ECON 212

10) Deflation occurs when A) the average price level declines. B) economic activity declines. C) the economic growth rate declines. D) the unemployment rate declines. Answer: A Diff: 2 Topic: Macroeconomic Concerns Skill: Definition 11) A period of very rapid increase in the overall price level is known as A) stagnation. B) hyperinflation. C) stagflation. D) depression. Answer: B Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 12) The trend of the economy is A) the long run growth path of the economy. B) the long run inflation rate. C) the long run unemployment rate. D) the short run production capacity of an economy. Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 13) The term business cycle refers to the A) short-term ups and downs in the price level. B) long-term trends in the price level. C) short-term ups and downs in the level of economic activity. D) long-term trends in the level of economic activity. Answer: C Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 14) A period during which aggregate output rises is known as a(n) A) recession. B) inflation. C) hyperinflation. D) expansion. Answer: D Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 15) A period when the economy shrinks is known as A) a recession. B) a contraction. C) a slump. D) all of the above. Answer: D Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 118 Contact: 16) In a business cycle, a peak represents the end of ________ and a trough represents the end of ________. A) an expansion; a recession B) a depression; an expansion C) a trough; a peak D) a recession; an expansion Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 17) In a business cycle, a peak represents the end of A) an expansion. B) a depression. C) trough. D) a recession Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 18) In a business cycle, a trough represents the end of A) an expansion. B) an inflation. C) a peak D) a recession. Answer: D Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 19) It has become conventional to classify an economic downturn as a recession when aggregate output declines for A) three consecutive quarters. B) two consecutive quarters. C) a year. D) six consecutive quarters. Answer: B Diff: 1 Topic: Macroeconomic Concerns Skill: Fact 20) If the labor force is 500 and employment is 450, then the unemployment rate is A) 100%. B) 90%. C) 10%. D) 0%. Answer: C Diff: 2 Topic: Macroeconomic Concerns Skill: Analytic 21) A prolonged and deep recession is called A) a business cycle. B) a depression. C) a stagflation. D) hyperinflation. Answer: B Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 119 22) Between a trough and a peak, the economy goes through a(n) A) recession. B) bust. C) expansion. D) hyperinflation. Answer: C Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 23) Between a peak and a trough, the economy goes through a(n) A) expansion. B) inflation. C) recession. D) boom. Answer: C Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 24) Unemployment means that A) at the going wage rate, there are people who want to work but cannot find work. B) people are not willing to work at the going wage rate. C) there are some people who will not work at the going wage rate. D) there is excess demand in the labor market. Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 25) Unemployment implies that in the labor market A) there is an excess supply of labor. B) there is an excess demand for labor. C) there are too few workers for the jobs available. D) quantity demanded of labor exceeds quantity supplied. Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 26) The unemployment rate equals A) labor force/population. B) unemployed/employed. C) (employed - unemployed)/labor force. D) (labor force - employed)/labor force. Answer: D Diff: 2 Topic: Macroeconomic Concerns Skill: Definition 120 27) The unemployment rate equals A) labor force/population. B) unemployed/employed. C) (employed - unemployed)/labor force. D) unemployed/labor force. Answer: D Diff: 2 Topic: Macroeconomic Concerns Skill: Definition 28) If the labor force is 50 million and 48 million are employed then the unemployment rate is: A) 2%. B) 4%. C) 5%. D) 52%. Answer: B Diff: 2 Topic: Macroeconomic Concerns Skill: Analytic AACSB: Analytic Skills 29) If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is A) 10%. B) 11.1%. C) 18%. D) 80%. Answer: A Diff: 2 Topic: Macroeconomic Concerns Skill: Analytic AACSB: Analytic Skills 30) The period in the business cycle from a trough to peak is called a(n) A) recession. B) expansion. C) slump. D) depression. Answer: B Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual 31) If output is rising and unemployment is falling, the economy MUST be in a(n) A) contraction. B) expansion. C) depression. D) hyperinflationary period. Answer: B Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 32) The period in the business cycle from a peak to a trough is a(n) A) recession. B) boom. C) expansion. D) inflation. Answer: A Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual 121 33) Unemployment generally ________ during recessions and ________ during expansions. A) falls; rises. B) falls; falls. C) rises; falls. D) rises; rises. Answer: C Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 34) Which of the following statements is FALSE? A) The rate of change in economic activity is used to assess whether an economy is expanding or contracting. B) Short-term ups and downs in the economy are known as business cycles. C) During a recession, output and employment are falling. D) Business cycles are always symmetricNthe length of an expansion is the same as the length of a contraction. Answer: D Diff: 2 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 2 True/False 1) Macroeconomics is concerned with inflation or deflation, output growth and unemployment. Answer: TRUE Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 2) Macroeconomics is concerned with the market price and equilibrium quantity of each good or service. Answer: FALSE Diff: 1 Topic: Macroeconomic Concerns Skill: Conceptual AACSB: Reflective Thinking 3) The employment rate is the number of people employed divided by number of people in the labor force. Answer: TRUE Diff: 1 Topic: Macroeconomic Concerns Skill: Definition 4) Hyperinflation andȱȱstagflation are two different names which refer to identical economic conditions. Answer: FALSE Diff: 1 Topic: Macroeconomic Concerns Skill: Definition