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ECO202– Questions And Detailed Solutions
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ECO202– Questions And Detailed Solutions
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ECO202– Questions And Detailed SolutionsWhat is the sequence of a Business cycle Right Ans - Trough, expansion,
peak, recession
The official definition (by the Business Cycle Dating Committee) of a recession
is Right Ans - asignificant decline in economic activity spread across the
country, lasting more than a few months, visible in industral production,
employment, real income, and wholesale-retail trade.
Gross domestic product is calculated by summing up the total Right Ans -
market value of final goods and services produced in the economy during a
period of time.
Gross domestic production (GDP) ____ total production in the economy
because GDP Right Ans - understates; omits household production and the
underground economy
GDP is not a perfect measure of well-being because Right Ans - GDP is not
adjusted for pollution
Using the Rule of 70, how many years does it take an investment fund ot
double fi the fund is growing at 7 percent per year? Right Ans - 10 years
What's best measure of the standard of living of a country? Right Ans - real
GDP per capita
The quantity of goods and services that can be produced by one worker or by
one hour of work si referred ot as Right Ans - Nominal GDP
Gross domestic income (GDI) measures the economy's ________from the income
side using income received by households (wages, interest, rent, and profit).
Right Ans - Output
What does the real wage equal if the nominal wage equals $100 and the
consumer price index equals 200? Right Ans - $50
, Inflation usually___ with an expansion and ____ with a recession Right Ans -
increases; decreases
The official unemployment rate typically Right Ans - increases for a period
after a recession ends, because discouraged workers enter the labor force
looking for jobs, and firms still have excess capacity and may continue ot lay
workers of.
Which of the following causes the unemployment rate as measured by the
Bureau of Labor Statistics to understate the true extent of joblessness?
Right Ans - discouraged workers
When an unemployed person drops out of the labor force, the employment-
population ratio Right Ans - does not change
When an unemployed person drops out of the labor force, the unemployment
rate Right Ans - decreases
Frictional unemployment is the result of Right Ans - the search process of
matching workers with jobs.
People who lost their jobs as hand-drawn animators because of the popularity
of computer-generated 3D animation are examples of persons who are
suffering Right Ans - structural unemployment
Workers laid of as a result of a recession suffer Right Ans - cyclical
unemployment.
The advice ot "retrain" would be most appropriate for which of the following
types of unemployment? Right Ans - frictional unemployment
If cyclical unemployment is eliminated in the economy, then the Right Ans -
the economy is considered to be at full employment
The nominal interest rate equals the real interest rate______ the inflation rate.
Right Ans - Plus
The price index which is used to measure changes in the cost of living is the
Right Ans - consumer price index (CPI).
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