question

Keynesian economists believe:

answer

government can implement policy proposals that can positively impact the economy.

question

"Classical economist" is often used interchangeably with which term?

answer

Laissez-faire economist

question

Keynesian economists focus their analysis on:

answer

the short run.

question

The Classical economists argued that:

answer

if unemployment occurs, it will cure itself because wages and prices will fall.

question

Which of the following statements best depicts laypeople's explanation of the Great Depression at that time?

answer

An oversupply of goods had glutted the market.

question

Which of the following was not a solution to the Great Depression favored by Classical economists?

answer

Hire unemployed workers for public works programs

question

Classical economists are generally associated with:

answer

laissez faire.

question

Keynesians:

answer

generally favor activist government policies.

question

The two frameworks conventional economists generally use to analyze macroeconomic issues are:

answer

the short-run and the long-run frameworks.

question

Classical economists believe that in the short-run, in the real world:

answer

prices and wages weren't flexible enough to bring about equilibrium.

question

The secular trend growth rate in the United States is approximately:

answer

2.5 to 3.5 percent per year.

question

Business cycles are generally considered in:

answer

the short-run framework.

question

What turns a business cycle into a structural stagnation?

answer

A slow expansion that keeps the economy below trend.

question

Policies that affect work, capital accumulation, and technological change are primarily relevant to:

answer

the long-run growth framework.

question

Which of the following countries, or groups of countries, has grown at the fastest rate in the last twenty years?

answer

China.

question

Fluctuations around the long-term growth rate are called:

answer

business cycles.

question

The business cycle is:

answer

the term used to describe fluctuations in output around its long-term trend.

question

In September 2010, the NBER's Business Cycle Dating Committee decided that the recession that began in December of 2007 had ended in July of 2009. The NBER does not use a popular definition of recession—two quarters of falling GDP—but looks at a variety of monthly statistics to date business cycles. Read the paragraph shown. In July 2009 a recession ended. In business cycle terminology, what does July 2009 mark?

answer

The trough of the cycle

question

In September 2010, the NBER's Business Cycle Dating Committee decided that the recession that began in December of 2007 had ended in July of 2009. The NBER does not use a popular definition of recession—two quarters of falling GDP—but looks at a variety of monthly statistics to date business cycles. Read the paragraph shown. When the NBER says that a recession is over, what are they saying?

answer

Economic activity is no longer declining

question

Which of the following statements best characterizes the Keynesian view of business cycles?

answer

Expansions and contractions of the business cycle are symptoms of underlying problems and should be dealt with through activist government policies.

question

In order of their occurrence, the phases of the business cycle are:

answer

peak, downturn, trough, upturn.

question

The business cycle consists of several stages or phases. Which is the accurate sequence?

answer

Recession, trough, expansion, peak

question

A recession is often considered to be:

answer

an economic downturn that persists for more than two consecutive quarters of the year.

question

The longest business-cycle expansion in U.S. history occurred during the ten years from:

answer

1991 until 2001.

question

Most economists agree that during a depression:

answer

economic policy should be used to improve economic conditions.

question

Changes in the institutional structure of the U.S. economy following the Great Depression:

answer

reduced the length of business cycles.

question

Prior to the Industrial Revolution, unemployment was not generally considered a social problem because:

answer

a reduction in spending would cause wages and income to fall rather than unemployment to rise.

question

Unemployment caused by people entering the job market and people quitting a job just long enough to look for and find another one is called:

answer

frictional unemployment.

question

In contrast to a recession in industrialized nations, a recession in pre-industrial nations:

answer

is less visible in its effects on the unemployment rate but it has a larger effect on wage rates.

question

In the early 2000s, the United States went through what many economists described as a jobless recovery, which is a situation in which real output grows but the unemployment rate does not fall. Normally, an increase in real output affects:

answer

cyclical unemployment more than structural unemployment.

question

Another term for what the text calls the "target rate of unemployment" is:

answer

the natural rate of unemployment.

question

Frictional unemployment is a result of:

answer

people quitting a job just long enough to look for and find another one.

question

Frictional unemployment:

answer

comes from people constantly entering the labor force and changing jobs.

question

Workers at a car-manufacturing plant are let go because automated machinery has been installed that requires fewer employees to operate. What type of unemployment describes the workers' situation?

answer

Structural unemployment

question

The target rate of unemployment is defined as the:

answer

lowest sustainable rate of unemployment achievable under existing conditions.

question

Which of the following institutional changes would tend to reduce the target rate of unemployment?

answer

An increased number of people reaching the age at which they are more employable

question

If output is below potential output, it is most likely that the economy is:

answer

near a trough.

question

Potential output in the long run:

answer

rises at a trend rate of 2.5 to 3.5 percent per year.

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