ECO 372T Wk 2 – Apply: Business Cycles, Unemployment, and Inflation Test

Review the Week 2 Business Cycles, Unemployment, and Inflation Quiz in preparation for this assignment.

Complete the Week 2 Business Cycles, Unemployment, and Inflation Assignment in McGraw-Hill Connect®. These are randomized questions.

Note: You have only one attempt available to complete the assignment. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date.

For each of the following items, indicate to which major group of the CPI the item belongs:

1. Tuition payments to your university:
2. A new desk for your dorm room or apartment:
3. An airline ticket to Florida to be used during spring break:
4. A 12-pack of beer to be used during spring break:
5. Tickets to a local concert:
6. A late night visit to the emergency room:

In each of the following examples, identify whether the person is counted in the official labor force or not.

1. Cynthia owns and operates her own retail store.

1. Elder has recently moved to a retirement community in Florida where he enjoys his “golden years” as a retiree.

1. Drew lost his job at the bank last year. He spent 6 months applying for every job possible before giving up 2 months ago.

1. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is unable to extend her hours.

1. Latisha is an ambitious 15-year-old who spends her summer working as a lifeguard at a local pool.

1. Bill is currently serving a prison sentence, and works making license plates.

1. Tyrell just graduated college with a business degree. He is currently looking for a banking job in the major city he just moved to.

1. John and his wife just had their second child. They decided that it was best for John to leave his job and care for their new child.

In each of the following examples, identify whether the individual is experiencing cyclical unemployment, frictional unemployment, structural unemployment, or no unemployment.

1. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating.

1. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm’s competitors, but good jobs are currently hard to come by.

1. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.

1. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.

1. Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
2. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.

1. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.

1. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.

Historical data show that during the recession of 1990–1991, the natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%.

Using this information, which of the following statements is  regarding these two short recessions?

The actual unemployment rate was higher during the recession of 1990−1991, while cyclical unemployment was higher in 2001.

Both the actual unemployment rate and cyclical unemployment were higher during the recession of 1990−1991.

Both the actual unemployment rate and cyclical unemployment were higher during the 2001 recession.

The actual unemployment rate was higher in 2001, while cyclical unemployment was higher from 1990−1991.

The recurrent ups and downs in the level of economic activity extending over several years are referred to as

Multiple Choice

noncyclical fluctuations.

business cycles.

economic phases.

business startups.

In the expansion phase of a business cycle

Multiple Choice

employment and output increase.

employment increases, but output decreases.

the inflation rate and productive capacity decrease.

the inflation rate decreases, but productive capacity increases.

A mismatch between the geographic location of workers and the location of job openings would result in which type of unemployment?

Multiple Choice

cyclical

frictional

wait

structural

According to the Bureau of Labor Statistics, to be officially unemployed a person must

Multiple Choice

be in the labor force.

be waiting to be called back from a layoff.

be 21 years of age or older.

have lost a job.

The labor force includes

Multiple Choice

permanent employees but excludes temporary employees.

full-time workers but excludes part-time workers.

employed workers and persons who are officially unemployed.

employed workers but excludes persons who are officially unemployed.

The unemployment rate of full-employment is also called the

Multiple Choice

potential rate of unemployment.

frictional rate of unemployment.

cyclical rate of unemployment.

natural rate of unemployment.

In calculating the unemployment rate, part-time workers are

Multiple Choice

treated the same as “discouraged” workers who are not actively seeking employment.

used to determine the size of the labor force, but not the unemployment rate.

counted as employed because they are receiving payment for work.

counted as unemployed because they are not working full-time.

Wait unemployment and search unemployment are both types of

Multiple Choice

structural unemployment.

cyclical unemployment.

frictional unemployment.

hidden unemployment.

Use the table below to answer the next question.

Determine the number of people frictionally unemployed for the year 2006.

Multiple Choice

0

100

200

-100

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called

Multiple Choice

natural unemployment.

frictional unemployment.

structural unemployment.

cyclical unemployment.

In the United States, business cycles have occurred against a backdrop of a long-run trend of

Multiple Choice

stagnant productivity growth.

declining unemployment.

rising real GDP.

rising inflation.

Which of the following is the  way to calculate the unemployment rate?

Multiple Choice

(unemployed/labor force) x 100

(labor force/population) x 100

(labor force/unemployed) x 100

(unemployed/population) x 100

Search and wait unemployment is another way to describe

Multiple Choice

frictional unemployment.

noncyclical unemployment.

structural unemployment.

cyclical unemployment.

Which of the following statements is true about causes of business cycle fluctuations?

Multiple Choice

There are a wide range of theories as to the underlying causes of business cycle movements.

Economists all agree that productivity shocks are the cause of most business cycle changes.

Economists all agree that monetary changes are primarily responsible for business cycle fluctuations.

Economists all agree that supply shocks are the cause of most business cycle fluctuations.

Use the table below to answer the next question.

Determine the number of people structurally unemployed for the year 2005.

Multiple Choice

0

170

220

150

“Full employment” refers to the situation when there is

Multiple Choice

no cyclical unemployment.

no frictional or structural unemployment.

100% employment of the labor force.

a 0% unemployment rate.

What is an advantage of mild inflation according to some economists?

Multiple Choice

It helps to close the GDP gap.

It reduces the inflation premium.

It makes it easier for firms to adjust real wages downward as demand for their products falls.

It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive.

The inflation rate measures the percentage growth rate of

Multiple Choice

the CPI from the base period 1982-84 to a given year.

the CPI from one year to the next.

real GDP from the base period 1982-84 to a given year.

real GDP from one year to the next.

Inflation that occurs when total spending is greater than the economy’s ability to produce output at the existing price level is

Multiple Choice

cost-push inflation.

unexpected inflation.

demand-pull inflation.

expected inflation.

The CPI compiled by the Bureau of Labor Statistics is used in the computations for the

Multiple Choice

interest rate.

foreign exchange rate.

inflation rate.

unemployment rate.

Which of the following groups has traditionally benefited from unexpected inflation?

Multiple Choice

federal government

foreign sector

consumers

business firms

What is the main problem with mild inflation according to some economists?

Multiple Choice

It diverts productive time towards activities to hedge against inflation.

It increases frictional and structural unemployment in the economy.

It reduces the size of the GDP gap.

It leads to unexpected deflation.

Core inflation refers to the inflation picture after stripping away the

Multiple Choice

capital goods prices.

service-sector prices.

food and energy prices.

government-regulated prices.

Unexpected inflation arbitrarily

Multiple Choice

“benefits” those who save money.

“taxes” those who receive fixed money incomes.

“subsidizes” those who receive fixed money incomes.

“penalizes” those who borrow money.

Inflation caused by an increase in aggregate spending is referred to as

Multiple Choice

demand-pull inflation.

cost-push inflation.

expected inflation.

hyperinflation.

Inflation is a rise in

Multiple Choice

real GDP over time.

the general level of prices over time.

unemployment over time.

the standard of living over time.