ECO 561 Week 4 Quiz1. Business cycles occur when outputA. falls below its potentialB. rises above its potentialC. is fixed at its potentialD. fluctuates around its growth trend2. Which of these statements best describes a complete individual business cycle?A. Movement from peak to trough to peakB. Movement from recession to expansionC. Movement from peak to recession to troughD. Movement from trough to expansion then to peak3. 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 calledA. a peakB. a troughC. an expansionD. a recession4. 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 GNPB. Nominal GDPC. Real GDPD. Real GNP5. 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%6. The unemployment produced by fluctuations in economic activity is calledA. frictional unemploymentB. cyclical unemploymentC. natural unemploymentD. structural unemployment7. New college graduates are most likely to experienceA. frictional unemploymentB. cyclical unemploymentC. natural unemploymentD. structural unemployment8. The natural rate of unemployment is defined as theA. highest sustainable rate of unemployment achievable under existing conditionsB. unemployment rate that is consistent with the economy operating at its potential outputC. unemployment rate at which there is no cyclical unemploymentD. the rate of unemployment that should exist according to policy makers9. The Consumer Price Index (CPI) is based onA. surveys of retail store salesB. a broad index of all items in GDPC. surveys of the prices of items in a market basketD. Bureau of Labor Statistics estimates of price changes10. Unanticipated inflation is a problem for society because itA. rewards lenders at the expense of borrowersB. increases real profits in the short termC. rewards savers at the expense of spendersD. benefits borrowers at the expense of lenders
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