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Macroeconomics For Today 8th Edition Tucker Test Bank Download
Macroeconomics For Today 8th Edition Tucker Test Bank Download
MULTIPLE CHOICE
1. Economists use the phrase "business cycle" when referring to fluctuations in:
a. real GDP. c. the consumer price index.
b. the chain price index. d. the general level of prices.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
2. The period of declining growth in real GDP between the peak of the business cycle and the trough is
called a(n):
a. recessionary phase. c. expansionary phase.
b. recovery. d. stationary phase.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
3. The period of growth in real GDP between the trough of the business cycle and the next peak is called
the:
a. recessionary phase. c. contractionary phase.
b. recovery phase. d. cyclical phase.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
4. Which of the following will most likely occur during the recessionary phase of a business cycle?
a. Real GDP rises, and the unemployment rate falls.
b. Real GDP declines, and the rate of inflation rises.
c. The sales of most businesses decline, and the unemployment rate rises.
d. Inflation rises, and employment/population ratio falls.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
5. Which of the following will most likely occur during the recovery phase of a business cycle?
a. Real GDP rises, and unemployment falls.
b. Real GDP declines, and inflation rises.
c. Interest rates rise, and the number of business failures rise.
d. Inflation rises, and employment falls.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
7. Which of the following is true of the business cycle record of the United States?
a. Recessions have been lengthier during the last two decades than was true prior to 1980.
b. Real GDP contracted throughout most of the 1950s.
c. Real GDP in 2000 was approximately the same as 1950.
d. Since 1950, the fluctuations in GDP have been less severe than before 1950.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
9. The point at which real output reaches a maximum during a business cycle is called the:
a. peak. c. recovery.
b. recession. d. trough.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
10. The period during which real output falls during a business cycle is called:
a. peak. c. recovery.
b. recession. d. trough.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
11. The phase of the business cycle that follows a recession is known as the:
a. peak. c. recovery.
b. recession. d. trough.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
12. As a general rule, a recession is a decline in real GDP lasting at least:
a. one year. c. three months.
b. six months. d. one month.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
13. As a general rule, a recession occurs when there is a six consecutive month fall in:
a. nominal GDP. c. the price level.
b. real GDP. d. the trade balance.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
14. Since World War II, the average length of recessions in the United States has been:
a. 2 months. c. 2 years.
b. 11 months. d. 3 1/2 years.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
16. What stage of the business cycle immediately follows the trough?
a. Peak. c. Recession.
b. Recovery. d. Depression.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
18. A phase in the business cycle in which the economy's real GDP declines is known as:
a. a depression.
b. a recession.
c. a downtick.
d. disequilibrium.
e. limited demand.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
19. A long and deep recession in the business cycle is:
a. unemployment.
b. a trough.
c. a recession.
d. a depression
e. unavoidable.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
20. The business cycle consists of four phases. At the top we have:
a. recovery, followed by peak, and then recession followed by a recession.
b. recovery, followed by a recession, and then peak followed by recession.
c. peak, then an upturn followed by a recession, and then recession.
d. peak, then a recession followed by recovery, and then recession.
e. peak, then a recession followed by recession, and finally, recovery.
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
21. In Exhibit 6-1, the recovery phase of the business cycle can be represented by points:
a.
a. CHOICE BLANK
b. C.
c. E.
d. C to E.
e. E to G.
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
24. The phase in the business cycle in which real GDP declines is called a:
a. trendline.
b. peak.
c. recession.
d. recovery.
e. trough.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
25. If you look for a job for eighteen months after graduation, but fail to generate an offer, even after
lowering your expectations, the economy is probably in the business cycle phase called a:
a. recession.
b. peak.
c. boom.
d. recovery.
e. trough.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
26. If real GDP declines for at least one-half year, the economy is experiencing a:
a. depression.
b. decline.
c. recession.
d. growth recession.
e. deflation.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
28. Since 1929, real GDP in the United States has grown at an average annual rate of about:
a. 0.5 percent. c. 3 percent.
b. 1 percent. d. 7.5 percent.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
29. Economic growth is measured by the annual percentage increase in a nation's level of:
a. nominal GDP. c. real GDP deflator.
b. real GDP. d. economic indicators.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
30. The government's chief forecasting gauge for business cycles is the:
a. unemployment rate. c. personal income index.
b. real GDP. d. index of leading indicators.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
31. Which of the following is not a variable in the index of leading indicators?
a. Average work week. c. Employment claims.
b. Duration of unemployment. d. New businesses.
ANS: B PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Analysis
32. Suppose the index of leading economic indicators begins to decline for several months. Which of the
following economic events will likely follow?
a. A recession. c. Greater employment.
b. Severe inflation. d. Higher investment.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
33. Economic indicators, like unemployment claims and the average workweek, which change before real
GDP changes, are called:
a. leading. c. coincident.
b. lagging. d. structural.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Knowledge
34. Variables that change before real GDP changes are measured by the:
a. personal income index. c. forecasting gauge.
b. real GDP index. d. index of leading indicators.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Business-Cycle Roller Coaster KEY: Bloom’s: Comprehension
39. Which of the following groups of people are members of the labor force?
a. People in prison.
b. Full-time students.
c. People over 16 years of age who are employed.
d. Anyone not actively looking for work during the past 30 days.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Knowledge
42. Find the size of the civilian labor force from the following data: frictional unemployment = 150,
structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25,
underemployed workers = 75, fully employed workers = 850, total population = 2,000.
a. 1,425
b. 1,450
c. 1,500
d. 1,525
e. 2,000
ANS: C PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
43. Stephen Moreno reported to the government interviewer that he worked 40 hours last week as a
stocker at a Target department store. He is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. not a member of the labor force.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
44. Martin Shore lost his job when General Motors closed down its local plant. He has been visiting the
personnel offices of the other factories in the area, looking for a new job. He is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. not a member of the labor force.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
45. Mallory Trammell is a homemaker. Last week, she was busy with her normal household chores. She
is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. not a member of the labor force.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
46. Ryan Black does not work and has not looked for work because of a disability. He is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. not a member of the labor force.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
47. Which one of the following people is not a member of the labor force?
a. A full-time student who devotes all her time to her classes.
b. A person who works 30 hours a week at Burger King and goes to school at night.
c. The man who was fired last week and is searching for a new job.
d. The President of the United States.
e. A professional athlete.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
48. Which one of the following people would not be considered a part of the labor force?
a. A steel worker who was laid off last week and is seeking work.
b. A steel worker who was laid off last year and is no longer seeking work.
c. A student who also works part-time.
d. A member of the U.S. Navy.
e. A retired college professor paid to teach a summer course.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
51. People who are not currently employed, but say they want a job, are counted as unemployed only if
they:
a. have previously held a job.
b. are actively seeking employment.
c. are willing to accept a reasonable offer.
d. are between 16 and 65 years of age.
e. are willing to accept any offer of employment.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
52. Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for
work, and 15 of whom are retired. The number of people in the civilian labor force is:
a. 30.
b. 60.
c. 85.
d. 90.
e. 70.
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
53. Consider an economy made up of 100 people, 60 of whom old jobs, 10 of whom are looking for work,
and 15 of whom are retired. The number counted as unemployed is:
a. 10.
b. 15.
c. 40.
d. 30.
e. 90.
ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
57. An individual who is employed part time, but is looking for a full-time job, is classified as:
a. frictionally unemployed. c. structurally unemployed.
b. cyclically unemployed. d. employed.
ANS: D PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
62. If a sizable number of workers were switched from full-time to half-time employment, then the official
unemployment rate would:
a. rise. c. remain unchanged.
b. fall. d. react unpredictably.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
64. Which of the following statements would come from someone classified as unemployed?
a. I'm not working because I'm going to Jamaica with my buddy.
b. I haven't had a job in a year, and I stopped looking for a job nine months ago.
c. I'm a full-time student at the University of Illinois who doesn't have time to work.
d. I can't stand my current job as a telemarketer. I used to be a nuclear engineer.
e. I'm not working. I had three interviews this week, and I'm trying to find a job.
ANS: E PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Analysis
# of
Category Individuals
Frictional unemployment 20
Structural unemployment 35
Cyclical unemployment 60
Discouraged workers 5
Underemployed workers 10
Fully employed workers 410
Population 900
66. The unemployment rate for the economy in Exhibit 6-2 is:
a. 28 percent.
b. 30.5 percent.
c. 31.7 percent.
d. 12.8 percent.
e. 21.5 percent.
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
67. Find the BLS's rate of unemployment from the following data: frictional unemployment = 150,
structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25,
underemployed workers = 75, fully employed workers = 850, total population = 2,000.
a. 17.5 percent
b. 23.3 percent
c. 24.6 percent
d. 28.8 percent
e. 38.3 percent
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
68. Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for
work, and 15 of whom are retired. The unemployment rate is approximately:
a. 10 percent.
b. 12 percent.
c. 17 percent.
d. 20 percent.
e. 25 percent.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
70. Suppose u = those adults who are unemployed and seeking work; e = those adults who are employed;
and NLF = those adults not in the labor force. Which expression would equal the BLS definition of the
unemployment rate?
a. u / (e + NLF)
b. u / e
c. u / (u + e)
d. u / (e + NLF)
e. u / (u + e − NLF)
ANS: C PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
71. Suppose the official unemployment rate is 10 percent. We can conclude without question that:
a. the same 10 percent of the people in the economy were out of work for the entire ear.
b. one of every 10 people in the civilian labor force is currently unemployed.
c. the same 10 percent of the people in the civilian labor force were out of work for the entire
year.
d. every person in the civilian labor force was out of work for 10 percent of the year.
e. 10 percent of the people in the economy were out of work for 10 percent of the year.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
Category Workers
Frictional unemployment 250
Structural unemployment 350
Cyclical unemployment 600
Discouraged workers 400
Underemployment 450
73. According to data in Exhibit 6-3 and assuming the total number of workers is 8,400, the civilian labor
force is:
a. 7,550.
b. 8,000.
c. 8,400.
d. 8,800.
e. 9,250.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
74. According to data in Exhibit 6-3 and assuming the total number of workers is 8,400, the
unemployment rate is:
a. 14 percent.
b. 15 percent.
c. 16 percent.
d. 19 percent.
e. 24 percent.
ANS: B PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Application
76. The number of people officially unemployed is not the same as the number of people who can't find a
job because:
a. the armed forces is included.
b. some people have jobs but continue to look for a better one.
c. some people who can't find a job become discouraged and quit looking.
d. none of these.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
77. The number of people officially unemployed is not the same as the number of people who can't find a
job because:
a. people who have jobs continue to look for better ones.
b. the armed forces is included.
c. discouraged workers are not counted.
d. none of the above.
ANS: C PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Analysis
78. Brian Vargo, an auto repair mechanic who remains unemployed because he refuses to work for less
than $1,000 an hour, is:
a. counted as part of the labor force.
b. considered frictionally unemployed.
c. an underemployed worker.
d. not counted as part of the labor force.
e. considered as productively active.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
79. John Steinbeck's Cannery Row describes a character who takes his own life because of poor job
prospects. If he was an unemployed person who gave up looking for work, he would be considered:
a. chronically unemployed. c. a member of the labor force.
b. a discouraged worker. d. frictionally unemployed.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
80. Elisa Kilhafer, a housewife in St. Louis, Missouri, who claims on a Bureau of Labor Statistics (BLS)
survey that she is neither gainfully employed nor looking for work, is, according to the BLS,
a. considered retired.
b. counted as unemployed.
c. considered reemployable.
d. counted as a member of the labor force.
e. not counted as a member of the labor force.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
81. Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if one was offered,
but she has given up looking for work until the economy improves. She is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. now structurally unemployable.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
84. Whom does the Bureau of Labor Statistics include in the discouraged workers group?
a. All those between 16 and 65 who are neither disabled nor in an institution and are also
neither employed nor seeking employment.
b. Civilian labor force members who have chosen early retirement because they dislike their
work or think the pay is too low.
c. Members of the noninstitutional population who say they want to be employed but aren't
searching for a job.
d. Members of the civilian labor force who are looking for a job but cannot find one.
e. Anyone in the population who is not working.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Knowledge
85. Exclusion of which of the following tends to understate the true level of unemployment in the
economy?
a. Children.
b. Retired persons.
c. Students.
d. People who do not want to work.
e. Discouraged workers.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
86. Whom does the Bureau of Labor Statistics include in the "discouraged workers" group?
a. All those between 16 and 65 who are neither disabled nor in an institution and are also
neither employed nor seeking employment.
b. Civilian labor force members who have chosen early retirement because they dislike their
work or think the pay is too low.
c. Members of the noninstitutional population who say they want to be employed but aren't
searching for a job.
d. Members of the civilian labor force who are looking for a job but cannot find one.
e. Anyone in the population who is not working.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Comprehension
88. Unemployment that is of a short duration to allow time to find a new job is:
a. structural unemployment. c. frictional unemployment.
b. cyclical unemployment. d. durational unemployment.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Knowledge
89. A person who voluntarily quits his/her job in New York and expects to get a similar job in Los
Angeles is an example of:
a. structural unemployment. c. durational unemployment.
b. cyclical unemployment. d. frictional unemployment.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Knowledge
90. Frictional unemployment refers to:
a. people who are out of work and have no job skills.
b. short periods of unemployment needed to match jobs and job seekers.
c. people who spend relatively long periods out of work.
d. unemployment related to the ups and downs of the business cycle.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Knowledge
94. If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in
a few weeks, then Mr. Jackson is considered:
a. frictionally unemployed.
b. cyclically unemployed.
c. seasonally unemployed.
d. structurally unemployed.
e. unwise to quit his job without already having another one.
ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
97. Sharon was being treated unfairly by her boss, so she stormed off the job and two days later found
another position. For two days, Sharon experienced:
a. cyclical unemployment.
b. structural unemployment.
c. seasonal unemployment.
d. frictional unemployment.
e. being out of the labor force.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
98. Althea, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes
eventually to teach at one of the top 10 universities in her field. The type of unemployment she is
experiencing is:
a. frictional.
b. structural.
c. seasonal.
d. cyclical.
e. underemployment.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
99. A general mismatch between the skills of unemployed workers and the skills needed by employers
with job openings results in:
a. frictional unemployment. c. cyclical unemployment.
b. structural unemployment. d. a higher labor force participation rate.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
100. When individuals are unemployed because they lack the qualifications to fill available jobs, this is
called:
a. frictional unemployment. c. cyclical unemployment.
b. natural unemployment. d. structural unemployment.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
101. Bob is unemployed because his skills have become obsolete due to technological advances. This is
____ unemployment.
a. frictional c. cyclical
b. structural d. abnormal
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
102. When people become unemployed because of a higher minimum wage, this type of unemployment is
called:
a. frictional. c. cyclical.
b. structural. d. abnormal.
ANS: B PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
105. Unemployment that is caused by a mismatch of the demand for workers with certain skills and the
skills of unemployed workers is:
a. frictional unemployment. c. cyclical unemployment.
b. structural unemployment. d. mismatch unemployment.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
106. Sam is a musician who is out of work because electronic equipment replaced live musicians. This is an
example of:
a. frictional unemployment. c. structural unemployment.
b. cyclical unemployment. d. involuntary unemployment.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
107. Louise is unemployed due to a decrease in the demand for workers with a knowledge of a certain word
processing language. This is an example of:
a. cyclical unemployment. c. involuntary unemployment.
b. frictional unemployment. d. structural unemployment.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
108. Consider a broom factory that permanently closes because of foreign competition. If the broom
factory's workers cannot find new jobs because their skills are no longer marketable, then they are
classified as:
a. seasonally unemployed. c. structurally unemployed.
b. frictionally unemployed. d. cyclically unemployed.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
109. A mismatch of the skills of unemployed workers and the skills required for existing jobs is defined as:
a. involuntary unemployment. c. structural unemployment.
b. cyclical unemployment. d. frictional unemployment.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
110. Unemployment that occurs from fundamental technological changes in the production, or from the
substitution of new goods for customary ones, is known as:
a. underemployment.
b. seasonal unemployment.
c. frictional unemployment.
d. structural unemployment.
e. cyclical unemployment.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
111. Unemployment that results from fundamental technological changes in production, or from the
substitution of new goods for customary ones, is:
a. the natural rate of unemployment.
b. full employment.
c. cyclical unemployment.
d. frictional unemployment.
e. structural unemployment.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
112. Juanita earned a B.S. in engineering and went to work for a large defense contractor in a small town in
California. When the government cut spending, Juanita and 99 others were laid off. The only other
business in the town is growing grapes to be made into raisins, but the growers refuse to hire laid-off
engineers, knowing they will leave at the first opportunity. The unemployment Juanita is experiencing
is:
a. cyclical.
b. structural.
c. permanent.
d. frictional.
e. voluntary.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
114. Susan Greenberg, who works in a typewriter factory, becomes unemployed because people start
buying personal computers instead of typewriters. Susan can best be described as:
a. frictionally unemployed.
b. structurally unemployed.
c. cyclically unemployed.
d. not part of the labor force.
e. a discouraged worker.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
116. Jamal (now age 54) lost his job. He has very specialized skills that are no longer in demand. Jamal's
unemployment is best classified as:
a. cyclical.
b. structural.
c. seasonal.
d. frictional.
e. voluntary.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
117. Which type of unemployment is most closely connected with the saying "you can't teach an old dog
new tricks"?
a. Cyclical.
b. Frictional.
c. Structural.
d. Voluntary.
e. Seasonal.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
118. Which type of unemployment is experienced by a person who is laid off at an office because word
processing equipment and software reduce the need for typists?
a. Seasonal.
b. Cyclical.
c. Voluntary.
d. Structural.
e. Frictional.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
119. The type of unemployment that occurs because of a recession is called:
a. frictional unemployment. c. natural unemployment.
b. seasonal unemployment. d. cyclical unemployment.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
122. Eric lost his job because a recession caused his employer's sales to fall. This is an example of:
a. involuntary unemployment. c. structural unemployment.
b. frictional unemployment. d. cyclical unemployment.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
123. Sally lost her job when her company went out of business because of a recession. This is an example
of:
a. frictional unemployment. c. cyclical unemployment.
b. structural unemployment. d. technological unemployment.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
129. A decrease in aggregate demand and the subsequent cutbacks in production lead to:
a. frictional unemployment.
b. cyclical unemployment.
c. cost-push unemployment.
d. structural unemployment.
e. transitory unemployment.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
131. In an economic expansion, people used their charge cards to purchase many goods. Now the economy
is in a recession and people must use much of their reduced incomes to pay back debts. If employees
manufacturing the goods people used to buy are laid off, they will suffer from:
a. cyclical unemployment.
b. structural unemployment.
c. permanent unemployment.
d. frictional unemployment.
e. underemployment.
ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: Types of Unemployment KEY: Bloom’s: Comprehension
139. Full employment is the situation in which the economy operates at an unemployment rate equal to the
sum of:
a. structural and frictional unemployment.
b. cyclical and frictional unemployment.
c. structural and cyclical unemployment.
d. structural, frictional, and cyclical unemployment.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: The Goal of Full Employment KEY: Bloom’s: Comprehension
141. Full employment occurs when the rate of unemployment consists of:
a. structural plus frictional unemployment.
b. cyclical plus frictional unemployment.
c. structural, frictional, and cyclical unemployment.
d. none of these.
ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The Goal of Full Employment KEY: Bloom’s: Comprehension
151. Of the four groups listed below, the highest unemployment rate is typically experienced by:
a. females as a group.
b. males as a group.
c. teenagers.
d. persons who completed 1-3 years of high school.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: The GDP Gap KEY: Bloom’s: Comprehension
TRUE/FALSE
1. The business cycle is the periodic but recurrent fluctuations in real GDP.
2. A principal cause of the business cycle is the changes in total spending that occur in the overall
economy.
3. The four phases of a single business cycle are, in order, the trough, followed by a recovery, then a
recession, ending with a peak.
4. Recovery is the phase of the business cycle during which real GDP reaches its maximum.
5. The government's chief forecasting gauge for business cycles is the chained real GDP indicators.
7. Business cycles are recurring periods of economic growth and decline in an economy's real GDP.
9. A principal cause of the business cycle is the changes in total spending that occur in the overall
economy.
10. The government's main statistic for forecasting business cycles is the index of coincident indicators.
15. The civilian labor force excludes anyone not actively seeking a job.
16. The unemployment rate is the percentage of the civilian labor force that is unemployed but actively
seeking work.
17. Any adult who does not have a job is counted as unemployed.
18. In the United States, the unemployment rate for blacks is roughly the same as the unemployment rate
for whites.
ANS: F PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: Unemployment KEY: Bloom’s: Knowledge
19. Part-time workers who want full-time work are counted as only partially employed in the official
unemployment statistic.
20. In the United States, the unemployment rate for women is roughly the same as the unemployment rate
for men.
21. The official unemployment rate can be criticized for both understating and overstating the true number
of unemployed.
23. A person who has lost his or her job because it is now performed by a robot is structurally
unemployed.
24. Structural unemployment refers to short periods of unemployment needed to match jobs and job
seekers.
26. When actual real GDP output is below full-employment real GDP, the GDP measures the cost of
cyclical unemployment.
29. Full employment, which is always expected to occur, consists of the frictionally and cyclically
unemployed.
30. The economic cost of unemployment is the loss of potential output which can never be realized.
ESSAY
1. What generally causes the business cycle? What are the four phases of a single business cycle? What
are the problems associated with the business cycle?
ANS:
Changes in total spending (aggregate demand) are what generally cause changes in the business cycle.
The four phases of a single business cycle is a peak, recession, trough and an expansion. The problems
associated with a recession are cyclical unemployment and slow growth. The problem with an
expanding economy is (demand-pull) inflation.
2. What is full employment? What are the different kinds of unemployment? What constitutes the natural
(normal) rate of unemployment?
ANS:
Full employment exists when approximately 95 percent of the civilian labor force is employed. This
implies a natural rate of unemployment of approximately 5 percent. The natural rate of unemployment
consists of the frictionally and structurally unemployed. The only other type of unemployment is
cyclical unemployment.
ANS:
The GDP gap = potential real GDP − actual real GDP. It measures the loss of potential output
associated with unemployment which can never be realized (it measures the economic cost of
unemployment).