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Multiple Choice Quiz
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Economic growth is a goal most societies pursue because
A)an increase in real output per capita can result in higher real wages and incomes.
B)it means that all resources are being fully utilized.
C)it means that inflation rates will be low.
D)it ensures that everyone who wants a job will have one.
The Rule of 70 states that if GDP grows at 2 percent a year, real GDP will double in about
A)18 years
B)23 years
C)35 years
D)40 years
Production and employment in which of the following industries would be least affected by a recession?
A)non-durable consumer goods
B)durable consumer goods
C)capital goods
D)iron and steel
A worker who loses a job at a petroleum refinery because consumers and business firms switch from the use of oil to the burning of coal is an example of
A)frictional unemployment
B)structural unemployment
C)cyclical unemployment
D)a discouraged worker
Insufficient total spending in the economy results in
A)frictional unemployment
B)structural unemployment
C)cyclical unemployment
D)discouraged workers
The unemployment rate in an economy is 8%. The total population of the economy is 250 million, and the size of the labour force is 150 million. The number of employed workers in this economy is
A)12 million
B)20 million
C)138 million
D)140 million
If the natural rate of unemployment is 6 percent and unemployment is at 8 percent, Okun's law states that GDP will be decreased by what percent of its potential output?
A)1 percent
B)2 percent
C)4 percent
D)6 percent
Who would be hurt by unanticipated inflation?
A)those living on incomes with cost-of-living adjustments
B)those who find prices rising less rapidly than their nominal incomes
C)those who became debtors when prices were lower
D)those who lent money at a fixed interest rate
If the consumer price index was 110 in one year and 117 in the next year, then the rate of inflation from one year to the next was
Which of the following describes demand-pull inflation?
A)an increase in employment and incomes when the economy is below potential GDP.
B)an increase in spending when the economy is at or near potential GDP.
C)a decrease in resource prices
D)an increase in unemployment
When people look at real GDP and per capita GDP growth they must remember that the numbers do not fully account for
A)Improvements in the quality of products and services.
B)Increases in the amount of leisure time for many Canadians in the last 50 years.
C)Effects on the environment and our physical surroundings that result from economic growth.
D)All of the above.
Which is one of the four phases of a business cycle?
D)seasonal variation
If the economy can supply no more resources to production, an increase in aggregate spending will cause
A)output and employment to increase
B)output and prices to increase
C)nominal income and prices to increase
D)employment and nominal income to increase
If a person's nominal income increases by 8% while the price level increases by 10%, the person's real income
A)decreases by 2%
B)increases by 18%
C)decreases by 18%
D)increases by 2%
If an economy has experienced an inflation rate of over 3000% per year, this economic condition would best be described as
A)a recession
B)a cost-of-living adjustment
C)cost-push inflation

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