Chapter 10: Measuring Aggregate Performance
Multiple Choice Questions
3) The Bureau of Labor Statistics counts a person as unemployed if he or she is
A) without a job.
B) qualified for employment but unable to find it.
C) in the labor force but unable to find work.
D) in the labor force but unable to find full time work.
E) in the labor force but working less than 22 hours per week.
Answer: C
4) If you were working at a part-time job because you were unable to find a full-time job,
the Bureau of Labor Statistics would classify you as
A) unemployed.
B) not participating in the labor market.
C) employed.
D) quasi-employed.
E) unhappy.
Answer: C
7) Structural unemployment is caused by
A) a general slowdown or decline in the level of economic activity in the economy.
B) the unwillingness of workers to accept employment at prevailing wage rates.
C) a lack of marketable skills.
D) the time lags that are involved in changing jobs.
E) a slowdown in the rate of technological advance.
Answer: C
8) Cyclical unemployment exists because
A) certain skills tend to become obsolete as the economy continually changes.
B) there are periodic reductions in the economy's total demand for goods and services.
C) it takes some time for new entrants into the labor force to find employment.
D) as workers become older, they become less attractive to businesses.
E) domestic producers have lost out to foreign competition.
Answer: B
9) The amount of unemployment that is normal or unavoidable is due to
A) structural changes in the economy and the time lags involved in labor market
adjustments.
B) the voluntary idleness of those who choose not to seek employment.
C) the ups and downs in the level of economic activity in the economy.
D) the impact of foreign competition.
E) illness and injury.
Answer: A
10) The label "frictional unemployment" is used to describe individuals who
A) lose their jobs because of personality conflicts with their employers.
B) are out of work while they are changing jobs.
C) are out of work because they lack the motivation to seek employment.
D) are unemployed because they lack a sound general education.
E) are unemployed because of discrimination in hiring practices.
Answer: B
11) Which of the following individuals would be considered structurally unemployed?
A) a fork lift operator who quit her job to look for a similar position with better working
conditions
B) a meatpacker whose job was eliminated when the company purchased automated
packing equipment
C) a national sales representative who lost his job due to a general downturn in the
overall economy
D) a recent college graduate who is trying to choose between three job offers
E) a former nurse who is thinking about looking for a job but whose skills are rusty from
disuse
Answer: B
12) Which of the following would be most likely to reduce frictional unemployment?
A) programs to assist in the retraining of workers
B) an increase in the amount of radio and television advertising of job openings
C) an increase in the level of financial support for elementary and secondary education
D) a program of subsidized day care so that welfare mothers could join the labor force
more easily
E) policies to stimulate the demand for goods and services so that businesses can sell
more output
Answer: B
13) A certain amount of unemployment is normal, or unavoidable. It consists of
A) cyclical unemployment.
B) cyclical and structural unemployment.
C) cyclical and frictional unemployment.
D) voluntary unemployment.
E) frictional and structural unemployment.
Answer: E
14) In our economy, full employment means
A) a zero unemployment rate.
B) an unemployment rate of about 2.5 percent.
C) an unemployment rate of about 5.0 percent.
D) an unemployment rate of about 8 percent.
E) an unemployment rate between 1 and 2 percent.
Answer: C
17) Which of the following is least likely to suffer a reduction in real income during a
period of unanticipated inflation?
A) an unskilled worker earning the minimum wage
B) a widow on a fixed pension
C) a lawyer in private practice
D) a bus driver with a 3-year contract without a COLA clause
E) a salesperson with funds in a long-term, fixed interest savings deposit
Answer: C
18) During a period of unanticipated inflation
A) debtors tend to benefit at the expense of creditors.
B) creditors tend to benefit at the expense of debtors.
C) businesses that have borrowed money at a fixed interest rate tend to be harmed.
D) income will be redistributed from the federal government to private households.
E) everyone is harmed.
Answer: A
19) The Consumer Price Index attempts to measure the rate of inflation
A) for all of the items that make GNP.
B) for a market basket of products typically purchased by urban residents.
C) for food and clothing.
D) at the wholesale level.
E) for services only.
Answer: B
20) If the Consumer Price Index is 150 (1982 = 100), then prices have risen
A) 150 percent in the last year.
B) 50 percent in the last year.
C) 50 percent since 1982.
D) 150 percent since 1982.
E) 15 percent since 1982.
Answer: C
23) Gross domestic product is defined as the monetary value of
A) all goods and services sold in 1 year.
B) all final goods and services produced and sold in 1 year.
C) all final goods and services produced in 1 year.
D) all goods and services produced in 1 year.
E) all final goods and services sold in 1 year.
Answer: C
31) The difference between nominal or "money" GDP and "real" GDP is that
A) real GDP measures the output of goods and services, while money GDP records
financial transactions.
B) real GDP is adjusted for changes in the price level, while money GDP is not.
C) money GDP considers goods and services, while real GDP considers only goods.
D) real GDP deducts taxes, while money GDP does not.
E) real GDP must be measured in units of output, while money GDP is measured in
dollars or other currency units.
Answer: B
32) Between 2000 and 2009, real GDP in the United States rose less than nominal GDP.
This indicates that
A) the welfare of U.S. citizens was lower in 2009 than it was in 2000.
B) U.S. citizens paid a substantial portion of their incomes in taxes.
C) the price level rose during this period.
D) services made up a substantial portion of the value of nominal GDP.
E) imports exceeded exports.
Answer: C
34) If the value of nominal or money GDP was higher in 2000 than in 2002, and the price
index (2000 = 100) was higher in 2002 than in 2000, then
A) real GDP must have increased from 2000 to 2002.
B) real GDP must have declined from 2000 to 2002.
C) we cannot say whether real GDP increased or decreased from 2000 to 2002.
D) consumers were clearly better off in 2002 than they were in 2000.
E) inflation must have exceeded 50 percent between 2000 and 2002.
Answer: B