Fundamentals Of Economics 5th Edition By William Boyes – Test Bank

Chapter 11—Unemployment, Inflation, and Business Cycles

MULTIPLE CHOICE

1. At any time, job opportunities depend on all of the following except
a. the individual’s ability.
b. the individual’s experience.
c. the current state of the economy.
d. the individual’s level of education.
e. all of these determine job opportunities.

ANS: E PTS: 1 DIF: Easy REF: Ch 11, Section Preview
OBJ: N/A TOP: Job opportunities TYP: Factual

2. During the Great Depression in the 1930s, all of the following were characteristic of the economy except
a. about one in four workers was out of work.
b. a large number of firms had laid off workers or gone out of business.
c. consumer prices rose.
d. national output fell 25%.
e. none  all of these were characteristic of the economy during the Great Depression.

ANS: C PTS: 1 DIF: Medium
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Great Depression
TYP: Factual

3. The most widely used measure of a nation’s output is
a. CPI
b. NNP
c. GNP
d. GDP
e. NI

ANS: D PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: GDP
TYP: Factual

4. The two most important aspects of business cycles are changes in
a. business profits and the money supply.
b. unemployment and inflation.
c. monopolies and the international sector.
d. the price system and the foreign exchange market.
e. inflation and fiscal policy.

ANS: B PTS: 1 DIF: Easy REF: Ch 11, Section Preview
OBJ: N/A TOP: Business cycles TYP: Factual

5. A business cycle refers to
a. fluctuations in the level of corporate profits.
b. seasonal unemployment patterns.
c. the ups and downs of real GDP.
d. changes in the long-term growth pattern of the CPI.
e. fluctuations in the general price level.

ANS: C PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Business cycles
TYP: Factual

6. Business cycles are
a. variations in the economy that are all equal in intensity.
b. seasonal variations in the economy that occur every year.
c. fluctuations in economic output that show a declining growth pattern over time.
d. periodic but irregular variations in economic activity.
e. exactly alike in the amount of time that passes from peak to peak.

ANS: D PTS: 1 DIF: Medium
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Business cycles
TYP: Interpretive

7. In the business cycle, a trough marks the end of a(n) ____ and the beginning of a new ____.
a. contraction; expansion
b. peak; expansion
c. expansion; contraction
d. peak; contraction
e. expansion; peak

ANS: A PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Business cycles
TYP: Factual

8. Economists call a severe prolonged economic recession a
a. slump.
b. depression.
c. stagnation.
d. trend.
e. contraction.

ANS: B PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Depression
TYP: Factual

9. The part of a business cycle that follows a trough is the
a. contractionary phase of the cycle.
b. breakeven point of the cycle.
c. peak period of the cycle.
d. recessionary phase of the cycle.
e. expansionary phase of the cycle.

ANS: E PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Expansion
TYP: Factual

10. The period between a peak and a trough is known as a(n)
a. boom.
b. recovery.
c. expansion.
d. business cycle.
e. contraction.

ANS: E PTS: 1 DIF: Easy
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Recession
TYP: Factual

11. The four phases of a business cycle, in order, are
a. peak, contraction, trough, expansion.
b. recession, trough, peak, expansion.
c. expansion, trough, recession, peak.
d. trough, recession, expansion, peak.
e. peak, expansion, trough, recession.

ANS: A PTS: 1 DIF: Medium
REF: Ch 11, Section 1: Business Cycles OBJ: 11.1 TOP: Business cycles
TYP: Factual