Cyclical unemployment refers to unemployment resulting from:
a. a mismatch of skills.
b. being in the wrong geographical location.
c. the time and monetary cost of finding the best job.
d. a recession.
QUESTION 2The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
a. 1.
b. 0.
c. the interest rate.
d. the marginal propensity to invest (MPI).
QUESTION 3According to the classical view,
a. velocity is constant, which means changes in price will cause changes in price or quantity.
b. quantity is constant, which means changes in the money supply could cause either changes in velocity or changes in prices.
c. velocity and price are constant so that changes in the money supply causes changes in quantity.
d. velocity and quantity are constant so that changes in the money supply cause changes in prices.
e. velocity is constant while quantity is variable so that changes in the money supply change both price and quantity.
QUESTION 4In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:
a. cyclical unemployment.
b. structural unemployment.
c. permanent unemployment.
d. frictional unemployment.
e. underemployment.
QUESTION 5If your income increases from 30,000 to 40,000 and your savings increases from 2,000 to 4,000 . your marginal propensity to save (MPS) is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.8.
e. 1.0.
QUESTION 6In the quantity theory of money:
a. the price level is a function of the supply of money.
b. the supply of money is a function of the price level.
c. the money supply and the price level are inversely related.
d. the money supply is controlled by the government.
QUESTION 7The increase in unemployment associated with a recession is called:
a. structural unemployment.
b. frictional unemployment.
c. discouraged unemployment.
d. cyclical unemployment.
e. temporary unemployment.
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