Cost-push inflation may be caused by:
a negative supply shock.
Official unemployment statistics:
understate unemployment because discouraged workers are not counted as unemployed.
occurs when total spending in the economy is excessive.
Recurring upswings and downswings in an economy’s real GDP over time are called:
A lender need not be penalized by inflation if the:
lender correctly anticipates inflation and increases the nominal interest rate accordingly.
Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:
Given the annual rate of inflation, the “rule of 70” allows one to:
calculate the number of years required for the price level to double.
For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:
Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is:
not in the labor force.
The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore, the rate of inflation in 2002 was about:
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
The GDP gap measures the difference between:
actual GDP and potential GDP.
Suppose that a person’s nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105. The person’s real income will:
rise by about 15 percent.
Part-time workers who want full-time work are counted as:
fully employed and therefore the official unemployment rate may understate the level of unemployment.
The phase of the business cycle in which real GDP declines is called:
Wait unemployment and search unemployment are both types of:
Innovations such as the microchip and the Internet lead to business cycle variations because:
significant innovations occur irregularly and unexpectedly.
If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is:
The unemployed are those people who:
Are not employed but are seeking work
Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be available. We can say that Susie is faced with:
The natural rate of unemployment is:
that rate of unemployment occurring when the economy is at its potential output.
Cost-of-living adjustment clauses (COLAs):
tie wage increases to changes in the price level.
The type of unemployment associated with recessions is called:
Inflation means that:
prices on average are rising, although some particular prices may be falling.
(Consider This) If wages were more downwardly flexible, then we would expect:
fewer layoffs during recessions.
A college graduate using the summer following graduation to search for a job would best be classified as:
a part of frictional unemployment.
If actual GDP is less than potential GDP:
the actual unemployment rate will be higher than the natural unemployment rate.