ECO 372 Entire Course Link https://uopcourses.com/category/eco-372/

1. ECO/372
Principles of Macroeconomics
The Latest Version A+ Study Guide
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ECO 372 Entire Course Link
https://uopcourses.com/category/eco-372/
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ECO 372 Week 1 Practice: Output, Income, and Economic
Growth Quiz – Unlimited Attempts
Complete the Week 1 Output, Income, and Economic Growth Quiz in McGraw-Hill
Connect®by Day 5. These are randomized questions.
Note: You have unlimited attempts available to complete practice assignments. The
highest scored attempt will be recorded. These assignments have earlier due dates, so
plan accordingly. Grades must be transferred manually to eCampus by your instructor.
Don't worry, this might happen after your due date.
Which of the following ly describes GDP using the income approach?

GDP = Consumption + Gross Investment + Net Exports + Government
Purchases

GDP = Wages + Rents + Interest + Profits and Losses

2. 
GDP = National Income + Indirect Business Taxes + Depreciation +
Net Foreign Factor Income

GDP = Wages + Rents + Interest + Profits and Losses + National
Income
Which of the following statements ly explains exports versus net exports?
Exports are goods, services, or resources produced domestically and
sold abroad, while net exports are equal to exports minus imports.

Exports are goods, services, or resources produced domestically and
sold abroad, while net exports are equal to imports minus exports.

Exports are goods, services, or resources produced abroad and sold
domestically, while net exports are equal to exports minus imports.

Exports are goods, services, or resources produced abroad and sold
domestically, while net exports are equal to imports minus exports.
The major difference between nominal GDP and real GDP is:

3. nominal GDP measures the value of output with current-year output
levels, while real GDP measures output using constant output levels.

nominal GDP measures the value of output with constant output
levels, while real GDP measures output using current-year output
levels.

nominal GDP measures the value of output in current-year prices,
while real GDP measures output using constant prices.

nominal GDP measures the value of output in constant prices, while
real GDP measures output using current-year prices.
Determine whether each of the following examples would be included
in Gross Domestic Product (GDP).
a. When Judy went to the grocery store yesterday, she bought three
pounds of potatoes.
Judy's purchase of potatoes
b. Ford Motor Company buys four tires to put on a new Ford Mustang.
The purchase of the tires
c. The U.S. Air Force purchases two new fighter jets from Boeing.
The purchase of the two fighter jets
d. When Joey had his birthday last week, his grandmother sent him a
$100 bill that he could spend.
Joey's birthday gift of $100

4. Henry and his girlfriend ate dinner at the new Thai restaurant that recently
opened in his neighborhood. This expenditure would be included in:

consumer durables.

services.

government purchases.

consumer nondurables.
The equation for net investment is written as:

Net Investment = Nominal GDP - Gross Investment

Net Investment = Gross Investment - Depreciation

Net Investment = Depreciation - Gross Investment

Net Investment = Consumption - Gross Investment

5. Which of the following measures is most often used to compare the
standards of living in different countries?
rev: 04_09_2018
Multiple Choice

daily per capita calorie supply

per capita income

life expectancy at birth

per capita energy consumption
GDP tends to overstate economic well-being because it takes into account
_____.
rev: 04_09_2018
Multiple Choice

expenditures undertaken to pollution

illegal activities of individuals and businesses

nonmarket activities, such as the productive work of homemakers

improvements in product quality over time

6. One common measure of the "standard of living" in a nation is _____.
rev: 04_09_2018
Multiple Choice

real GDP per capita

population size

real GDP

the unemployment rate
What are net exports?
rev: 04_09_2018
Multiple Choice

That portion of consumption and investment goods sent to other countries

Exports minus imports


7. Exports plus imports

Imports minus exports
The U.S. produces and sells millions of different products. To aggregate
them together into a single measure of domestic output, the quantity of each
good produced is weighted by its _____.
rev: 04_09_2018
Multiple Choice

cost of production

contribution to corporate profits

utility to consumers

market price
"Net foreign factor income" in the national income accounts refers to the
difference between the _____.
rev: 04_09_2018
Multiple Choice

income Americans gain from supplying resources abroad and the income that foreigners
earn by supplying resources in the U.S.


8. income earned by Americans in the U.S. minus the income earned by foreigners in the
U.S.

value of investments that Americans made abroad and the value of investments made by
foreigners in the U.S.

value of products sold by Americans to other nations and the value of products bought by
Americans from other nations.
A nation’s nominal gross domestic product (GDP) _____.
rev: 04_09_2018
Multiple Choice

is the dollar value of all final output produced by its citizens, regardless of where they are
living

is always some amount less than C + I + G + NX

can be found by summing C + I + S + NX

is the dollar value of all final output produced within the borders of the nation during a
specific period of time
The value of corporate stocks and bonds traded in a given year is _____.
rev: 04_09_2018
Multiple Choice

9. 
excluded from the calculation of GDP because it does not represent new production

included in the calculation of GDP because it is a component of gross investment

included in the calculation of net private domestic investment

included in the calculation of gross private domestic investment
Government purchases include spending on _____.
rev: 04_09_2018
Multiple Choice

government purchases of final goods and government salaries

government salaries only

government purchases of final goods only

government purchases of final goods, government salaries, and transfer payments

10. Which of the following is included in GDP?
rev: 04_09_2018
Multiple Choice

The value of an existing house sold during a year

The value of a haircut

The value of the steel and aluminum used to produce a new car

The value of a homemaker’s services
In the treatment of U.S. exports and imports, national income accountants
_____.
rev: 04_09_2018
Multiple Choice

subtract both exports and imports in calculating GDP

subtract exports but add imports in calculating GDP


11. add exports but subtract imports in calculating GDP

add both exports and imports in calculating GDP
Which of the following is not included in the sum of national income?
rev: 04_09_2018
Multiple Choice

Rent

Profits and losses

Depreciation or consumption of fixed capital

Interest
The sale of a used automobile would not be included in GDP of the
current year because it is _____.
rev: 04_09_2018
Multiple Choice

not a market transaction


12. a private transfer payment

not current production

a purely financial transaction
GDP measured using current prices is called _____.
rev: 04_09_2018
Multiple Choice

real GDP

deflated GDP

nominal GDP

constant GDP
Answer the next question based on the following price and output data over
a five-year period for an economy that produces only one good. Assume that
year 2 is the base year.

13. Year
Units of
Output
Price per
Unit
1 8 $2
2 10 3
3 15 4
4 18 5
5 20 6
In year 4, nominal GDP would be _____.
rev: 04_09_2018
Multiple Choice

$90

$120

$316

$60
In calculating GDP, governmental transfer payments, such as Social
Security or unemployment compensation, are _____.
rev: 04_09_2018
Multiple Choice

counted as investment spending.

counted as consumption spending.

14. 
not counted.

counted as government spending.
If real GDP declines in a given year, nominal GDP _____.
rev: 04_09_2018
Multiple Choice

may either rise or fall

is likely to remain constant

must also be declining

must also be increasing
The broadest measure to adjust Nominal GDP for price changes is _____.
rev: 04_09_2018

15. Multiple Choice

the Consumer Price Index (CPI)

the Producer Price Index (PPI)

the GDP price index

exchange rates
Which of the following is included in the expenditures approach to GDP?
rev: 04_09_2018
Multiple Choice

The value of stocks and bonds bought by businessmen

Spending on meals by consumers at restaurants

Spending on used clothing at garage sales

Government spending on welfare payments

16. GDP can be calculated by summing _____.
rev: 04_09_2018
Multiple Choice

consumption, investment, government purchases, exports, and imports

consumption, investment, government purchases, and net exports

consumption, investment, wages, and rents

consumption, investment, government purchases, and imports
What are the two ways of looking at GDP?
rev: 04_09_2018
Multiple Choice

Income approach and saving approach

Output approach and consumption approach

17. 
Expenditures approach and income approach

Output approach and expenditures approach
What do government purchases include in national income accounting?
rev: 04_09_2018
Multiple Choice

Purchases by the federal government only

Government transfer payments

Purchases by federal, state, and local governments

Purchases of goods for consumption but not public capital goods
Net exports is a positive number when a nation _____.
rev: 04_09_2018
Multiple Choice

18. 
simply exports goods and services to other nations

exports fewer goods and services than it imports

increases its exports of goods and services

exports more goods and services than it imports
Nominal GDP is _____.
rev: 04_09_2018
Multiple Choice

money GDP adjusted for inflation

the sum of all monetary transactions that occur in the economy in a year

the sum of all monetary transactions involving final goods and services that occur in the
economy in a year

the amount of production that occurs when the economy is operating at full employment

19. Which of the following statements about economic growth is accurate?

The world’s sustained economic growth has only been occurring over
the last 300 to 400 years.

Countries in Africa and South America are responsible for most of the
economic growth in the world since the 1600s.

Economic growth has been shared equally among all the countries in
the world since the start of the most recent generation.

Sustained economic growth has been occurring since the start of the
Roman Empire.
Suppose that real GDP per capita in the United States is $49,000. If the
long-term growth rate of real GDP per capita is 1.6% per year, how many
years will it take for real GDP per capita to reach $98,000?
Instructions: Enter your answer as a whole number.
years
Suppose that Italy can produce either goods or services with its resources,
and that its PPF curve is shown on the graph as PPF1.
Using the graph, for each of the following situations, determine whether the
PPF curve shifts.

20. a. Suppose that Italy increases its spending on education, which increases
the amount of human capital in Italy.
Italy's PPF curve would
b. A recession causes Italy's unemployment rate to increase above the
natural rate of unemployment.
Italy's PPF curve would
c. Italy experiences an influx of immigrants from surrounding countries,
which causes the population of Italy to increase.
Italy's PPF curve would
Which of the following is a measure of economic growth that is most useful
for measuring changes in the overall size of an economy?
rev: 05_30_2018
Multiple Choice

increases in real GDP per capita

decreases in the rate of unemployment

increases in real GDP

growth in nominal GDP
Human capital refers to the

21. rev: 05_30_2018
Multiple Choice

amount of financing available to start-up firms.

number of workers available in the economy.

tools and equipment available to workers.

education, training, and skills of workers.
The number of years required for real GDP to double can be found by
rev: 05_30_2018
Multiple Choice

dividing the annual growth rate by .072.

multiplying the annual growth rate by 72.

dividing 72 by the annual growth rate.

adding 72 to annual growth rate.

22. Before the Industrial Revolution, living standards in the world
rev: 05_30_2018
Multiple Choice

were declining because of rapid increases in population.

are not known, for lack of reliable records from that period.

were already rising significantly for many decades.

were relatively stagnant for long periods of time.
Which of the following will not increase a nation’s real GDP?
rev: 05_30_2018
Multiple Choice

technological progress

average price level


23. number of workers

labor productivity
If labor becomes more productive, the production possibilities frontier will
rev: 05_30_2018
Multiple Choice

remain constant, but output will increase as unemployment falls.

shift to inward, toward the origin.

shift to outward away from the origin.

remain constant, but output will fall as less labor is needed to produce the same level of
output.
Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital
per worker. In all other respects, the two countries are the same. According
to the principle of diminishing returns to capital, an additional unit of capital
will ______ in Alpha compared to Beta, holding other factors constant.
rev: 05_30_2018
Multiple Choice

increase output by the same amount


24. have no effect on output

increase output more

increase output less
Use the following diagram to answer the next question.
The most likely cause for a shift in the production possibilities frontier from
AB to CD is
rev: 05_30_2018
Multiple Choice

the use of the economy's resources in a less efficient way.

an increase in government purchase of the economy's output.

an increase in the quantity and quality of labor resources.

an increase in the spending of business and consumers.

25. Human capital is
rev: 05_30_2018
Multiple Choice

the talents, training, and education of workers.

the factories and machinery made by workers.

the financial resources available to humans for investment.

the factories and machinery used by humans in the production process.
The principle of diminishing returns to capital states that if the amount of
labor and other inputs employed is held constant, then the greater the
amount of capital in use the
rev: 05_30_2018
Multiple Choice

less is produced.

less production is wasted.

the more an additional unit of capital adds to production.

the less an additional unit of capital adds to production.

26. Real GDP per capita is found by
rev: 05_30_2018
Multiple Choice

subtracting population from real GDP.

adding real GDP and population.

dividing real GDP by population.

dividing population by real GDP.
Between the U.S. and Nepal, Nepal invests less in new factories and
equipment. This will likely cause
rev: 05_30_2018
Multiple Choice

Nepal's production possibilities frontier to shift inward faster than the U.S's.

the U.S.'s production possibilities frontier to shift outward faster than Nepal's.


27. the U.S.'s production possibilities frontier to shift inward faster than Nepal's.

Nepal's production possibilities frontier to shift outward faster than the U.S.'s.
Most economists agree that ______ are the single most important source of
economic growth.
rev: 05_30_2018
Multiple Choice

technological advances

increases in physical capital

increases in human capital

discoveries of natural resources
Providing a constant number of workers with additional capital with which
to work will ______ labor productivity at a(n) ______ rate.
rev: 05_30_2018
Multiple Choice

increase; increasing

decrease; decreasing

28. 
increase; constant

increase; decreasing
The cost of a higher living standard in the future is giving up
rev: 05_30_2018
Multiple Choice

current investment.

future consumption.

future investment.

current consumption.
Use the following diagram to answer the next question.
If CD is the economy’s current production possibilities frontier, what is the
most likely reason for operating at point X?
rev: 05_30_2018
Multiple Choice


29. increases in the quantity and the quality of resources

unemployment and inefficient allocation of resources

technological progress and industrial change

improvement in labor productivity and the number of work-hours
Increasing the capital available to the workforce, holding other factors
constant, tends to ______ total output while ______ labor productivity.
rev: 05_30_2018
Multiple Choice

increase; not changing

decrease; increasing

increase; decreasing

increase; increasing
ECO 372 Week 1 Apply: Output, Income, and Economic
Growth Homework– One Attempt
Review the Week 1 Output, Income, and Economic Growth Quiz in preparation for this
assignment.
Complete the Week 1 Output, Income, and Economic Growth Assignment in McGraw-Hill
Connect®. These are randomized questions.

30. Note: You have only one attempt available to complete assignments. Grades must be
transferred manually to eCampus by your instructor. Don't worry, this might happen after
your due date.
Which of the following scenarios would be included in GDP?

Darius unclogs the drain in his sink using the plunger he owns.

Sandra is a waitress at Morton’s Steakhouse. She receives a cash tip
of $50 that she pockets and does not report.

Pam buys a new 40-inch television at Walmart.

Miguel won $100 in his office fantasy football league.
Which of the following expenditures is an example of a consumer durable
good?

Marcus buys some new soccer cleats at the sporting goods store.

Arti buys a new refrigerator from Sears.

Latisha gets a manicure from the nail salon in the mall.

Colin buys a large coffee and a donut from Dunkin' Donuts.
The equation for net investment is written as:

Net Investment = Nominal GDP - Gross Investment

Net Investment = Gross Investment - Depreciation

Net Investment = Consumption - Gross Investment

Net Investment = Depreciation - Gross Investment

31. Which of the following ly describes GDP using the income approach?

GDP = Wages + Rents + Interest + Profits and Losses + National
Income

GDP = Consumption + Gross Investment + Net Exports +
Government Purchases

GDP = Wages + Rents + Interest + Profits and Losses

GDP = National Income + Indirect Business Taxes + Depreciation +
Net Foreign Factor Income
The major difference between nominal GDP and real GDP is:

nominal GDP measures the value of output with constant output
levels, while real GDP measures output using current-year output
levels.

nominal GDP measures the value of output in constant prices, while
real GDP measures output using current-year prices.

nominal GDP measures the value of output with current-year output
levels, while real GDP measures output using constant output levels.

nominal GDP measures the value of output in current-year prices,
while real GDP measures output using constant prices.
The U.S. produces and sells millions of different products. To aggregate
them together into a single measure of domestic output, the quantity of each
good produced is weighted by its _____.
rev: 04_09_2018
Multiple Choice

utility to consumers

32. 
market price

contribution to corporate profits

cost of production
A nation’s nominal gross domestic product (GDP) _____.
rev: 04_09_2018
Multiple Choice

is the dollar value of all final output produced within the borders of the nation during a
specific period of time
is the dollar value of all final output produced by its citizens, regardless of where they are
living
is always some amount less than C + I + G + NX

can be found by summing C + I + S + NX
Which of the following is not included in gross domestic private investment,
as defined in national income accounts?
rev: 04_09_2018
Multiple Choice

Changes to business inventories


33. The value of all new capital goods bought by business firms

Domestic home construction undertaken by and for the private sector

Government construction of new highways and dams
GDP measured using current prices is called _____
deflated GDP

constant GDP

real GDP

nominal GDP
Which of the following is a primary use for national income accounts?
rev: 04_09_2018
Multiple Choice

To analyze the environmental cost of economic growth

34. 
To assess the economic efficiency of specific industries in the economy

To determine whether there is a fair and equitable distribution of income in the economy

To measure changes in the value of production and income in the economy
Final goods and services refer to _____.
rev: 04_09_2018
Multiple Choice

goods and services that are unsold and therefore added to inventories

goods and services purchased by ultimate users, rather than for resale or further
processing

goods and services whose value has been adjusted for changes in the price level

the excess of U.S. exports over U.S. imports
Nominal GDP differs from real GDP because _____.
rev: 04_09_2018
Multiple Choice


35. nominal GDP is based on constant prices

nominal GDP results from adjusting for changes in the price level

real GDP results from adjusting for changes in the price level

real GDP is based on current prices
Which of the following is not an example of an intermediate good?
rev: 04_09_2018
Multiple Choice

an oven bought by a homeowner

office supplies bought by an accounting firm

gasoline bought by a trucking company

flour bought by a bakery

36. In the treatment of U.S. exports and imports, national income accountants
_____.
rev: 04_09_2018
Multiple Choice

subtract exports but add imports in calculating GDP

subtract both exports and imports in calculating GDP

add both exports and imports in calculating GDP

add exports but subtract imports in calculating GDP
The value of corporate stocks and bonds traded in a given year is _____.
rev: 04_09_2018
Multiple Choice

included in the calculation of net private domestic investment

excluded from the calculation of GDP because it does not represent new production

37. 
included in the calculation of GDP because it is a component of gross investment

included in the calculation of gross private domestic investment
Suppose that real GDP per capita in the United States is $49,000. If the
long-term growth rate of real GDP per capita is 1.6% per year, how many
years will it take for real GDP per capita to reach $98,000?
Instructions: Enter your answer as a whole number.
years
The table below shows real GDP per capita for the United States between
the years 1950–2016.
Real GDP per Capita over Time
Year
Real GDPper Capita
(dollars)
1950 $13,819
1975 24,601
2000 43,935
2016 52,172

38. Instructions: Round your answers to one decimal place.
a. What is the growth rate in the standard of living from 1950 to 1975?
b. What is the growth rate in the standard of living from 1975 to 2000?
c. What is the growth rate in the standard of living from 2000 to 2016?
Suppose that Italy can produce either goods or services with its resources,
and that its PPF curve is shown on the graph as PPF1.
Using the graph, for each of the following situations, determine whether the
PPF curve shifts.
a. Suppose that Italy increases its spending on education, which increases
the amount of human capital in Italy.
Italy's PPF curve would
b. A recession causes Italy's unemployment rate to increase above the
natural rate of unemployment.
Italy's PPF curve would
c. Italy experiences an influx of immigrants from surrounding countries,
which causes the population of Italy to increase.
Italy's PPF curve would

39. Which of the following is a measure of economic growth that is most useful
for comparing changes in standards of living?
rev: 05_30_2018
Multiple Choice

increases in real GDP

increases in real GDP per capita

growth in nominal GDP

decreases in the rate of unemployment
The benefits of economic growth are _____, while the costs of economic
growth are _____.
rev: 05_30_2018
Multiple Choice

increased output per person; the consumption sacrificed in exchange for capital formation

increased output per person; less future consumption

increased output per person; too small for concern

more current consumption; less future consumption

40. Use the following production possibilities frontiers to answer the next
question.
Curve (a) is the current frontier for the economy. Focusing on curve (a),
point N suggests that the economy currently produces
rev: 05_30_2018
Multiple Choice

more goods for the future than at point P.

less goods for the present than at point P.

less goods for the future than at point P.

a combination of output that is less than its potential.

41. The application of new technologies to the production process will increase
rev: 05_30_2018
Multiple Choice

labor productivity.

the share of the population employed.

the unemployment rate.

the quantity of human capital.
Real GDP per capita is found by
rev: 05_30_2018
Multiple Choice

dividing real GDP by population.

subtracting population from real GDP.

dividing population by real GDP.

adding real GDP and population.

42. Human capital is
rev: 05_30_2018
Multiple Choice

the financial resources available to humans for investment.

the talents, training, and education of workers.

the factories and machinery used by humans in the production process.

the factories and machinery made by workers.
To increase future living standards by pursuing higher current rates of
investment spending, an economy must
rev: 05_30_2018
Multiple Choice

reduce the current capital stock.

allow higher rates of current consumption.

reduce current rates of consumption spending.

decrease the amount of future research and development spending.

43. Which of the following is a measure of economic growth that is most useful
for measuring changes in the overall size of an economy?
rev: 05_30_2018
Multiple Choice

decreases in the rate of unemployment

increases in real GDP

increases in real GDP per capita

growth in nominal GDP
Human capital refers to the
rev: 05_30_2018
Multiple Choice

amount of financing available to start-up firms.

tools and equipment available to workers.

44. 
education, training, and skills of workers.

number of workers available in the economy.
Economic growth can best be portrayed as a(n)
rev: 05_30_2018
Multiple Choic
outward shift of the production possibilities frontier.

movement from a point inside to a point outside of the production possibilities frontier.

inward shift of the production possibilities frontier.

movement from a point near the vertical axis to a point near the horizontal axis on the
production possibilities frontier.

45. The cost of a higher living standard in the future is giving up
rev: 05_30_2018
Multiple Choice
current consumption.

current investment.

future consumption.

future investment.
The principle of diminishing returns to capital states that if the amount of
labor and other inputs employed is held constant, then the greater the
amount of capital in use the
rev: 05_30_2018
Multiple Choice

the less an additional unit of capital adds to production.

less is produced.

the more an additional unit of capital adds to production.

less production is wasted.

46. ECO 372 Week 2 Practice: Business Cycles, Unemployment,
and Inflation Quiz – Unlimited Attempts
Complete the Week 2 Business Cycles, Unemployment, and Inflation Quiz in
McGraw-Hill Connect® by Day 5. These are randomized questions.
Note: You have unlimited attempts available to complete practice assignments. The
highest scored attempt will be recorded. These assignments have earlier due dates, so
plan accordingly. Grades must be transferred manually to eCampus by your instructor.
Don't worry, this might happen after your due date.
In each of the following examples, identify whether the individual is
experiencing cyclical unemployment, frictional unemployment, structural
unemployment, or no unemployment.
a. 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.
b. 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.
c. 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.
d. 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.
e. 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.
f. 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.

47. g. 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.
h. 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.
For each of the following items, indicate to which major group of the CPI
the item belongs:
a. Tuition payments to your university:
b. A new desk for your dorm room or apartment:
c. An airline ticket to Florida to be used during spring break:
d. A 12-pack of beer to be used during spring break:
e. Tickets to a local concert:
f. A late night visit to the emergency room:
Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos
each month. During the last couple of weeks, Marcus noticed an increase in
the price of burritos. The price of burritos rose from $5.50 per burrito last
month to $6.60 per burrito this month. Assume that Marcus has a fixed
income of $165 that he can spend on burritos.
How many burritos can Marcus afford to buy at the new price of $6.60?
Instructions: Enter your answer as a whole number.
burritos

48. In each of the following examples, identify whether the person is counted in
the official labor force or not.
a. Cynthia owns and operates her own retail store.
b. Elder has recently moved to a retirement community in Florida where
he enjoys his "golden years" as a retiree.
c. Drew lost his job at the bank last year. He spent 6 months applying for
every job possible before giving up 2 months ago.
d. 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.
e. Latisha is an ambitious 15-year-old who spends her summer working as
a lifeguard at a local pool.
f. Bill is currently serving a prison sentence, and works making license
plates.
g. Tyrell just graduated college with a business degree. He is currently
looking for a banking job in the major city he just moved to.
h. 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.
Using the graph below, identify the different stages of the business cycle.
Assume that A, B, and C represent consecutive years.
a. A time period when the economy is growing toward full employment is
known as
It is depicted in the graph as
b. A time period characterized by full or near-full employment is known as

49. It is depicted in the graph as
c. A time period with two consecutive quarters of declining output is known
as
It is depicted in the graph as
d. A time period when employment and real output are at their lowest levels
is known as
It is depicted in the graph as
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?

Both the actual unemployment rate and cyclical unemployment were
higher during the 2001 recession.

Both the actual unemployment rate and cyclical unemployment were
higher during the recession of 1990−1991.

The actual unemployment rate was higher during the recession of
1990−1991, while cyclical unemployment was higher in 2001.

The actual unemployment rate was higher in 2001, while cyclical
unemployment was higher from 1990−1991.
The natural rate of unemployment

50. rev: 05_30_2018
Multiple Choice

means that the economy will always operate at that rate.

is a fixed unemployment rate that does not change over time.

means that the economy will always realize its potential output.

is equal to the total of frictional and structuralunemployment.
Use the following diagram to answer the next question.
The diagram illustrates the pattern of
rev: 05_30_2018
Multiple Choice

economic growth patterns.

business cycles.


51. wage movements over time.

price level movements.
Full employment" refers to the situation when there is
rev: 05_30_2018
Multiple Choice

100% employment of the labor force.

no cyclical unemployment.

no frictional or structural unemployment.

a 0% unemployment rate.

52. The unemployment rate is interpreted as the percentage of the
rev: 05_30_2018
Multiple Choice

able-bodied population who are not working.

adult population who are unemployed.

workforce that have been laid off.

labor force that are not employed.
A recession is a decline in
rev: 05_30_2018
Multiple Choice

the inflation rate that lasts six months or longer.

the unemployment rate that lasts six months or longer.

real GDP that lasts six months or longer.

53. 
potential GDP that lasts six months or longer.
The rate of unemployment when the economy is fully employed is called
the
rev: 05_30_2018
Multiple Choice

frictional rate of unemployment.

structural rate of unemployment.

full-employment rate of unemployment.

natural rate of unemployment.
Use the table below to answer the next question.
YearEmployedStructuralFrictionalCyclicalUnemployed
2003 1,800 50 100 50 200
2004 2,400 100 100 300
2005 2,000 150 180 500

54. 2006 2,660 40 0 140
Determine the number of people cyclically unemployed for the year 2004.
rev: 05_30_2018
Multiple Choice

-100

100

0

200
Use the table below to answer the next question.
YearEmployedStructuralFrictionalCyclicalUnemployed
2003 1,800 50 100 50 200
2004 2,400 100 100 300
2005 2,000 150 180 500
2006 2,660 40 0 140
Determine the number of people frictionally unemployed for the year 2006.
rev: 05_30_2018
Multiple Choice

100
0

55. 
200

-100
A mismatch between the geographic location of workers and the location
of job openings would result in which type of unemployment?
rev: 05_30_2018
Multiple Choice

cyclical

structural

wait

frictional
Unemployment that occurs when there is deficient demand for the goods
and services of an economy is called

56. rev: 05_30_2018
Multiple Choice

cyclical unemployment.

structural unemployment.

frictional unemployment.

natural unemployment.
A peak in the business cycle
rev: 05_30_2018
Multiple Choice

occurs when the unemployment rate is its greatest.

is a temporary maximum point.

is a temporary minimum point.


57. occurs when the inflation rate is its lowest.
Which of the following is the way to calculate the unemployment rate?
rev: 05_30_2018
Multiple Choice

(labor force/unemployed) x 100

(unemployed/labor force) x 100

(labor force/population) x 100

(unemployed/population) x 100
The Great Recession that started in 2007 was triggered by shocks in
which of the following economic sectors?
rev: 05_30_2018
Multiple Choice

consumer and government spending


58. international trade and foreign exchange markets

real estate and financial markets

gold market and stock market
In the expansion phase of a business cycle
rev: 05_30_2018
Multiple Choice

employment and output increase.

the inflation rate and productive capacity decrease.

the inflation rate decreases, but productive capacity increases.

employment increases, but output decreases.

59. In calculating the unemployment rate, part-time workers are
rev: 05_30_2018
Multiple Choice

treated the same as "discouraged" workers who are not actively seeking employment.

counted as employed because they are receiving payment for work.

counted as unemployed because they are not working full-time.

used to determine the size of the labor force, but not the unemployment rate.
The labor force includes
rev: 05_30_2018
Multiple Choice

permanent employees but excludes temporary employees.

employed workers but excludes persons who are officially unemployed.

full-time workers but excludes part-time workers.

employed workers and persons who are officially unemployed.

60. Wait unemployment and search unemployment are both types of
rev: 05_30_2018
Multiple Choice

frictional unemployment.

cyclical unemployment.

hidden unemployment.

structural unemployment.
Use the table below to answer the next question.
YearEmployedStructuralFrictionalCyclicalUnemployed
2003 1,800 50 100 50 200
2004 2,400 100 100 300
2005 2,000 150 180 500
2006 2,660 40 0 140

61. Determine the number of people structurally unemployed for the year 2005.
rev: 05_30_2018
Multiple Choice

220

170
0

150
Which of the following statements is true about causes of business cycle
fluctuations?
rev: 05_30_2018
Multiple Choice

Economists all agree that monetary changes are primarily responsible for business cycle
fluctuations.

There are a wide range of theories as to the underlying causes of business cycle
movements.

62. 
Economists all agree that productivity shocks are the cause of most business cycle
changes.

Economists all agree that supply shocks are the cause of most business cycle fluctuations.
In the United States, business cycles have occurred against a backdrop of
a long-run trend of
rev: 05_30_2018
Multiple Choice

stagnant productivity growth.

rising real GDP.

rising inflation.

declining unemployment.

63. The unemployment rate of full-employment is also called the
rev: 05_30_2018
Multiple Choice

cyclical rate of unemployment.

natural rate of unemployment.

potential rate of unemployment.

frictional rate of unemployment.
According to the Bureau of Labor Statistics, to be officially unemployed
a person must
rev: 05_30_2018
Multiple Choice

be 21 years of age or older.


64. be in the labor force.

be waiting to be called back from a layoff.

have lost a job.
The recurrent ups and downs in the level of economic activity extending
over several years are referred to as
rev: 05_30_2018
Multiple Choice

business cycles.

economic phases.

business startups.

65. 
noncyclical fluctuations.
In calculating the unemployment rate, "discouraged" workers who are not
actively seeking employment are
rev: 05_30_2018
Multiple Choice

included as part of the unemployed.

excluded from the labor force.

used to determine the size of the labor force.

treated the same as part-time workers.
The unemployed are those people who

66. rev: 05_30_2018
Multiple Choice

are not employed but are seeking work.

are not working.

do not have jobs.

are not in the workforce.
The GDP gap measures the amount by which
rev: 11_14_2016_QC_CS-69055
Multiple Choice

nominal GDP exceeds real GDP.

actual GDP exceeds equilibrium GDP.

potential GDP differs from actualGDP.

actual GDP exceeds national income.

67. Use the following diagram to answer the next question.
The straight line E drawn through the wavy lines would provide an estimate
of the
rev: 05_30_2018
Multiple Choice

recession fluctuation.

recovery trend.

natural rate of unemployment.

economic growth trend.
Which of the following groups declares the start and end of recessions in
the U.S.?
rev: 05_30_2018
Multiple Choice

The Business Cycle Dating Committee of the National Bureau of Economic Research.

68. 
The Business Cycle Monitoring Committee of the Federal Reserve System.

The Business Cycle TrackingAgency of the Department of Commerce.

The Committee on Business Cycles of the Council of Economic Advisers.
A trough in the business cycle occurs when
rev: 05_30_2018
Multiple Choice

the inflation rate is at its lowest level.

employment and output reach their lowest levels.

cyclical unemployment is at a minimum point.

the natural rate of unemployment is at a minimum point.

69. Search and wait unemployment is another way to describe
rev: 05_30_2018
Multiple Choice

structural unemployment.

noncyclical unemployment.

frictional unemployment.

cyclical unemployment.
Unexpected inflation arbitrarily
rev: 05_02_2017_QC_CS-84894
Multiple Choice


70. "penalizes" those who borrow money.

"taxes" those who receive fixed money incomes.

"benefits" those who save money.

"subsidizes" those who receive fixed money incomes.
The CPI compiled by the Bureau of Labor Statistics is used in the
computations for the
Multiple Choice

interest rate.

unemployment rate.

inflation rate.

foreign exchange rate.

71. What is an advantage of mild inflation according to some economists?
Multiple Choice

It reduces the inflation premium.

It reduces frictional, structural, and cyclical unemployment in the economy to make the
economy more productive.

It makes it easier for firms to adjust real wages downward as demand for their products
falls.

It helps to close the GDP gap.
Core inflation refers to the inflation picture after stripping away the
Multiple Choice

government-regulated prices.

service-sector prices.


72. capital goods prices.

food and energy prices
Which of the following groups has traditionally benefited from unexpected
inflation?
rev: 05_02_2017_QC_CS-84894
Multiple Choice
federal government

foreign sector

consumers

business firms
Which of the following measures the changes in the prices of a "market
basket" of some 300 goods and services purchased by typical urban
consumers?
Multiple Choice

the Consumer Price Index

the GDP Price Index

73. 
the Wholesale Price Index

the Retail Trade survey
Inflation caused by an increase in aggregate spending is referred to as
rev: 05_02_2017_QC_CS-84894
Multiple Choice

demand-pull inflation.

cost-push inflation.

hyperinflation.

expected inflation.
Inflation caused by a rise in the prices of inputs is referred to as
rev: 05_02_2017_QC_CS-84894
Multiple Choice

hyperinflation.

demand-pull inflation.

74. 
unexpected inflation.

cost-push inflation.
The inflation rate measures the percentage growth rate of
Multiple Choice

the CPI from one year to the next.

real GDP from one year to the next.

the CPI from the base period 1982-84 to a given year.

real GDP from the base period 1982-84 to a given year.

75. Inflation is a rise in
Multiple Choice

the general level of prices over time.

the standard of living over time.

real GDP over time.

unemployment over time.
In an economy, the total expenditures for a market basket of goods in
year 1 (the base year) was $5,000 billion. In year 2, the total expenditure
for the same market basket of goods was $5,500 billion. What was the
Consumer Price Index for the economy in year 2?
Multiple Choice

100

115

110

76. 
120
What is the main problem with mild inflation according to some
economists?
rev: 05_02_2017_QC_CS-84894
Multiple Choice

It leads to unexpected deflation.

It diverts productive time towards activities to hedge against inflation.

It increases frictional and structuralunemployment in the economy.

It reduces the size of the GDP gap.
Inflation that occurs when total spending is greater than the economy's
ability to produce output at the existing price level is
rev: 05_02_2017_QC_CS-84894
Multiple Choice


77. demand-pull inflation.

expected inflation.

unexpected inflation.

cost-push inflation.
Assume that there is a fixed rate of interest on contracts for borrowers and
lenders. If unexpected inflation occurs in the economy, then
rev: 05_02_2017_QC_CS-84894
Multiple Choice

both lenders and borrowers benefit.

both lenders and borrowers are hurt.

borrowers are hurt, but lenders benefit.

lenders are hurt, but borrowers benefit.

78. ECO 372 Week 2 Apply: Business Cycles, Unemployment, and
Inflation Homework– One Attempt
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:
a. Tuition payments to your university:
b. A new desk for your dorm room or apartment:
c. An airline ticket to Florida to be used during spring break:
d. A 12-pack of beer to be used during spring break:
e. Tickets to a local concert:
f. 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.
a. Cynthia owns and operates her own retail store.
b. Elder has recently moved to a retirement community in Florida where
he enjoys his "golden years" as a retiree.
c. Drew lost his job at the bank last year. He spent 6 months applying for
every job possible before giving up 2 months ago.
d. 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.

79. e. Latisha is an ambitious 15-year-old who spends her summer working as
a lifeguard at a local pool.
f. Bill is currently serving a prison sentence, and works making license
plates.
g. Tyrell just graduated college with a business degree. He is currently
looking for a banking job in the major city he just moved to.
h. 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.
a. 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.
b. 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.
c. 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.
d. 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.
e. 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.
f. 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.

80. g. 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.
h. 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
rev: 05_30_2018
Multiple Choice

81. 
noncyclical fluctuations.

business cycles.

economic phases.

business startups.
In the expansion phase of a business cycle
rev: 05_30_2018
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.

82. A mismatch between the geographic location of workers and the location
of job openings would result in which type of unemployment?
rev: 05_30_2018
Multiple Choice

cyclical

frictional

wait

structural
According to the Bureau of Labor Statistics, to be officially unemployed
a person must
rev: 05_30_2018
Multiple Choice

be in the labor force.

be waiting to be called back from a layoff.


83. be 21 years of age or older.

have lost a job.
The labor force includes
rev: 05_30_2018
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.

84. The unemployment rate of full-employment is also called the
rev: 05_30_2018
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
rev: 05_30_2018
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.


85. counted as unemployed because they are not working full-time.
Wait unemployment and search unemployment are both types of
rev: 05_30_2018
Multiple Choice

structural unemployment.

cyclical unemployment.

frictional unemployment.

hidden unemployment.
Use the table below to answer the next question.
YearEmployedStructuralFrictionalCyclicalUnemployed
2003 1,800 50 100 50 200
2004 2,400 100 100 300

86. 2005 2,000 150 180 500
2006 2,660 40 0 140
Determine the number of people frictionally unemployed for the year 2006.
rev: 05_30_2018
Multiple Choice

0

100

200

-100
Unemployment that occurs when there is deficient demand for the goods
and services of an economy is called
rev: 05_30_2018
Multiple Choice

natural unemployment.

frictional unemployment.

structural unemployment.

87. 
cyclical unemployment.
In the United States, business cycles have occurred against a backdrop of
a long-run trend of
rev: 05_30_2018
Multiple Choice

stagnant productivity growth.

declining unemployment.

rising real GDP.

rising inflation.
Which of the following is the way to calculate the unemployment rate?
rev: 05_30_2018
Multiple Choice

88. 
(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
rev: 05_30_2018
Multiple Choice

frictional unemployment.

noncyclical unemployment.

structural unemployment.

cyclical unemployment.

89. Which of the following statements is true about causes of business cycle
fluctuations?
rev: 05_30_2018
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.
YearEmployedStructuralFrictionalCyclicalUnemployed
2003 1,800 50 100 50 200
2004 2,400 100 100 300

90. 2005 2,000 150 180 500
2006 2,660 40 0 140
Determine the number of people structurally unemployed for the year 2005.
rev: 05_30_2018
Multiple Choice

0

170

220

150
"Full employment" refers to the situation when there is
rev: 05_30_2018
Multiple Choice

no cyclical unemployment.

no frictional or structural unemployment.

100% employment of the labor force.

91. 
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.

92. 
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
rev: 05_02_2017_QC_CS-84894
Multiple Choice

cost-push inflation.

unexpected inflation.

demand-pull inflation.

expected inflation.

93. 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?
rev: 05_02_2017_QC_CS-84894
Multiple Choice

federal government

foreign sector

consumers

business firms

94. What is the main problem with mild inflation according to some
economists?
rev: 05_02_2017_QC_CS-84894
Multiple Choice

It diverts productive time towards activities to hedge against inflation.

It increases frictional and structuralunemployment 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.

95. 
food and energy prices.

government-regulated prices.
Unexpected inflation arbitrarily
rev: 05_02_2017_QC_CS-84894
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.

96. Inflation caused by an increase in aggregate spending is referred to as
rev: 05_02_2017_QC_CS-84894
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.

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