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ECO 561 Week 4 Knowledge Check




Question;ECO/561 Week 4 Knowledge Check;1.;Business cycles occur when output;A. falls below its;potentialB. rises above its;potentialC. is fixed at its;potentialD. fluctuates around its;growth trend2.;Which of these statements best describes a complete individual business cycle?;A. Movement from peak to;trough to peakB. Movement from;recession to expansionC. Movement from peak to;recession to troughD. Movement from trough;to expansion then to peak3.;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;A. a peakB. a troughC. an expansionD. a recession4.;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 GNPB. Nominal GDPC. Real GDPD. Real GNP5.;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?;A. 3%B. 5%C. 7%D. 9%6. The;unemployment produced by fluctuations in economic activity is called;A. frictional;unemploymentB. cyclical unemploymentC. natural unemploymentD. structural;unemployment7. New;college graduates are most likely to experience;A. frictional;unemploymentB. cyclical unemploymentC. natural unemploymentD. structural;unemployment8. The;natural rate of unemployment is defined as the;A. highest sustainable;rate of unemployment achievable under existing conditionsB. unemployment rate;that is consistent with the economy operating at its potential outputC. unemployment rate at;which there is no cyclical unemploymentD. the rate of;unemployment that should exist according to policy makers9. The;Consumer Price Index (CPI) is based on;A. surveys of retail;store salesB. a broad index of all;items in GDPC. surveys of the prices;of items in a market basketD. Bureau of Labor;Statistics estimates of price changes10.;Unanticipated inflation is a problem for society because it;A. rewards lenders at;the expense of borrowersB. increases real;profits in the short termC. rewards savers at the;expense of spendersD. benefits borrowers at;the expense of lenders


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