Cyclical unemployment results from:
Answer(s): D
Choice "d" is correct. Cyclical Unemployment is caused by the business cycle. It tends to rise during a recession and fall during an expansion.Choice "a" is incorrect. This is an example of structural unemployment. Choice "b" is incorrect. This is an example of frictional unemployment. Choice "c" is incorrect. This is an example of seasonal unemployment.
A sharp rise in the price of oil (a major input), would result in:
Answer(s): A
Choice "a" is correct. Cost (Push) inflation is inflation caused by a shift left in aggregate supply. An increase in input costs, such as a sharp increase in the price of oil, will cause the aggregate supply curve to shift left and thus increase the aggregate price level causing inflation. Choice "b" is incorrect. Demand (Pull) inflation is inflation caused by a shift right in aggregate demand.Choice "c" is incorrect. An increase in the price of oil causes the aggregate supply curve to shift, not the aggregate demand curve.Choice "d" is incorrect. An increase in the price of oil will cause aggregate supply to decrease (shift left), not increase.
During a period of high inflation, which of the following groups in society would be most likely to gain?
Answer(s): B
Choice "b" is correct. During a period of high inflation, those with a fixed amount of debt will repay their debt with inflated dollars and are thus likely to gain. Choice "a" is incorrect. Those with a fixed income will see the purchasing power of their income erode and are thus likely to be hurt.Choice "c" is incorrect. Those holding a large amount of money will see the purchasing power of their money erode and are thus likely to be hurt.Choice "d" is incorrect. Cost of living adjustments take inflation into account, thus these individuals are likely to be unaffected.
Frictional unemployment refers to unemployment resulting from:
Choice "b" is correct. Frictional unemployment is the unemployment that arises from workers routinely changing jobs or from workers being temporarily laid off. It results from the time needed to match qualified job seekers with available jobs.Choice "a" is incorrect. This is structural unemployment.Choice "c" is incorrect. This is seasonal unemployment.Choice "d" is incorrect. This is cyclical unemployment.
The measure most often used to compare standards of living across countries or across time is:
Choice "d" is correct. Real GDP per capita is real GDP divided by population. Real GDP per capita is typically used to compare standards of living across countries or across time. By dividing real GDP by population, this measure adjusts for differences in the size of countries and for differences in population over time.Choice "a" is incorrect. Government spending is not a measure of the standard of living of a country. Choice "b" is incorrect. Countries with larger populations tend to have higher levels of real GDP. This however does not mean they have a higher standard of living. To adjust for differences in population, real GDP per capita is typically used to compare standards of living, not real GDP. Choice "c" is incorrect. Real consumption expenditures are only a part of real GDP and thus do not measure all economic activity. Furthermore, real consumption expenditures do not adjust for differences in population. It is therefore not used as a measure of the standard of living.
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