Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The unemployment rate is calculated as
a. | the rate of inflation minus the rate of employment. | b. | total productivity
divided by frictional unemployment. | c. | the percentage of the labor force that is
unemployed. | d. | structural unemployment divided by GDP. |
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2.
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The ________ is the beginning of a recession.
a. | peak | b. | trough | c. | expansion | d. | valley |
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3.
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The date a recession bottoms out is called the
a. | peak. | b. | expansion. | c. | trough. | d. | equilibrium. |
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4.
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The ___________ is the period of time from the trough, through recovery, and all
the way back to peak.
a. | peak | b. | trough | c. | expansion | d. | start |
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5.
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___________ policies of the government can also cause recessions.
a. | Inflation-fighting | b. | Welfare | c. | Defense | d. | Poor
market-based |
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6.
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When unemployment is below the natural rate,
a. | inflation slows. | b. | the inflation rate
increases. | c. | frictional unemployment increases. | d. | structural unemployment
declines. |
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7.
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Which person provides an example of structural unemployment?
a. | A worker who stays at home to tend to children. | b. | A worker trained in
running an obsolete machine. | c. | A student who goes to school instead of
working. | d. | A fast-food worker who quits that job to find a better-paying
job. |
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8.
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How can fighting inflation cause a recession?
a. | The Federal Reserve raises interest rates to intentionally slow down the
economy. | b. | Businesses lay off workers as a way to keep prices from rising too
fast. | c. | The federal government orders businesses to reduce prices, which raises interest
rates. | d. | Households stop buying goods and services in response to higher
prices. |
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9.
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Fluctuations in the level of economic activity, particularly real GDP, relative
to a long-term growth trend are called
a. | market trends | b. | business cycles | c. | inflation | d. | secular growth | e. | unemployment
rates |
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10.
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Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are
looking for
work, and 15 of whom are retired. The number counted as unemployed is
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