question

Recurring upswings and downswings in an economy's real GDP over time are called:

answer

business cycles

question

In the United States, business cycles have occurred against a backdrop of a long-run trend of:

answer

rising real GDP.

question

Most economists agree that the immediate determinant of the volume of output and employment is the:

answer

level of total spending.

question

As it relates to economic growth, the term long-run trend refers to:

answer

the long-term expansion or contraction of business activity that occurs over 50 or 100 years.

question

In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?

answer

capital goods

question

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:

answer

capital goods and durable consumer goods.

question

During a severe recession, we would expect output to fall the most in:

answer

the construction industry.

question

The phase of the business cycle in which real GDP declines is called:

answer

a recession.

question

The phase of the business cycle in which real GDP is at a minimum is called:

answer

the trough.

question

The production of durable goods varies more than the production of nondurable goods because:

answer

durables purchases are postponable.

question

A recession is defined as a period in which:

answer

real domestic output falls.

question

In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?

answer

expansion

question

Which of the following statements is true about causes of business cycle fluctuations?

answer

There are a wide range of theories as to the underlying causes of business cycle movements.

question

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

answer

All of these are identified as causes of business cycle changes.

question

. Most economists agree that the immediate cause of most business cycle variation is:

answer

an unexpected change in the level of total spending.

question

An unexpected increase in total spending will cause an increase in GDP:

answer

. if prices are sticky.

question

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?

answer

Prices are sticky in the short run.

question

. Innovations such as the microchip and the Internet lead to business cycle variations because:

answer

significant innovations occur irregularly and unexpectedly.

question

Which of the following would most likely move the economy into a recession in the short term?

answer

The central bank printing less money than was anticipated.

question

Refer to the above information. The labor force in Scoob is:

answer

102 million

question

Refer to the above information. The unemployment rate in Scoob is:

answer

3.2 percent

question

Refer to the above information. If the natural rate of unemployment in Scoob is 5 percent, then:

answer

cyclical unemployment is about 2 percent.

question

The United States' economy is considered to be at full employment when:

answer

about 4-5 percent of the labor force is unemployed.

question

In the United States, the rate of unemployment is highest for:

answer

African-American teenagers.

question

Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kara presently is:

answer

frictionally unemployed.

question

According to the Bureau of Labor Statistics, to be officially unemployed a person must:

answer

be in the labor force.

question

The natural rate of unemployment is:

answer

that rate of unemployment occurring when the economy is at its potential output.

question

The labor force includes:

answer

employed workers and persons who are officially unemployed.

question

The unemployment rate of:

answer

teenagers is much higher than that of adults.

question

Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is:

answer

not in the labor force

question

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the:

answer

cyclical unemployment rate is 4 percent.

question

Official unemployment statistics:

answer

understate unemployment because discouraged workers are not counted as unemployed

question

The presence of discouraged workers:

answer

may cause the official unemployment rate to understate the true amount of unemployment.

question

Part-time workers are counted as:

answer

D. fully employed and therefore the official unemployment rate may understate the level of unemployment.

question

Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:

answer

6 percent.

question

The natural rate of unemployment is the:

answer

. full-employment unemployment rate.

question

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B. Kyle will be considered as:

answer

frictionally unemployed.

question

The unemployment rate is the:

answer

percentage of the labor force that is unemployed.

question

Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, all else equal, the official unemployment rate would:

answer

. decline.

question

Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon where she anticipates that a new job will be available. We can say that Susie is faced with:

answer

structural unemployment.

question

Cyclical unemployment results from:

answer

a deficiency of spending on goods and services.

question

Which of the following is correct?

answer

The unemployment rates of men and women workers are roughly the same.

question

A college graduate using the summer following graduation to search for a job would best be classified as:

answer

a part of frictional unemployment

question

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

answer

structural unemployment.

question

Structural unemployment:

answer

may involve a locational mismatch between unemployed workers and job openings.

question

Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially counted as:

answer

employed.

question

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

answer

Structural and frictional unemployment.

question

. Wait unemployment and search unemployment are both types of:

answer

frictional unemployment.

question

The type of unemployment associated with recessions is called:

answer

cyclical unemployment.

question

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result:

answer

the official unemployment rate will remain unchanged.

question

. To say money is socially defined means that:

answer

whatever performs the functions of money extremely well is considered to be money.

question

Money functions as:

answer

all of these.

question

If you are estimating your total expenses for school next semester, you are using money primarily as:

answer

a unit of account.

question

If you place a part of your summer earnings in a savings account, you are using money primarily as a:

answer

unit of account.

question

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

answer

a medium of exchange.

question

A $70 price tag on a sweater in a department store window is an example of money functioning as a:

answer

unit of account.

question

Stock market price quotations best exemplify money serving as a(n):

answer

unit of account.

question

Purchasing common stock by writing a check best exemplifies money serving as a(n):

answer

medium of exchange.

question

When economists say that money serves as a medium of exchange, they mean that it is:

answer

a means of payment.

question

When economists say that money serves as a unit of account, they mean that it is:

answer

a monetary unit for measuring and comparing the relative values of goods.

question

When economists say that money serves as a store of value, they mean that it is:

answer

a way to keep wealth in a readily spendable form for future use.

question

The paper money used in the United States is:

answer

Federal Reserve Notes.

question

In the United States, the money supply (M1) is comprised of:

answer

coins, paper currency, and checkable deposits.

question

Currency held in the vault of First National Bank is:

answer

not counted as part of the money supply.

question

Checkable deposits are classified as money because:

answer

they can be readily used in purchasing goods and paying debts.

question

Which of the following is not part of the M2 money supply?

answer

currency

question

The M2 money supply includes:

answer

individual shares in money market mutual funds.

question

A checking account entry is money because it:

answer

performs the functions of money.

question

Currency in circulation is part of:

answer

both M1 and M2.

question

. The amount of money reported as M2:

answer

is larger than the amount reported as M1.

question

Paper money (currency) in the United States is issued by the:

answer

Federal Reserve Banks.

question

A $20 bill is a:

answer

Federal Reserve Note.

question

The difference between M1 and M2 is that:

answer

the latter includes small-denominated time deposits, non-checkable savings accounts, money market deposit accounts, and money market mutual fund balances.

question

Refer to the above information. Money supply M1 for this economy is:

answer

$130.

question

Refer to the above information. Money supply M2 for this economy is:

answer

$480

question

Refer to the above information. The value of the "near-monies" that are part of M2 is:

answer

$350

question

The money supply is backed:

answer

by the government's ability to control the supply of money and therefore to keep its value relatively stable.

question

Other things equal, an excessive increase in the money supply will:

answer

decrease the purchasing power of each dollar.

question

Refer to the above table. The value of the dollar in year 2 is:

answer

$0.80.

question

Refer to the above table. The value of the dollar in year 3 is:

answer

$1.25

question

The basic policy-making body in the U.S. banking system is the:

answer

Board of Governors of the Federal Reserve.

question

The Federal Reserve System was created in:

answer

. 1913.

question

In the U.S. economy the money supply is controlled by the:

answer

Federal Reserve System.

question

As it relates to Federal Reserve activities, the acronym FOMC describes the:

answer

Federal Open Market Committee.

question

The Federal Open Market Committee (FOMC) is made up of:

answer

the seven member of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis.

question

The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:

answer

Federal Open Market Committee (FOMC).

question

An important routine function of the Federal Reserve Bank is to:

answer

provide facilities by which commercial banks and thrift institutions may collect checks.

question

Which of the following statements best describes the twelve Federal Reserve Banks?

answer

They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare.

question

The seven members of the Board of Governors of the Federal Reserve System are:

answer

appointed by the President with the confirmation of the Senate.

question

To say that the Federal Reserve Banks are quasi-public banks means that:

answer

they are privately owned, but managed in the public interest.

question

Which of the following is the basic economic policy function of the Federal Reserve Banks?

answer

controlling the supply of money

question

The Federal Reserve System:

answer

is basically an independent agency.

question

. "Subprime mortgage loans" refer to:

answer

high-interest rate loans to home buyers with above average credit risk.

question

What are "mortgage-backed securities?"

answer

Bonds backed by mortgage payments.

question

When banks bundled mortgage loans and sold the resulting mortgage-backed securities:

answer

. they reduced their direct exposure to mortgage default risk, but were still exposed through loans to investors in mortgage-backed securities.

question

Banks lost money during the mortgage default crisis because:

answer

of all of these reasons.

question

What does it mean when economists say that home buyers are "underwater" on their mortgages?

answer

Buyers owe more on their mortgage than the properties are worth.

question

The "shadow banking system" refers to:

answer

. the process by which securities exchanges provide credit for personal and business needs apart from traditional bank lending.

question

. Some economists are concerned that the financial rescue provided by the TARP will encourage financial investors and firms to take on greater risks in the future. This is an example of:

answer

moral hazard.

Macroeconomics Chap 26 and 31 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards