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Label The Graph in Figure 1 With Respect To The Three Phases of The Business Cycle and The Cycle Turning Points

This document contains 22 multiple choice and short answer questions about macroeconomic concepts like the business cycle, GDP, unemployment, inflation, and the misery index. It includes charts and tables with economic data from various years to aid in answering the questions. The questions assess understanding of key macroeconomic indicators and calculations involving these indicators.

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Brown Abbey
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107 views5 pages

Label The Graph in Figure 1 With Respect To The Three Phases of The Business Cycle and The Cycle Turning Points

This document contains 22 multiple choice and short answer questions about macroeconomic concepts like the business cycle, GDP, unemployment, inflation, and the misery index. It includes charts and tables with economic data from various years to aid in answering the questions. The questions assess understanding of key macroeconomic indicators and calculations involving these indicators.

Uploaded by

Brown Abbey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Chapter 10

1. Label the graph in Figure 1 with respect to the three phases of the business cycle and the cycle
turning points.

Figure 1

2. Label the graph in Figure 2 with respect to the three phases of the business cycle and the
cycle turning points.

Figure 2

243
Figure 3

3. How much was the GDP gap in (a) 2020? (b) 2034? and (c) 2040?

4. If 4 million people are collecting unemployment insurance benefits, 12 million people are
officially unemployed, 113 million people are employed, and there are 2 million
discouraged workers, (a) How many people are in the labor force? (b) What is the
unemployment rate?

5. If 6 million people are collecting unemployment insurance benefits, 10 million people are
officially unemployed, 140 million people are employed, and there are 3 million
discouraged workers, (a) How many people are in the labor force? (b) What is the
unemployment rate?

6. If the official unemployment rate is 8%, how much is the cyclical rate of unemployment?

7. If the cyclical rate of unemployment is 4%, what is the official rate of unemployment?

8. If the CPI rose is 234.1, by what percentage did the price level rise since the base year?
6. If the CPI is 302.7, by what percentage did the price level rise since the base year?

10. If the CPI rose from 135.9 to 162.4, by what percentage did it rise?

244
11. If the CPI rose from 160 to 200, by what percentage did it rise?

12. How much would the nominal interest rate be if the real rate of interest were 7 percent
and the expected rate of inflation were 4 percent?

13. How much would the real rate of interest be if the nominal rate of interest were 15
percent and the expected rate of inflation were 9 percent?

14. Use Table 1 to answer these questions:


(a) How much did it cost this family to live in July 1994?
(b) How much did it cost this family to live in July 2004?
(c) If the base year were centered in July 1994, how much was the CPI in July 2004?
(d) By what percentage did the cost of living rise over this ten year period?

Table 1
A. July 1994
Item Quantity Price Quantity  Price
Car lease 0.4 $300.00
Visit to doctor 1.0 50.00
Pound of Steak 8.0 2.50
Pair of jeans 0.7 30.00
Mortgage payment 1.0 850.00
Video rental 28.0 2.00
Total

B. July 2004
Item Quantity Price Quantity  Price
Car lease 0.4 $400.00
Visit to doctor 1.4 70.00
Pound of Steak 8.0 3.00
Pair of jeans 0.7 40.00
Mortgage payment 1.0 1000.00
Video rental 28.0 2.00
Total

15. Use Table 2 to answer these questions:


(a) How much did it cost this family to live in December 1999?
(b )How much did it cost this family to live in December 2009?

245
(c) If the base year were centered in December 1999, how much was the CPI in
December 2009?
(d) By what percentage did the cost of living rise over this ten year period?

Table 2
A. December 1999
Item Quantity Price Quantity  Price
Car lease 0.5 $250
Visit to doctor 1.2 60
Motel rental 3.6 40
Health club fee 1.0 25
Pair of shoes 0.4 60
Quart of milk 40.0 0.80
Mortgage payment 1.0 750
Total

B. December 2009
Item Quantity Price Quantity  Price
Car lease 0.5 $380
Visit to doctor 1.2 85
Motel rental 3.6 55
Health club fee 1.0 45
Pair of shoes 0.4 70
Quart of milk 40.0 1.00
Mortgage payment 1.0 1000
Total

16. Use Table 3 to answer these questions:


(a) In what year did disinflation begin?
(b) In what year did deflation begin?

Table 3
Year CPI
1900 100.0
1901 105.0
1902 110.8
1903 117.4
1904 127.9

246
1905 134.8
1906 138.0
1907 140.1
1908 140.4
1909 140.4
1910 139.6
1911 135.7

17. Use Table 4 to answer these questions:


(a) In what year did disinflation begin?
(b) In what year did deflation begin?
Table 4
Year CPI
2009 150.0
2010 158.2
2011 171.2
2012 189.5
2013 210.6
2014 222.9
2015 230.3
2016 234.9
2017 236.1
2018 237.0
2019 237.0
2020 235.7
2021 233.1

18. If the unemployment rate were 7.3%, the rate of inflation were 5.9%, and the real rate of
interest were 4.5%, how much is the misery index?

19. If the real rate of interest is 6.0%, the unemployment rate is 7.9%, and the rate of
inflation is 4.1%, how much is the misery index?

20. Between 1925 and 2000, in which year did the Consumer Price Index (a) fall the most?
(b) rise the most.

21. How many years since 1925 have we had double-digit (10 percent or more) inflation?

22. How many years since 1925 have we had deflation?

247

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