Principles of Macroeconomics International Edition 9th Edition by Michael Melvin -Test Bank

Principles of Macroeconomics International Edition 9th Edition by Michael Melvin -Test Bank

Chapter 07 Unemployment and Inflation

MULTIPLE CHOICE

1. Which of the following refers to business cycles?
a. Variations in the economy that are all equal in intensity
b. Seasonal variations in the economy that occur every year
c. Fluctuations in economic output that show a declining growth pattern over time
d. Periodic but irregular variations in economic activity
e. Period movements from one economic peak to another

ANS: D DIF: Easy REF: 1 OBJ: ch. 07, 1
NAT: Analytic | Unemployment | Inflation TOP: Business Cycles
MSC: Comprehension

2. In the business cycle, a trough marks the end of a(n) _____ and the beginning of a new _____.
a. contraction; expansion
b. peak; expansion
c. expansion; contraction
d. peak; contraction
e. expansion; peak

ANS: A DIF: Easy REF: 1.a OBJ: ch. 07, 1
NAT: Analytic | Inflation | Unemployment TOP: Business Cycles
MSC: Knowledge

3. The part of a business cycle that follows a peak is the:
a. trough phase of the cycle.
b. break-even point of the cycle.
c. peak period of the cycle.
d. recessionary phase of the cycle.
e. expansionary phase of the cycle.

ANS: D DIF: Easy REF: 1.a OBJ: ch. 07, 1
NAT: Analytic | Inflation | Unemployment TOP: Business Cycles
MSC: Knowledge

4. Which of the following signals the start of an expansion?
a. A boom period
b. A peak
c. An inflation
d. A contraction
e. A trough

ANS: E DIF: Easy REF: 1.a OBJ: ch. 07, 1
NAT: Analytic | Inflation | Unemployment TOP: Business Cycles
MSC: Knowledge

The figure given below represents the business cycle of an economy.
Figure 7.1

5. Refer to Figure 7.1. The movement from point A to point B in the figure is most likely to be associated with _____.
a. negative inflation rates.
b. an increase in the aggregate demand for goods and services.
c. lagging economic productivity.
d. an increase in cyclical unemployment.
e. a downward trend in leading economic indicators.

ANS: B DIF: Moderate REF: 1.a OBJ: ch. 07, 1
NAT: Reflective Thinking | Inflation | Unemployment TOP: Business Cycles
MSC: Application

6. Refer to Figure 7.1. At point D, lagging economic indicators should show that:
a. real GDP is expanding.
b. real GDP falls to zero.
c. real GDP is contracting.
d. real GDP growth is zero.
e. real GDP growth will be positive over time.

ANS: C DIF: Moderate REF: 1.a OBJ: ch. 07, 1
NAT: Reflective Thinking | Inflation | Unemployment TOP: Business Cycles
MSC: Application

7. Refer to Figure 7.1. The overall upward trend in real GDP reflected by this figure implies that:
a. the real GDP gap is widening over time.
b. cyclical unemployment is growing at positive rates.
c. consumer purchasing power is rising over time.
d. on average, labor productivity is declining.
e. expansionary phases outweigh contractionary phases in the economy over time.

ANS: E DIF: Moderate REF: 1.a OBJ: ch. 07, 1
NAT: Reflective Thinking | Inflation | Unemployment TOP: Business Cycles
MSC: Application