Question

12. Regarding business cycles, a boom refers to:

a) A period during which aggregate output declines.
b) The period in the business cycle from a trough up to a peak during which output, and
employment grow.
c) The period in the business cycle from a peak down to a trough during which unemployment
and inflation fall.
d) A prolonged increase in the output level.
For questions 13 and 14, consider the following labour market data for a hypothetical economy:
+16 age population at working age: 100
Number of people in the labour force: 50
Number of unemployed people: 5
Number of people informally employed: 2
13. What is the labour force participation rate?
a) 50% b) 10% c) 40% d) 60%
14. What is the rate of unemployment?
a) 50% b) 10% c) 40% d) 60%
15. Ahmet is a cashier at a supermarket. As the economy moves towards Industry 4.0, the
supermarket starts to use automated tellers. Ahmet loses his job and is now unemployed. This is
an example of:
a) cyclical unemployment b) frictional unemployment
c) structural unemployment d) non-institutional population

Answer 1

Answer: A business cycle or boom-bust cycle refers to the alternating periods of recession and recovery. Changes in production and trade in a market economy cause these alternating periods. We often use the term together with the economic bubble.

12. The period in the business cycle from a trough up to a peak during which output, and employment grow. B

13. The labour force participation rate is 10 percent

14. The rate of unemployment is 40 percent

15. Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn. Unemployment typically rises during recessions and declines during economic expansions. Moderating cyclical unemployment during recessions is a major motivation behind the study of economics and the goal of the various policy tools that governments employ to stimulate the economy. True

Frictional unemployment: the unemployment which exists in any economy due to people being in the process of moving from one job to another. False

Structural unemployment: unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand. False

Non-institutional: False

Explanation: Hope the explanation above was helpful