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| 1 | |
Real GDP was $5,000 billion in year 1 and $5,200 billion in year 2. The approximate rate of economic growth from year 1 to year 2 was: |
| | A) | 0.2% |
| | B) | 0.4% |
| | C) | 4% |
| | D) | $200 billion |
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| 2 | |
If the population is 300 million, the labor force is 150 million, and there are 141 million workers employed, the unemployment rate is: |
| | A) | 4% |
| | B) | 6% |
| | C) | 9% |
| | D) | 12% |
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| 3 | |
Kyle's employer relocated his company from Seattle to Chicago, but Kyle and his co-workers opted to stay in Seattle rather than undergoing a costly relocation. Kyle's unemployment is best characterized as: |
| | A) | frictional |
| | B) | natural |
| | C) | cyclical |
| | D) | structural |
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| 4 | |
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% |
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| 5 | |
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% |
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| 6 | |
If the annual inflation rate is 4%, the price level will double in approximately: |
| | A) | 10 years |
| | B) | 12 years |
| | C) | 17 years |
| | D) | 25 years |
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| 7 | |
Suppose your nominal income is increasing by 4% per year while the inflation rate is 2% per year. If these rates continue, your real income will double in approximately: |
| | A) | 12 years |
| | B) | 14 years |
| | C) | 25 years |
| | D) | 35 years |
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| 8 | |
A worker protected by a contractual COLA: |
| | A) | cannot be fired |
| | B) | will receive automatic wage increases based on the rate of inflation |
| | C) | must be recalled from layoff before other workers can be hired |
| | D) | is protected against anticipated inflation but not unanticipated inflation |
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| 9 | |
Borrowers will most likely benefit when there is an: |
| | A) | anticipated increase in the CPI |
| | B) | anticipated decrease in the CPI |
| | C) | unanticipated increase in the CPI |
| | D) | unanticipated decrease in the CPI |
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| 10 | |
Cyclical unemployment arises in part from a desire by workers to move from low-paying, low-productivity jobs to higher-paying, higher productivity jobs. |
| | A) | True |
| | B) | False |
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