The industries or sectors of the economy in which business cycle fluctuations tend to affect output most areMultiple Choicemilitary goods and capital goods.services and nondurable consumer goods.clothing and education.capital goods and durable consumer goods.

capital goods and durable consumer goods.

In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?Multiple ChoiceexpansionCorrectrecessionpeaktrough

expansion

What do economists mean when they refer to inflation as "general increase in the prices of goods and services."Multiple ChoiceAll prices are rising.All prices are falling.Some prices are rising, some prices are falling, and some prices are constant, but on average, prices are decreasing.Some prices are rising, some prices are falling, and some prices are constant, but on average, prices are increasing.

Some prices are rising, some prices are falling, and some prices are constant, but on average, prices are increasing.

The annual inflation rate measures the percentage growth rate ofMultiple Choicereal GDP from the base period 1982-1984 to a given year.real GDP from one year to the next.the CPI from the base period 1982-1984 to a given year.the CPI from one year to the next.

the CPI from one year to the next.

If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inflation is approximatelyMultiple Choice4 percent.4.2 percent.-4 percent.Correct-4.2 percent.

-4 percent.

The best example of a "frictionally unemployed" worker is one whoMultiple Choicereduces productivity by causing friction in a business.is laid off during a recessionary period in the economy.is in the process of voluntarily switching jobs.Correctis discouraged and not actively seeking work.

is in the process of voluntarily switching jobs.

Which of the following statistics can turn negative?Multiple Choiceinflation rateGDPCPIunemployment rate

inflation rate

The rate of unemployment when the economy is fully employed is called theMultiple Choicefull employment rate of unemployment.natural rate of unemployment.structural rate of unemployment.frictional rate of unemployment.

natural rate of unemployment.

According to the Bureau of Labor Statistics, to be officially unemployed a person mustMultiple Choicebe in the labor force.be 21 years of age or older.have lost a job.be waiting to be called back from a layoff.

be in the labor force.

Using the graph below, identify the different stages of the business cycle. Assume that A, B, and C represent consecutive years.The horizontal axis represents time and the vertical axis represents real GDP. A curve from the vertical axis increases through a point labeled, A, then decreases through a point labeled, B, and continues increasing through a point labeled, C.a. A time period when the economy is growing toward full employment is known as an expansion Correct.It is depicted in the graph as B through C Correct.b. A time period characterized by full or near-full employment is known as a peak Correct.It is depicted in the graph as A Correct.c. A time period with two consecutive quarters of declining output is known as a recession Correct.It is depicted in the graph as A through B Correct.d. A time period when employment and real output are at their lowest levels is known as a trough Correct.It is depicted in the graph as B Correct.

a. an expansion / B-Cb. a peak / Ac. a recession / A-Bd. a trough / BThe business cycle shows the short-term fluctuations experienced in an economy due to changes in levels of economic activity.a. Expansions are the phase of the business cycle characterized by increasing real GDP, income, and employment. Expansions are the business cycle phase between a trough and a peak.b. A peak is a point in the business cycle where real GDP reaches a maximum. The peak marks the end of an expansion.c. Recessions are declines in real output that last for at least two consecutive quarters.d. Finally, a trough is the lowest point of economic activity in the business cycle, where real GDP reaches a minimum. The trough marks the end of a recession.

The following information is given for an economy:Labor Force of an EconomyNumber of People (millions)Total population40.9Children under the age of 167.6Retirees7.2Employed21.2Unemployed2.2Not actively seeking employment2.1Homemakers0.6Instructions: Round your answers to one decimal place.

a. 33.3b. 23.4c. 70.3Explanationa. Note that the labor force participation rate is based on the population over the age of 16, so we must first subtract the 7.6 million children from the total population of 40.9 million to get this information. The population over 16 years of age is 33.3 million (40.9 - 7.6).b. Secondly, we must compute the labor force, which is all the employed plus unemployed people in the population, or 23.4 million (21.2 + 2.2). Note that retirees, homemakers, and those who are not actively looking for work are all counted as not in the labor force.c. Finally, we can compute the official labor force participation rate by dividing the labor force by the population over the age of 16 = 23.4 million/33.3 million = 0.7027, or 70.3%.

a. Inflation ismultiple choice 1a general increase in the prices of all goods and services. a general increase in the output of all goods and services.a general decrease in the output of all goods and services.a general decrease in the prices of all goods and services.b. When inflation occursmultiple choice 2it becomes easier to find a job.people can buy more with the same amount of money.people can buy less with the same amount of money. it becomes more difficult to find a job.

a. a general increase in the prices of all goods and services.b. people can buy less with the same amount of money.

If the CPI declines from one year to the next, then which one of the following statements is not true?Multiple ChoiceThere is deflation.The inflation rate is negative.The average price level is decreasing.The CPI turns negative in the next year.

The CPI turns negative in the next year.

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result, theMultiple Choiceofficial unemployment rate will fall.official unemployment rate will rise.official unemployment rate will remain unchanged.size of the labor force will increase.

official unemployment rate will remain unchanged.

Official unemployment rate statistics mayMultiple Choiceoverstate the amount of unemployment by including part-time workers in the calculations.understate the amount of unemployment by excluding part-time workers in the calculations.overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.

understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.