Economics Unit 2 Test

Front 1

Recurring upswings and downswings in an economy's real GDP over time are called?

recessions. Correct! business cycles. output yo-yos. total product oscillations.

Back 1

business cycles.

Front 2

The phase of the business cycle in which real GDP is at a minimum is called:

Back 2

the trough.

Front 3

The United States' economy is considered to be at "full employment" when:

The phase of the business cycle in which real GDP is at a minimum is called: the pits. the peak. Correct Answer the trough. a recession.

Back 3

about 5 percent of the labor force is unemployed.

Front 4

Anne Kasperson works in her own home as a full-time caretaker and homemaker. Officially, she is:

Back 4

not in the labor force.

Front 5

Part-time workers are counted as:

Back 5

fully employed and therefore the official unemployment rate may understate the level of unemployment.

Front 6

Full-time employed

30 million

Part-time employed

17 million Unemployed 3 million Discouraged Workers 75 thousand Underground Economy 1 million

Refer to the above information, the unemployment rate is:

Back 6

6 percent.

Front 7

Assume that Hernandez is temporarily unemployed because he has voluntarily quit his job with company A, earned his degree and is currently looking for a better job. Hernandez will be considered as:

Back 7

frictionally unemployed.

Front 8

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 8 percent. According to Okun's law, the GDP gap is:

Back 8

6 percent.

Front 9

"For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point GDP gap occurs." This is a statement of:

Back 9

Okun's law.

Front 10

The consumer price index was 166.6 in 1999 and 172.2 in 2000. Therefore, the rate of inflation in 2000 was about:

Back 10

3.4 percent.

Front 11

Cost-push inflation may be caused by:

Back 11

an increase in wage rates or other resource prices.

Front 12

Suppose that a person's nominal income rises by 5% and the price level rises by 4%. The person's real income will:

Back 12

rise by about 1 percent.

Front 13

The phases of the business cycle, in the order in which they occur are:

Back 13

peak, recession, trough, recovery/expansion

Front 14

"Discouraged workers", those who are unemployed but have given up looking for a job:

Back 14

understate the unemployment rate, because they are no longer counted in the calculation of unemployed workers.

Front 15

Cyclical Unemployment is caused by:

Back 15

downturns in the economy, recessions.

Front 16

People on social security, with a fixed income:

Back 16

are hurt by unanticipated inflation.

Front 17

An Increase in price and unemployment,combined with a decrease in output and employment best describes:

Back 17

stagflation

Front 18

A graph which demonstrates the tradeoff between unemployment and changes in price levels, specifically inflation best describes:

Back 18

the phillips curve

Front 19

The oil embargo of the 1970's created a situation in the economy where:

Back 19

inflation and unemployment were high