. is fixed at its potential;D. fluctuates around its growth trend ];2.;Which of these statements best describes a complete individual business cycle?;Hint: A complete business cycle is;measured from the initial peak to the next peak.;A. Movement from peak to trough to peak;B. Movement from recession to expansion;C. Movement from peak to recession to trough;D. Movement from trough to expansion then to peak;3. During the business cycle, the period between;the point at which output reaches a high and the point at which it reaches a low;is called;Hint: After a period of economic expansion;the economy usually contracts. This contraction would be characterized by;higher unemployment and a declining GDP.;A. a peak;B. a trough;C. an expansion;D. a recession;4.;Which of the following equals the market value of all final goods and services;produced in an economy, stated in the prices of a specific base year?;A. Nominal GNP;B. Nominal GDP;C. Real GDP;D. Real GNP;5.;Imagine a country has a population of 210 million. Within the country there are;95 million people who are employed workers, 50 million people incapable of;working, and 60 million people capable of working, but not actively looking.;Based on this information, what is the unemployment rate?;Hint: Begin by looking at the labor force;then find the number of unemployed people. Some division and multiplication;will be necessary after this point to find the unemployment rate.;A. 3%;B. 5%];C. 7%;D. 9%;6. The unemployment produced by fluctuations in;economic activity is called;Hint X Unemployment often changes with the;business cycles. As the economy expands, the level of unemployment decreases.;The unemployment level decreases as the economy expands.;A. frictional unemployment;B. cyclical unemployment];C. natural unemployment;D. structural unemployment;7. New college graduates are most likely to;experience;Hint X New college graduates often are people who;are just entering the labor force or are in the process of changing jobs.;A. frictional unemployment];B. cyclical unemployment;C. natural unemployment;D. structural unemployment;8. The natural rate of unemployment is defined as;the;Hint X The natural rate of unemployment occurs;when the economy is considered stable.;A. highest sustainable rate of unemployment;achievable under existing conditions;B. unemployment rate that is consistent with the;economy operating at its potential output];C. unemployment rate at which there is no cyclical;unemployment;D. the rate of unemployment that should exist;according to policy makers;9.;The Consumer Price Index (CPI) is based on;Hint X The CPI serves as an indicator for consumer;inflation.;A. surveys of retail store sales;B. a broad index of all items in GDP;C. surveys of the prices of items in a market;basket;D. Bureau of Labor Statistics estimates of price;changes;10. Unanticipated inflation is a problem for;society because it;Hint X Unanticipated inflation leads to;inefficiencies, as people make better investment and consumption-spending;decisions when they know accurate levels of future inflation.;A. rewards lenders at the expense of borrowers;B. increases real profits in the short term;C. rewards savers at the expense of spenders;D. benefits borrowers at the expense of lenders

 

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