Multiple Choice Questions:

1. A federal program aimed at retraining the unemployed workers of the declining auto and steel industries is designed to reduce which type of unemployment?

a. Seasonal

b. Cyclical

c. Structural

d. Frictional

2. When unemployment rises above the natural rate, it reflects the existence of ___________________ unemployment.

a. Frictional

b. Structural

c. Seasonal

d. Cyclical

3. When an economy is operating at full employment,

a. The unemployment rate will equal zero.

b. Frictional unemployment will equal zero.

c. Cyclical unemployment will equal zero.

d. Structural unemployment will equal zero.

e. Both b and d are correct.

4. The natural rate of unemployment would increase when which of the following increases?

a. Frictional unemployment

b. Structural unemployment

c. Cyclical unemployment

d. Any of the above

e. Either frictional or structural unemployment

5. If a nation’s labor force receives a significant influx of young workers,

a. The natural rate of unemployment is likely to increase.

b. The natural rate of unemployment is likely to decrease.

c. The natural rate of unemployment is unlikely to change.

d. Frictional unemployment will likely decrease to zero.

6. Which of the following is false?

a. At the natural rate of unemployment, the economy is considered to be at full employment.

b. At full employment, the economy is producing at its potential output.

c. If unemployment is greater than its natural rate, the economy is producing at greater than its potential output.

d. If we are at less than full employment, some cyclical unemployment exists.

7. When would consumers and producers experience increased difficulty in coordinating their plans and decisions?

a. In a period of inflation

b. In a period of deflation

c. In a period of either inflation or deflation

d. None of the above

8. Inflation can harm

a. Retirees on fixed pensions.

b. Borrowers who have long-term fixed interest rate loans.

c. Wage earners whose incomes grow slower than inflation.

d. Either a or c.

e. All of the above.