Chapter 13 Quiz

A decline in real GDP lasting at least two quarters or more is called a

• A. recession.

• B. business fluctuation.

• C. peak.

• D. business cycle.

A period of recovery from a recession is known as

• A. an econometric model.

• B. a trough.

• C. an expansion.

• D. a peak.

Which of the following statements best defines the first phase of a business cycle?

• A. a period during which real GDP increases for at least two quarters in a row

• B. a period during which real GDP declines for at least two quarters in a row

• C. the economy reaches the point where real GDP stops going up

• D. the economy reaches a turnaround point where real GDP stops going down

Which of the following describes demand-pull inflation?

• A. the last stage before monetary collapse

• B. the economy cannot produce quickly enough for all sectors, and shortages occur

• C. a 1 to 3 percent rise in prices over the course of a year

• D. rising costs in energy which cause higher prices of products

What is the first step in constructing a price index?

• A. select a representative selection of commonly purchased goods and services

• B. sample prices of items in stores across the country

• C. divide the cost of every market basket by the base-year market basket cost

• D. find the average price of each item in the market basket

Which of the following is the index used to measure changes in gross domestic product?

• A. implicit GDP price deflator

• B. producer price index (PPI)

• C. wage-price spiral index (CPI)

• D. consumer price

Which of the following is NOT a form of unemployment?

• A. underemployment

• B. long-term unemployment

• C. frictional unemployment

• D. structural unemployment

Which of the following is a characteristic of the long-term unemployed?

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• A. workers whose skills have become obsolete because of new technology or automated system

• B. workers who have been without a job for 27 weeks or more

• C. workers who are out of a job because of seasonal changes in the weather

• D. workers who are out of a job because of swings in the business cycle

Which of the following is a factor in preventing economic growth?

• A. recession

• B. civilian labor force

• C. GDP

• D. frictional unemployment

Which type of unemployment is natural in a free market economy, where workers have the

freedom to change occupations?

• A. structural unemployment

• B. cyclical unemployment

• C. frictional unemployment

• D. technological unemployment