Introduction to Macroeconomics

Frictional unemployment applies to

• Workers with skills not required for existing jobs.

• People who spend long periods of time out of work.

• Unemployment related to the ups and downs of the business cycle.

A business cycle refers to the

• Recurrent swings (up and down) in real GDP.

• Continued expansion in real GDP.

• Continued decline in real GDP.

• Period when real GDP grows at unusually high rate.

During business cycle, the opposite of a trough is

• An inflation.

• A hyperinflation.

• A trend.

• A peak.

Which of the following is a characteristic of the contraction phase of the business cycle?

• A decline in real GDP.

• Lower unemployment rates.

• Higher inflation rates.

• All of the above.

Which of the following describes the phase of a business cycle that occurs after a trough and before a peak?

• Lag.

• Contraction.

• Consolidation.

• Expansion.

Which of the following marks the beginning of a contraction in the business cycle?

• Expansion.

• Recession.

• Peak.

• Trough.

Peak and trough of the business cycle are known collectively as

• Equilibrium point.

• Real business cycle events.

• Volatility.

• Turning point.

Which would most likely occur during a period of recession?

• Production increase.

• Unemployment rate falls.

• Real gross domestic output falls.

The situation when the price of goods and services are increasing over time is called

• Inflation.

• Expansion.

• Deflation.

• A boom.

If the CPI is 123 in year 1 and 135 in year 2, what is the approximate percentage change in price between the two years?

• 8.9 %.

• 9.8 %.

• 15.7 %.

• 11.4 %.