Unit 2: Economic Indicators & Business Cycle
Macro · Unit 2 · Paper 2

Economic Indicators & Business Cycle unit test

A test on this unit alone, marked as a percentage and a letter grade — for the test your class is actually sitting, rather than for May. Answer everything, then submit once: seeing the answer to question 3 before attempting question 4 makes the final percentage meaningless.

Paper 1Paper 2Paper 3
Each paper is built from this unit’s 55 terms and is the same for everyone, so a teacher can assign “Unit 2, Paper 2” and every student sits the identical test. Multiple choice is marked objectively; the written sections you mark yourself against the model answer and rubric.
Suggested time 32 min 29 points0/17 attempted
1

Nominal vs real values

2

Gross domestic product (GDP)

3

The three labor-force boxes

4

Structural unemployment

5

Inflation rate from CPI

6

Cyclical unemployment

7

Consumer price index (CPI)

8

Who gains and loses from unexpected inflation

9

The four qualifiers in the GDP definition

10

What "I" includes in GDP

11

Costs that survive anticipated inflation

12

Labor force

Short answer 1. Define or explain: Full employment output

3 pts

Short answer 2. Define or explain: Unemployment rate

3 pts

Short answer 3. Define or explain: Unemployment as a lagging indicator

3 pts

Short answer 4. Define or explain: Frictional unemployment

3 pts

Free response

5 pts

The table below shows labor market data for the country of Petra, in millions of people. Adult (civilian, noninstitutional) population ......... 200 Employed .............................................. 120 Unemployed ............................................ 8 Not in the labor force ................................ 72

A. Calculate the size of Petra’s labor force.

B. Calculate Petra’s unemployment rate. Show your work.

C. Calculate Petra’s labor force participation rate. Show your work.

D. Assume that 2 million of the unemployed become discouraged and stop searching for work. Indicate the effect on the measured unemployment rate, and explain your reasoning.

E. A worker loses a job because a factory replaces assembly workers with robots. Identify the type of unemployment this represents.