Eco 561 Week 4 Quiz Free Essay

1015 Words Apr 1st, 2013 5 Pages
ECO 561 Week 4 Quiz
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** Important ** … ECO 561 Week 4 “FREE” Quiz w/ correct answers
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1. Business cycles occur when output

Hint: Business cycles fluctuate over time around the linear trend of gross domestic product (GDP).

A. falls below its potential B. rises above its potential C. is fixed at its potential [ D. fluctuates
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cyclical unemployment C. natural unemployment D. structural unemployment

Frictional unemployment arises when people enter the labor force or are in the process of changing jobs.

8. The natural rate of unemployment is defined as the
Hint X The natural rate of unemployment occurs when the economy is considered stable.

A. highest sustainable rate of unemployment achievable under existing conditions
[ B. unemployment rate that is consistent with the economy operating at its potential output] C. unemployment rate at which there is no cyclical unemployment D. the rate of unemployment that should exist according to policy makers
The natural rate of unemployment is defined as the unemployment rate that is consistent when the economy is operating at its potential output. This rate would occur when the economy is considered stable.

9. The Consumer Price Index (CPI) is based on
Hint X The CPI serves as an indicator for consumer inflation.

A. surveys of retail store sales B. a broad index of all items in GDP [ C. surveys of the prices of items in a market basket] D. Bureau of Labor Statistics estimates of price changes

The CPI is a price index of a market basket of items that consumers buy. A market basket is a collection of items that people often buy such as clothing, gasoline, food, and so forth.

10. Unanticipated inflation is a problem for society because it
Hint X Unanticipated

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