Chapter 12 Unemployment and Inflation

| November 9, 2018

17)
In the United States today, economists estimate that the natural rate of
unemployment is between ________ and ________%.
A)
3; 5.5
B)
3; 4
C)
5; 6.5
D)
6.5; 7.5

18)
The natural rate of unemployment
A)
can vary over time and will differ across countries.
B)
can vary over time but tends to be the same across countries.
C)
tends to remain constant over time but at different levels for different
countries.
D)
tends to remain constant over time and is the same across countries.

19)
As compared to the estimates of the natural rate of unemployment for the United
States, those for Europe are
A)
the same.
B)
higher.
C)
lower.
D)
higher and more variable.

20)
Compared to the natural rate of unemployment, the actual unemployment rate is
A)
always higher.
B)
always lower.
C)
always the same.
D)
higher in periods when GDP fails to grow at its normal rate.

21)
In periods when GDP fails to grow at its normal rate, the actual unemployment
rate will be ________ than the natural rate of unemployment.
A)
lower
B)
higher
C)
the same
D)
falling faster

22)
Actual unemployment can exceed the natural rate of unemployment due to
A)
structural unemployment.
B)
cyclical unemployment.
C)
frictional unemployment.
D)
all of the above

23)
In periods when GDP grows very rapidly for a long period, the actual
unemployment rate will be ________ than the natural rate of unemployment.
A)
lower
B)
higher
C)
the same
D)
more variable

24)
Actual unemployment can fall below the natural rate of unemployment due to
A)
structural unemployment.
B)
negative cyclical unemployment.
C)
frictional unemployment.
D)
all of the above

25)
The typical relationship between inflation and unemployment is
A)
as unemployment falls, inflation falls.
B)
as unemployment falls, inflation increases.
C)
as unemployment falls, nothing happens to inflation.
D)
unemployment changes do not directly lead to changes in inflation, but
inflation changes may cause changes in unemployment.

26)
Economic expansions might lead to inflation because an expansion leads to
A)
a decrease in the unemployment rate, which increases wages.
B)
an increase in the unemployment rate, which increases wages.
C)
a decrease in the unemployment rate, which decreases wages.
D)
an increase in the unemployment rate, which decreases wages.

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