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    Business cycle theories

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    Question 1

    The labor force consists of
    Answer those employed plus those on temporary layoff.
    Those employed plus those unemployed.
    The working-age population minus those who are in the military or institutionalized.
    The working-age population plus those who are in the military or institutionalized.

    Question 2

    Suppose a country has a population of 61 million, of which 37 million are in the working-age population. Of those, 11 million are not in the labor force and 23 million are employed. The labor-force participation rate is
    Answer 42.6 percent.
    60.7 percent.
    70.3 percent.
    88.5 percent.

    Question 3

    If the population is 320 million, the working-age population is 215 million, the labor force is 145 million, and the number employed is 137 million, then the unemployment rate is
    Answer 3.7 percent.
    5.5 percent.
    63.7 percent.
    94.5 percent.

    Question 4

    In 2001, the number of unemployed people increased from 5.7 million to 8.3 million, while the labor force increased from 141.5 million to 142.3 million. By how much did the unemployment rate increase?
    Answer 1.8 percentage points
    2.6 percentage points
    3.25 percentage points
    5.8 percentage points

    Question 5

    In 2004, the number of people in the working-age population increased from 221.2 million to 223.4 million, while the labor force increased from 146.5 million to 147.4 million. By how much did the labor-force participation rate change?
    Answer -0.2 percentage point
    0.0 percentage point
    0.2 percentage point
    0.4 percentage point

    Question 6

    Labor productivity is calculated as
    Answer output minus net exports.
    The average product of labor minus the marginal product of labor.
    Total factor productivity divided by the amount of capital.
    Output divided by hours worked.

    Question 7

    If output grew 3.9 percent last year and hours worked grew 1.3 percent, how much did labor productivity grow?
    Answer 0.3 percent
    2.6 percent
    3.0 percent
    5.2 percent

    Question 8

    The production function is

    Y = A ´ Ka ´ L1- a.

    If a = 0.3, and over the past year output grew 5 percent, capital grew 2 percent, and labor grew 3 percent, what was the growth rate of total factor productivity (TFP)?
    Answer 0 percent
    2.3 percent
    2.5 percent
    2.7 percent

    Question 9

    The production function is

    Y = A ´ Ka ´ L1-a.

    If a = 0.4, and over the past year output grew 4 percent, total factor productivity (TFP) grew 2.6 percent, and labor grew 1 percent, what was the growth rate of capital?
    Answer 4 percent
    3 percent
    2 percent
    1 percent

    Question 10

    In which period was total factor productivity growth the slowest?
    Answer Long boom
    Economic liftoff period
    1995-2005
    Reorganization period

    Question 11

    A period when output, income, and employment are rising is
    Answer a recession.
    An expansion.
    A peak.
    A trough.

    Question 12

    A period when an expansion ends and a recession begins is
    Answer a recession.
    an expansion.
    a peak.
    a trough.

    Question 13

    In the long boom up to 2007, there have been ____ recessions.
    Answer 0
    2
    4
    6
    4 points
    Question 14

    The longest economic expansion in U.S. history occurred in the decade of the
    Answer 1960s.
    1970s.
    1980s.
    1990s.

    Question 15

    According to monetarists, the main source of the business cycle is
    Answer changes in the amount of money in the economy.
    Waves of optimism and pessimism that cause business investment in capital goods to fluctuate.
    Changes in the prices of oil and other resources.
    Changes in productivity.

    Question 16

    According to Keynesians, the main source of the business cycle is
    Answer changes in the amount of money in the economy.
    waves of optimism and pessimism that cause business investment in capital goods to fluctuate.
    changes in the prices of oil and other resources.
    changes in productivity.

    Question 17

    According to real business cycle (RBC) theory, the main source of the business cycle is
    Answer changes in the amount of money in the economy.
    waves of optimism and pessimism that cause business investment in capital goods to fluctuate.
    changes in the prices of oil and other resources.
    changes in productivity.

    Question 18

    Compensation of workers per hour grew the fastest in the
    Answer long boom.
    economic liftoff period.
    Great Depression.
    reorganization period.

    Question 19

    If you purchase a Dell computer manufactured in Round Rock, TX for $2,000
    Answer Investment increases by $2,000.
    Consumption increases by $2,000
    Government spending increases by $2,000
    Net exports increases by $2,000

    Question 20

    If you purchase a Ford Mondeo manufactured in Germany for $20,000
    Answer Consumption and net exports increases by $20,000

    Consumption and net exports decrease by $20,000

    Consumption increases $20,000, Net Exports decreases $20,000

    Consumption decreases $20,000, Net Exports increases $20,000

    Question 21

    Which is the most volatile component of GDP?
    Answer Consumption

    Investment
    Government Spending
    Net Exports

    Question 22

    Which of the following is the best measure of living standards?
    Answer Nominal GDP
    Real GDP
    Nominal GDP per capita
    Real GDP per capita

    Question 23

    A worker has been laid off from his job due to an economic downturn and is seeking new employment. This worker is
    Answer Structurally unemployed
    Frictionally unemployed
    Cyclically unemployed
    Not in the labor force

    Question 24

    What action today is most likely to increase living standards in the future? All of these answers could be correct, but one of them has a direct effect while the rest propogate through other effects.
    Answer Higher levels of consumption
    Higher levels of government spending
    Higher levels of investment
    Lower levels of taxes

    Question 25

    The country of Examplestan has 100,000,000 citizens. 50,000,000 are adults who are employed or are actively seeking work.

    2 million have been laid off due to recession

    1 million have quit their jobs to look for work in cities with better climates

    1.5 million Have skills that do not match any jobs in their region.

    What is the natural rate of unemployment in Examplestan?

    Answer 1.0%

    2.5%
    4.5%
    5.0%
    9.0%

    © BrainMass Inc. brainmass.com May 20, 2020, 7:32 pm ad1c9bdddf
    https://brainmass.com/economics/economic-growth/business-cycle-theories-342847

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    Solution Preview

    The labor force consists of

    Those employed plus those unemployed.

    Question 2

    Suppose a country has a population of 61 million, of which 37 million are in the working-age population. Of those, 11 million are not in the labor force and 23 million are employed. The labor-force participation rate is

    70.3 percent.

    workforce = 37million -11 million = 26 million

    26/37 = 70.3%

    Question 3

    If the population is 320 million, the working-age population is 215 million, the labor force is 145 million, and the number employed is 137 million, then the unemployment rate is

    5.5 percent.

    unemployed = workforce - employed = 8 million
    unemployment rate = 8/145 = 5.5 percent.

    Question 4

    In 2001, the number of unemployed people increased from 5.7 million to 8.3 million, while the labor force increased from 141.5 million to 142.3 million. By how much did the unemployment rate increase?
    1.8 percentage points

    old unemployment = 5.7/ 141.5 = 4.0%
    new unemployment = 8.3/ 142. 3 =5.8%

    Question 5

    In 2004, the number of people in the working-age population increased from 221.2 million to 223.4 million, while the labor force increased from 146.5 million to 147.4 million. By how much did the labor-force ...

    Solution Summary

    Multiple choice questions related to RBC, Keynesian, and monetarist business cycle theories.

    $2.19

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