Question 1

The unemployment rate of:

Accepted Answer

A)   women greatly exceeds that of men.
B)   retired persons is more than that of women.
C)   white-collar workers exceeds that of blue-collar workers.
D)   teenagers is much higher than that of adults.E) B) and C)
F) A) and B)

Question 2

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Accepted Answer

A)   $17,343.
B)   $18,521.
C)   $19,481.
D)   $20,955.E) A) and B)
F) A) and D)

Question 3

The rate of inflation can be found by subtracting:

Accepted Answer

A)   the real income from the nominal income.
B)   last year's price index from this year's price index.
C)   this year's price index from last year's price index and dividing the difference by this year's price index.
D)   last year's price index from this year's price index and dividing the difference by last year's price index.E) None of the above
F) B) and D)

Question 4

In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2, the price level was 125 and the average nominal level of income was $32,000. What happened to real income from Year 1 to Year 2?

Accepted Answer

A)   It fell by $400.
B)   It rose by $400.
C)   It rose by $600.
D)   It rose by $2,000.E) A) and B)
F) All of the above

Question 5

The unemployment rate is the:

Accepted Answer

A)   ratio of unemployed to employed workers.
B)   number of employed workers minus the number of workers who are not in the labour force.
C)   percentage of the labour force which is out of work.
D)   percentage of the total population which is out of work.E) C) and D)
F) B) and D)

Question 6

The natural rate of unemployment is the:

Accepted Answer

A)   unemployment rate experienced at the depth of a depression.
B)   full-employment unemployment rate.
C)   unemployment rate experienced by the least-skilled workers in the economy.
D)   unemployment rate experienced by the most-skilled workers in the economy.E) All of the above
F) A) and C)

Question 7

Core inflation is the underlying inflation that exists when volatile food and energy prices are omitted.

Accepted Answer

A) True 
 B)False

Question 8

Demand-pull inflation:

Accepted Answer

A)   occurs when prices of resources rise, pushing up costs and the price level.
B)   occurs when total spending exceeds the economy's ability to provide output at the existing price level.
C)   occurs only when the economy has reached its absolute production capacity.
D)   is also called cost-push inflation.E) B) and D)
F) C) and D)

Question 9

Compared to the United States, Canada's recent unemployment rate has been:

Accepted Answer

A)   higher.
B)   lower.
C)   about the same.
D)   more variable.E) A) and B)
F) A) and C)

Question 10

The relationship between the size of the GDP gap and the unemployment rate is:

Accepted Answer

A)   direct.
B)   inverse.
C)   undefined.
D)   direct during recession, but inverse during expansion.E) None of the above
F) A) and B)

Question 11

The following information is about a hypothetical economy:
Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Members of underground economy = 6
Consumer Price Index = 110
-Refer to the above information. The unemployment rate is:

Accepted Answer

A)   18.8 percent.
B)   12.5 percent.
C)   16.7 percent.
D)   25 percent.E) A) and D)
F) A) and C)

Question 12

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million. The unemployment rate for this economy is:

Accepted Answer

A)   4.6 percent.
B)   5.8 percent.
C)   6.4 percent.
D)   7.8 percent.E) None of the above
F) B) and C)

Question 13

A statement that is often used to describe demand-pull inflation is:

Accepted Answer

A)   "a rising tide lifts all boats."
B)   "money is easily earned, but not easily saved."
C)   "too much spending chasing too few goods."
D)   "there is no such thing as a free lunch."E) A) and D)
F) B) and D)

Question 14

Suppose that the consumer price index was 140.3 in 2012 and 144.5 in 2013. Therefore, the rate of inflation in 2013 was about:

Accepted Answer

A)   6.7 percent.
B)   3.0 percent.
C)   1.2 percent.
D)   13.6 percent.E) A) and B)
F) A) and C)

Question 15

The following information is for a specific year in a hypothetical economy for which Okun's law is applicable:
Potential Real GDP = $200 billion
Natural rate of unemployment = 6 percent
Actual rate of unemployment = 12 percent
-The size of the GDP gap in percentage terms for the above economy is:

Accepted Answer

A)   9 percent.
B)   12 percent.
C)   15 percent.
D)   18 percent.E) B) and D)
F) None of the above

Question 16

Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the GDP gap:

Accepted Answer

A)   is 4 percent.
B)   is 8 percent.
C)   is 10 percent.
D)   is 2 percent.E) B) and D)
F) B) and C)

Question 17

Official unemployment statistics:

Accepted Answer

A)   understate unemployment because individuals receiving unemployment compensation are counted as employed.
B)   understate unemployment because "discouraged workers" are not counted as unemployed.
C)   include cyclical and structural unemployment, but not frictional unemployment.
D)   overstate unemployment because workers who are involuntarily working part time are counted as being employed.E) C) and D)
F) All of the above

Question 18

Core inflation refers to the:

Accepted Answer

A)   underlying increases in the CPI after volatile food and energy prices are removed.
B)   underlying decreases in the CPI after volatile durable goods prices are removed.
C)   underlying increases for goods and services bought by businesses only.
D)   overall inflation rate for consumers and not businesses.E) A) and D)
F) A) and B)

Question 19

The descriptions give the responses of four individuals to Statistics Canada.
1. Mollie just graduated from university and is now looking for work. She has had three job interviews in the past month.
2. George works in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in several months when national economic conditions improve.
3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4. Ryan lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year, but was unsuccessful and quit looking for work.
-Refer to the above information. Which individual is cyclically unemployed?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) C) and D)
F) B) and D)

Question 20

The national unemployment rate in Canada:

Accepted Answer

A)   reveals the significant diversity in regional unemployment.
B)   does not reveal the significant diversity in regional unemployment.
C)   is a good indicator of unemployment rate in all regions in Canada.
D)   is always higher than the unemployment rate in each region in Canada.E) B) and D)
F) A) and B)

Exam 7: Business Cycles, Unemployment, and Inflation

The relationship between the size of the GDP gap and the unemployment rate is:

Correct Answer
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The following information is for a specific year in a hypothetical economy for which Okun's law is applicable: Potential Real GDP = $200 billion Natural rate of unemployment = 6 percent Actual rate of unemployment = 12 percent -The size of the GDP gap in percentage terms for the above economy is:

Correct Answer
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The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million. The unemployment rate for this economy is:

Correct Answer
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A statement that is often used to describe demand-pull inflation is:

Correct Answer
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The unemployment rate is the:

Correct Answer
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In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2, the price level was 125 and the average nominal level of income was $32,000. What happened to real income from Year 1 to Year 2?

Correct Answer
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Correct Answer
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Official unemployment statistics:

Correct Answer
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Compared to the United States, Canada's recent unemployment rate has been:

Correct Answer
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The following information is about a hypothetical economy: Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer Price Index = 110 -Refer to the above information. The unemployment rate is:

Correct Answer
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Demand-pull inflation:

Correct Answer
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Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the GDP gap:

Correct Answer
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If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct Answer
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The national unemployment rate in Canada:

Correct Answer
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The natural rate of unemployment is the:

Correct Answer
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Core inflation is the underlying inflation that exists when volatile food and energy prices are omitted.

Correct Answer
verified

The rate of inflation can be found by subtracting:

Correct Answer
verified

Suppose that the consumer price index was 140.3 in 2012 and 144.5 in 2013. Therefore, the rate of inflation in 2013 was about:

Correct Answer
verified

The unemployment rate of:

Correct Answer
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Core inflation refers to the:

Correct Answer
verified

Exam 7: Business Cycles, Unemployment, and Inflation

The relationship between the size of the GDP gap and the unemployment rate is:

Correct AnswerverifiedShow Answer

The following information is for a specific year in a hypothetical economy for which Okun's law is applicable: Potential Real GDP = $200 billion Natural rate of unemployment = 6 percent Actual rate of unemployment = 12 percent -The size of the GDP gap in percentage terms for the above economy is:

Correct AnswerverifiedShow Answer

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million. The unemployment rate for this economy is:

Correct AnswerverifiedShow Answer

A statement that is often used to describe demand-pull inflation is:

Correct AnswerverifiedShow Answer

The unemployment rate is the:

Correct AnswerverifiedShow Answer

In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2, the price level was 125 and the average nominal level of income was $32,000. What happened to real income from Year 1 to Year 2?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Official unemployment statistics:

Correct AnswerverifiedShow Answer

Compared to the United States, Canada's recent unemployment rate has been:

Correct AnswerverifiedShow Answer

The following information is about a hypothetical economy: Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 Consumer Price Index = 110 -Refer to the above information. The unemployment rate is:

Correct AnswerverifiedShow Answer

Demand-pull inflation:

Correct AnswerverifiedShow Answer

Assume the natural rate of unemployment in the Canadian economy is 7 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the GDP gap:

Correct AnswerverifiedShow Answer

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Correct AnswerverifiedShow Answer

The national unemployment rate in Canada:

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the:

Correct AnswerverifiedShow Answer

Core inflation is the underlying inflation that exists when volatile food and energy prices are omitted.

Correct AnswerverifiedShow Answer

The rate of inflation can be found by subtracting:

Correct AnswerverifiedShow Answer

Suppose that the consumer price index was 140.3 in 2012 and 144.5 in 2013. Therefore, the rate of inflation in 2013 was about:

Correct AnswerverifiedShow Answer

The unemployment rate of:

Correct AnswerverifiedShow Answer

Core inflation refers to the:

Correct AnswerverifiedShow Answer

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