Choose the correct answers:-

1. The presence of discouraged workers:

   		A. increases the size of the labour force, but does not affect the unemployment rate
   		B. reduces the size of the labour force, but does not affect the unemployment rate
   		C. may cause the official unemployment rate to understate the amount of unemployment
   		D. May cause the official unemployment rate to overstate the amount of unemployment

0.4 points

QUESTION 2

1. Suppose that a person’s nominal income rises from $40,000 to $45,000 and the price index rises from 100 to 105. The person’s real income will:

   		A. rise by about 12 percent
   		B. fall by about 15 percent
   		C. rise by about 7 percent
   		D. fall by about 9 percent

0.4 points

QUESTION 3

1. If the unemployment rate is 9,5 percent and the natural rate of unemployment is 6.5 percent, then the:

   		A. frictional unemployment rate is 6 percent
   		B. cyclical unemployment rate is 3 percent
   		C. the combined cyclical unemployment rate and frictional unemployment rate must be 6.5 percent
   		D. the combined structural unemployment rate and seasonal unemployment rate would be 8 percent

0.4 points

QUESTION 4

1. In the Canadian economy, frictional unemployment:

   		A. results from new entrants into the labour force
   		B. is an outcome of normal economic activity such as people leaving their jobs before they have another
   		C. cannot be avoided
   		D. all of the above

0.4 points

QUESTION 5

1. Unemployment resulting from a deficiency of aggregate or total spending is called:

   		A. frictional unemployment
   		B. deficiency unemployment
   		C. cyclical unemployment
   		D. technological unemployment

0.4 points

QUESTION 6

1. Inflation is undesirable because it:

   		A. arbitrarily/randomly redistributes real income and wealth
   		B. always is cumulative; that is, creeping inflation invariably causes hyperinflation
   		C. reduces everyone’s standard of living
   		D. is always accompanied by a declining real output

0.4 points

QUESTION 7

1. Which of the following reduces the accuracy of GDP as a measure of well-being?

   		A. the underground economy
   		B. environmental damage
   		C. improvement in the quality of products
   		D. all of the above