BEC Economics and Business Cycles 1

Question 1

Which type of unemployment occurs when workers are between jobs or searching for better positions?

Accepted Answer

Frictional unemployment

Answer

Structural unemployment

Answer

Cyclical unemployment

Answer

Seasonal unemployment

Question 2

What does GDP measure?

Accepted Answer

Total market value of all final goods and services produced within a country in a given period

Answer

Total exports minus imports of a country

Answer

Total government spending plus private investment

Answer

Total household income within a nation

Question 3

During a recessionary gap, actual GDP is:

Accepted Answer

Below potential GDP

Answer

Equal to potential GDP

Answer

Above potential GDP

Answer

Negative in absolute terms

Question 4

Which of the following is an example of an automatic stabilizer?

Accepted Answer

Unemployment insurance benefits

Answer

A new infrastructure spending bill

Answer

A tax rate reduction passed by Congress

Answer

A Federal Reserve interest rate cut

Question 5

The Consumer Price Index (CPI) primarily measures:

Accepted Answer

Changes in the price level of a basket of consumer goods and services

Answer

Changes in wholesale prices paid by businesses

Answer

Changes in stock market valuations

Answer

Changes in government spending levels

Question 6

When the Federal Reserve increases the federal funds rate, the most likely immediate effect on the economy is:

Accepted Answer

Decreased borrowing and reduced spending

Answer

Increased consumer spending and investment

Answer

Higher inflation in the short run

Answer

Increased bank lending