Econ 110 Final Exam – Flashcards
Unlock all answers in this set
Unlock answersquestion
If the money supply is $3 billion and inflation is 6%, the inflation tax is: A) $3.18 billion. B) $50 billion. C) $180 million. D) $1.8 billion.
answer
C). Money Supply=3 billion Inflation rate = 6% Calculate Inflation tax Inflation Tax = Money Supply X Inflation rate 6/100= .6 X 3=1.8 X 100=180 million
question
In 1982 , the actual unemployment rate was approximately: -Actual rate (10%) -Natural Rate(6%) A) 0% B) 4% C) 6% D) 10%
answer
D)
question
In 1982, the natural unemployment rate was approximately: -Actual rate (10%) -Natural Rate(6%) A) 0% B) 4% C) 6% D) 10%
answer
C)
question
If actual output growth is 5% when potential output growth is 5%, then the unemployment rate will: A) not change. B) rise. C) fall. D) be zero.
answer
A)
question
The idea that a 1 percentage point increase in the output gap will decrease the unemployment rate by 1/2 of a percentage point is known as: A) Okun's law B) Phillip's law C) Greenspan's law D) Keynes's law
answer
A)
question
The long-run Phillips curve is: A) the same as the short-run Phillips curve B) negatively sloped, showing an inverse relationship between unemployment and inflation. C) vertical at the nonaccelerating-inflation rate of unemployment (NAIRU) D) unrelated to the NAIRU
answer
C)
question
The natural rate of unemployment is
answer
The same as the LRPC
question
If the economic growth rate is -1%, prices are falling at an annual rate of 5%, and the real rate of interest is 2%, then the nominal rate of interest will be: A) -3% B) 0% C) 3% D) 7%
answer
A) RIR = NIR-IR NIR= RIR+IR -3=2%+(-5%)
question
Full-time employed 20 million Not working but looking for work 2 million Part-time employed 10 million Discouraged workers 1 million ------------------------------------------------------- The unemployment rate is: A) 6.25% B) 6.45% C) 9.09% D) 9.37%
answer
A) Unemployed = Unemployed/Labor force LaborForce= unemployed + Employed
question
Frictional unemployment is: A) bad because people are no getting a paycheck B) good because people learn how other folks live C)good since that means people maybe seeking jobs that match their job skills D) bad because people are out of work
answer
C)
question
Deviations from the natural rate of unemployment are known as: A) frictional unemployment B) structural unemployment C) random unemployment D) cyclical unemployment
answer
D)
question
Unemployment rates are usually higher in Europe than in the United States because: A) the minimum wage is higher in the United States than in Europe B) Economic policy in the United States is much more effective than European economic policy C) There are more unskilled, uneducated workers in Europe than in the United States. D) Unemployment benefits are more generous in Europe than in the United States.
answer
D)
question
Price Index 2003 120 Price Index 2002 110 ------------------------------- Referring to the table, the inflation rate between the year 2002 and 2003 is: A) 10% B) 8.33% C) 9.09% D) 7.98%
answer
C) 120-110/110 X 100%=9.09%
question
Unit-of-account costs refer: A) to the increases in prices during inflation. B) the decrease in value of money C) the loss of reliability of money as a relative unit of measurement D) the increased costs of servicing bank accounts during inflation
answer
C)
question
Suppose that the nominal rate of interest is 7% and the inflation rate is 3% then the real rate of interest is equal to: A) 3% B) 4% C) 10% D) 7%
answer
B) RIR =NIR-IR 7%-3%=4%
question
Which of the following is a tool used by the Fed in the conduct of monetary policy? A) changes in the prime rate B) issuing new government bonds and retiring old ones C) buying and selling corporate bonds D) buying and selling federal government bonds
answer
D)
question
The classical model of the price level assumes: A) the real quantity of money is always at long-run equilibrium. B) real output is fully flexible. C) the nominal quantity of money is always at short-run equilibrium. D) the nominal quantity of money is always at long-run equilibrium.
answer
C)
question
Which of the following is likely to be the beneficiary of an unexpectedly low inflation rate? A) government B) creditors C) people who have their wages fully indexed to inflation. D) debtors
answer
B)
question
Efficiency wages are usually set by employers to: A) increase employment. B) increase employment and provide better incentives for performance. C) reduce unemployment. D) provide an incentive for better performance.
answer
D)
question
Disinflation means a decrease in: A) aggregate supply. B) prices. C) the money supply. D) the rate of inflation.
answer
D)
question
Labor markets react: A) at the same speed as other markets to changes in conditions. B) faster than other markets to changes in conditions. C) slower than other markets to changes in conditions. D) None of the above are useful economic answers.
answer
C)
question
Increases in unemployment benefits serve to: A) always effect everyone in the economy the same. B) increase the natural rate of unemployment. C) decrease the natural rate of unemployment. D) None of the above are correct.
answer
B)
