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1
The war in Iraq sent oil prices spiraling upwards, resulting in an increase in the overall price level. This is an example of which type of inflation?
A)Cost-pull
B)Cost-push
C)Demand-pull
D)Demand-push
2
At the deepest point of the Great Depression, most unemployment consisted of:
A)structural unemployment
B)cyclical unemployment
C)frictional unemployment
D)search unemployment
3
Orlando has just finished school and is searching for his first job. Orlando is considered to be:
A)structurally unemployed
B)frictionally unemployed
C)cyclically unemployed
D)employed
4
Unanticipated inflation:
A)arbitrarily redistributes income from creditors to debtors
B)invariably leads to unemployment
C)reduces the real incomes of all individuals
D)has the same economic consequences as anticipated inflation
5
In 2007, Maxine's nominal income increased by 3% while the price level rose by 1%. Consequently, Maxine's real income:
A)rose by approximately 4%
B)fell by approximately 1%
C)rose by approximately 2%
D)fell by approximately 2%
6
Suppose the total population is 200 million workers, 100 million of whom are in the labor force. 80 million people are employed full time and another 16 million are employed part time; 5 million people are "discouraged workers." The unemployment rate is:
A)21%
B)20%
C)11%
D)4%
7
If the natural rate of unemployment is 5.5% and the actual unemployment rate is 6.5%, then, according to Okun's law the GDP gap is:
A)1%
B)2%
C)–1%
D)–2%
8
The CPI is currently 126; a year ago it was 120. The rate of inflation over the past year was:
A)5%
B)6%
C)7%
D)8%
9
Inflation always:
A)reduces both the purchasing power of the dollar and real income
B)reduces the purchasing power of the dollar and increases real income
C)reduces the purchasing power of the dollar but may have no impact on real income
D)increases the purchasing power of the dollar and reduces real income
10
The "full employment rate of unemployment" is:
A)zero percent
B)around 4% - 5% because of frictional and structural unemployment
C)around 4% - 5% because of cyclical unemployment
D)considerably higher in 2008 than it was in the mid-1980s





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