econ exam 2- test answers Correct
Questions And Answers
the phases of the business cycle Correct Answers peak, recession, trough, expansion
An economic shock for an economy refers to the general situation where: Correct
Answers it is difficult for businesses to adjust to unexpected economic events.
If prices are "sticky" in an economy, then the economy will respond to demand shocks
primarily through changes in Correct Answers output & employment
A recession is defined as: Correct Answers a fall in real GDP that lasts six months or
longer
According to economists, the immediate cause of a downturn in the business cycle is
due to an unexpected changes in: Correct Answers the level of total spending
In which type of industry would production and employment be most negatively affected
by a severe recession? Correct Answers consumer durable goods
frictional unemployment Correct Answers unemployment that occurs when people take
time to find a job
The best example of a "frictionally unemployed" worker is one who: Correct Answers is
in the process of voluntarily switching jobs
In calculating the unemployment rate, part-time workers are: Correct Answers counted
as employed because they are receiving payment for work
If the unemployment rate in the U.S. economy is greater than the natural rate of
unemployment: Correct Answers potential GDP is greater than actual GDP
If the consumer price index was 111 in one year and 115 in the next year, then the rate
of inflation from one year to the next was: Correct Answers 3.6%
An increase in the price level that is caused by an excess of total spending beyond the
economy's capacity to produce would be: Correct Answers demand-pull inflation
If a worker's nominal income increased by 5 percent while the price level increased by 2
percent, what happened to the worker's real income? Correct Answers
Assume that the price level in an economy doubled in 7 years. This means that the
average rate of inflation over this period was approximately: Correct Answers 10%
, According to an account presented in the textbook, in Germany after the First World
War "prices increased so rapidly that waiters changed the prices on the menu several
times during the course of a lunch." This situation would be most associated with the
economic problem of: Correct Answers hyperinflation
You are given the following information about the economy: (a) percentage change in
nominal interest rate = 10 percent; (b) percentage change in real interest rate = 6
percent. What is the approximate percentage change in the price level? Correct
Answers 4%
Unanticipated inflation is most likely to: Correct Answers hurt people on fixed income
Inflation caused by a rise in per unit production costs is referred to as: Correct Answers
cost-push inflation
In Year 1, a worker earned $60,000 and the CPI was 240. In Year 2, the worker still
earned $60,000 and the CPI was 250. What happened to real income for this worker
from Year 1 to Year 2? Correct Answers
One major explanation for why the aggregate demand curve is downsloping is that:
Correct Answers a fall in the price level increases the real purchasing power of financial
assets
Which one of the following factors will most likely increase aggregate demand? Correct
Answers improved profit expectations
Which one of the following factors will most likely decrease aggregate demand? Correct
Answers
Which one of the following factors will most likely increase aggregate supply? Correct
Answers a decrease in the prices of resources
Which event would most likely increase net exports? Correct Answers an increase in
the national incomes in foreign nations
A large and sustained rise in the value of the stock market that increases consumer
wealth will most likely: Correct Answers increase aggregate demand.
If the price level increases and real GDP increases, these outcomes most likely would
be the result of: Correct Answers an increase in aggregate demand.
An increase in labor productivity is most likely to: Correct Answers increase aggregate
supply.
Questions And Answers
the phases of the business cycle Correct Answers peak, recession, trough, expansion
An economic shock for an economy refers to the general situation where: Correct
Answers it is difficult for businesses to adjust to unexpected economic events.
If prices are "sticky" in an economy, then the economy will respond to demand shocks
primarily through changes in Correct Answers output & employment
A recession is defined as: Correct Answers a fall in real GDP that lasts six months or
longer
According to economists, the immediate cause of a downturn in the business cycle is
due to an unexpected changes in: Correct Answers the level of total spending
In which type of industry would production and employment be most negatively affected
by a severe recession? Correct Answers consumer durable goods
frictional unemployment Correct Answers unemployment that occurs when people take
time to find a job
The best example of a "frictionally unemployed" worker is one who: Correct Answers is
in the process of voluntarily switching jobs
In calculating the unemployment rate, part-time workers are: Correct Answers counted
as employed because they are receiving payment for work
If the unemployment rate in the U.S. economy is greater than the natural rate of
unemployment: Correct Answers potential GDP is greater than actual GDP
If the consumer price index was 111 in one year and 115 in the next year, then the rate
of inflation from one year to the next was: Correct Answers 3.6%
An increase in the price level that is caused by an excess of total spending beyond the
economy's capacity to produce would be: Correct Answers demand-pull inflation
If a worker's nominal income increased by 5 percent while the price level increased by 2
percent, what happened to the worker's real income? Correct Answers
Assume that the price level in an economy doubled in 7 years. This means that the
average rate of inflation over this period was approximately: Correct Answers 10%
, According to an account presented in the textbook, in Germany after the First World
War "prices increased so rapidly that waiters changed the prices on the menu several
times during the course of a lunch." This situation would be most associated with the
economic problem of: Correct Answers hyperinflation
You are given the following information about the economy: (a) percentage change in
nominal interest rate = 10 percent; (b) percentage change in real interest rate = 6
percent. What is the approximate percentage change in the price level? Correct
Answers 4%
Unanticipated inflation is most likely to: Correct Answers hurt people on fixed income
Inflation caused by a rise in per unit production costs is referred to as: Correct Answers
cost-push inflation
In Year 1, a worker earned $60,000 and the CPI was 240. In Year 2, the worker still
earned $60,000 and the CPI was 250. What happened to real income for this worker
from Year 1 to Year 2? Correct Answers
One major explanation for why the aggregate demand curve is downsloping is that:
Correct Answers a fall in the price level increases the real purchasing power of financial
assets
Which one of the following factors will most likely increase aggregate demand? Correct
Answers improved profit expectations
Which one of the following factors will most likely decrease aggregate demand? Correct
Answers
Which one of the following factors will most likely increase aggregate supply? Correct
Answers a decrease in the prices of resources
Which event would most likely increase net exports? Correct Answers an increase in
the national incomes in foreign nations
A large and sustained rise in the value of the stock market that increases consumer
wealth will most likely: Correct Answers increase aggregate demand.
If the price level increases and real GDP increases, these outcomes most likely would
be the result of: Correct Answers an increase in aggregate demand.
An increase in labor productivity is most likely to: Correct Answers increase aggregate
supply.
