Knowledge Check quiz

Topics: Unemployment, Inflation, Macroeconomics Pages: 8 (835 words) Published: June 9, 2014
Knowledge Check Week 4
Concepts

Mastery

Score: 10/10
Questions

Stages in the Business
Cycle

100%

1

Level of Economic
Growth

100%

4

Level of
Unemployment

100%

Inflation

100%

2

3

5

6

7

9

10

8

Concept: Stages in the Business Cycle
Concepts

Mastery

Stages in the
Business Cycle

Questions

100%

1

2

3

1.
Business cycles occur when output
A. falls below its potential
B. rises above its potential
C. is fixed at its potential
D. fluctuates around its growth trend

Correct!
The correct answer is: D. The business cycle includes the
tendency for output to rise and fall in the short term. When output fluctuates around an economy’s secular trend,

business cycles occur.

2.
Which of these statements best describes a complete individual business cycle?
A. Movement from peak to trough to peak
B. Movement from recession to expansion
C. Movement from peak to recession to
trough
D. Movement from trough to expansion then
to peak
Correct!
The correct answer is: A. A business cycle is measured peak
to peak or trough to trough.
3.
During the business cycle, the period between the point at which output reaches a high and the point at which it reaches a low is called
A. a peak
B. a trough
C. an expansion
D. a recession

Correct!
The correct answer is: D. A downturn describes the
phenomenon of economic activity starting to fall from a peak. If output contracts between the point at which output reaches a high and the point at which it reaches a low for more than

two consecutive quarters, the economy is generally
considered to be in a recession.

Concept: Level of Economic Growth
Concepts

Mastery

Level of Economic
Growth

100%

Questions
4

4.
Which of the following equals the market value of all final goods and services produced in an economy, stated in the prices of a specific base year?
A. Nominal GNP
B. Nominal GDP
C. Real GDP
D. Real GNP

Correct!
The correct answer is: C. Real GDP is the market value of all final goods and services produced in an economy and stated
in the prices of a specific base year. Real GDP represents
nominal GDP adjusted for inflation.

Concept: Level of Unemployment
Concepts

Mastery

Level of
Unemployment

100%

Questions
5

6

7

8

5.
Imagine a country has a population of 210 million. Within the country there are 95 million people who are employed workers, 50 million people incapable of working, and 60 million people capable of working, but not actively looking. Based on this information, what is the unemployment rate?

A. 3%
B. 5%
C. 7%
D. 9%

Correct!
The correct answer is: B. First find the labor force—the
civilian population minus the people incapable of working
minus the people not looking for work: (210 – 50 – 60 = 100). Next, subtract the number of employed from the labor force
to find the number of unemployed people (100 – 95 = 5).
Finally, divide the number of unemployed people by the
number of people in the labor force and multiply by 100:
[(5/100) * 100 = 5%]

6.
The unemployment produced by fluctuations in economic activity is called
A. frictional unemployment
B. cyclical unemployment
C. natural unemployment
D. structural unemployment

Correct!
The correct answer is: B. Cyclical unemployment is
unemployment resulting from fluctuations in economic
activity.
7.
New college graduates are most likely to experience
A. frictional unemployment
B. cyclical unemployment
C. natural unemployment
D. structural unemployment

Correct!
The correct answer is: A. Frictional unemployment arises
when people enter the labor force or are in the process of
changing jobs.

8.
The natural rate of unemployment is defined as the
A. highest sustainable rate of unemployment
achievable under existing conditions
B. unemployment rate that is consistent with
the economy operating at its potential
output
C....
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