question

To be officially counted as unemployed, one must be:

answer

Actively seeking employment and currently not working.

question

The study of aggregate economic behavior is referred to as:

answer

Macroeconomics.

question

Which of the following types of unemployment is most directly related to real GDP growth?

answer

Cyclical unemployment.

question

A measure of changes in the average price of consumer goods and services is the:

answer

The Consumer Price Index.

question

Suppose that in a population of 135 million people, 120 million are in the labor force and 96 million are employed. The unemployment rate is:

answer

Answer is 20 percent. Unemployed divided by labor force, times 100 120-96=24 24/120=0.2 0.2 x 100=20 percent

question

Which of the following is not one of the three basic measures of macroeconomic performance? a.)Output (GDP) growth b.)Unemployment c.)Inflation d.)Growth in population

answer

d.)Growth in population.

question

Which of the following would be counted as unemployed? A. Amy, who is on vacation but will soon return to the same job. B. Bob, a college student looking for summer work. C. Carol, who is on welfare and not actively looking for a job. D. Dave, who is on strike.

answer

B. Bob, a college student looking for summer work.

question

Business cycles in the United States: A. Are similar in length but vary greatly in magnitude. B. Vary greatly in length, frequency, and magnitude. C. Are similar in frequency and magnitude. D. Are similar in length, frequency, and magnitude.

answer

B.Vary greatly in length, frequency, and magnitude.

question

The unemployment rate is calculated by dividing:

answer

The number of unemployed by the labor force and multiplying by 100.

question

The Classical view of the economy is characterized by: A.A laissez-faire approach. B.The inherent instability of the economy. C.The belief that demand creates it own supply. D.All of the above.

answer

A.A laissez-faire approach.

question

Starting from an equilibrium at less than full employment:

answer

A.If aggregate demand increases, ceteris paribus , the economy will generally experience inflation. B. If aggregate supply decreases, ceteris paribus , the economy will generally experience inflation. C.If both aggregate demand and aggregate supply increase, output and employment should increase, but the price level could increase or decrease. Answer is D. All of the above could be the case.

question

Which of the following causes the aggregate supply curve to shift, ceteris paribus? A.A increase in the cost of labor. B.Lower business taxes. C.An easing of environmental regulations. D.All of the above could shift aggregate supply.

answer

D.All of the above could shift aggregate supply.

question

Which of the following would cause the aggregate demand curve to decrease, ceteris paribus? A.Strong performance of foreign economies. B.A decrease in interest rates. C.An increase in income taxes. D.An increase in the value of the stock market.

answer

C.An increase in income taxes.

question

Which of the following concepts is consistent with Classical theory? A.Self-adjustment of the economy. B.Flexible prices. C.Lack of government intervention. D.All of the above.

answer

D.All of the above.

question

As the demand for loans decreases: A.More borrowing occurs. B.The cost of borrowing increases. C.Interest rates tend to fall. D.The demand for goods and services increases.

answer

C.Interest rates tend to fall.

question

The aggregate demand curve is downward sloping because,ceteris paribus,

answer

A.People are willing and able to buy more goods and services at lower average prices.

question

Keynes and classical economists disagree about whether: A.Government intervention should be used to correct business cycles. B.Unemployment occurs. C.Supply-side policies should be used to correct business cycles. D.Business cycles occur.

answer

A.Government intervention should be used to correct business cycles.

question

Which of the following explanations of the business cycle does not focus on aggregate demand shifts? A.Monetarist explanations. B.Keynesian explanations. C.Supply-side explanations. D.Eclectic explanations.

answer

C.Supply-side explanations.

question

the study of aggregate economic behavior, of the economy as a whole

answer

Macroeconomics

question

alternating periods of economic growth and contraction

answer

Business Cycle

question

the total value of goods and services produced within a nation's borders, measured in current prices

answer

Nominal GDP

question

The inflation-adjusted value of GDP; the value of output measured in constant prices

answer

Real GDP

question

A decline in total output (real GDP) for two or more consecutive quarters

answer

Recession

question

All persons over age 16 who are either working for pay or actively seeking paid employment

answer

Labor Force

question

The proportion of the labor force that is unemployed

answer

Unemployment Rate

question

The inability of labor-force participants to find jobs

answer

Unemployment

question

The lowest rate of unemployment compatible with price stability; variously estimated at between 4 and 6 percent unemployment

answer

Full Employment

question

An increase in the average level of prices of goods and services

answer

Inflation

question

A decrease in the average level of prices of goods and services

answer

Deflation

question

The price of one good in comparison with the price of other goods

answer

Relative price

question

The amount of money income received in a given time period, measured in current dollars

answer

Nominal income

question

Income in constant dollars:nominal income adjusted for inflation

answer

Real income

question

A measure (index) of changes in the average price of consumer goods and services

answer

Consumer Price Index (CPI)

question

The annual rate of increase in the average price level

answer

Inflation rate

question

The absence of significant changes in the average price level; officially defined as a rate of inflation of less than 3%

answer

Price stability

question

A recession occurs: A. Each time an economy experiences a decline in growth B. When there are two consecutive quarters of negative GDP growth C. When the economy moves from the trough to the peak of the business cycle D. Each time the unemployment rate increases

answer

B. When there are two consecutive quarters of negative GDP growth

question

Unemployment that occurs when there are not enough jobs for the number of people in the labor force is referred to as: A. Frictional unemployment B. Structural unemployment C. Cyclical unemployment D. Seasonal unemployment

answer

C. Cyclical unemployment

question

Automobile workers in Detroit are unemployed because of imported cars, but at the same time, job vacancies exist for computer programmers. In this case, the automobile workers are an example of: A. Cyclical unemployment B. Structural unemployment C. Frictional unemployment D. Seasonal unemployment

answer

B. Structural unemployment

question

Which of the following individuals is part of the labor force? A. The CEO of General Motors B. A retired school teacher C. A mom who stays home and does housework all day D. A woman serving seven years in the penitentiary for selling drugs

answer

A. The CEO of General Motors

question

The U.S. economic goal is to: A. Keep the rate of inflation under 3 percent B. Maintain zero inflation at all times C. Keep the rate of inflation at zero unless unemployment increases D. Allow inflation to fluctuate and use other economic indicators to evaluate the economy.

answer

A. Keep the rate of inflation under 3 percent

question

If the population of a country is 1,000,000 people, its labor force consists of 500,000, and 40,000 people are unemployed, the unemployment rate is: A. 50.0 percent. B. 8.0 percent. C. 7.4 percent. D. 4.0 percent.

answer

B. 8.0 percent

question

The Full Employment and Balanced Growth Act of 1978 established a goal for inflation of _______ percent. A. Zero. B. One. C. Four to six. D. Under three.

answer

D. Under three

question

To construct the Consumer Price Index, the Bureau of Labor Statistics must: A. Convert nominal incomes into real GDP and then compute the percentage increase on an annual basis. B. Interview people to determine their willingness and ability to work and their average income. C. Construct an index of the growth rate of real income to measure the growth of the economy. D. Find out what people buy and then survey how the prices of these items change.

answer

D. Find out what people buy and then survey how the prices for these items change

question

During a period of inflation: A. Specific prices are rising, and relative prices are falling. B. Both relative prices and average prices are rising. C. Relative prices are rising, but it is not certain what is happening to average prices. D. Average prices are rising, but it is not certain what is happening to relative prices

answer

D. Average prices are rising, but it is not certain what is happening to relative prices

question

"Full employment" in the U.S. economy means: A. Cyclical unemployment has been reduced to zero. B. The total unemployment rate has been reduced to zero. C. Cyclical and structural unemployment have been minimized. D. Everyone who is willing and able to work has a job.

answer

C. Cyclical and structural unemployment have been minimized

question

Which of the following as an example of cyclical unemployment? A. Qadir is employed in the summer as a lifeguard but cannot find a position in the winter. B. Qunicy left his job in Dallas to search for a new job in Idaho. C. Quinlan worked as an engineer until he was laid off because of a decrease in aggregate demand. D. Quinn has few job-related skills so she is never hired even though she continues to apply.

answer

C. Quinlan worked as an engineer until he was laid off because of a decrease in aggregate demand

question

The alternative combinations of goods and services that can be produced in a given time period with available resources and technology is referred to as: A. The business cycle. B. Real GDP. C. Nominal GDP. D. The production possibilities.

answer

D. The production possibilities

question

The study of the economy as a whole is known as: A. Microeconomics. B. Economic theory. C. Economic policy. D. Macroeconomics.

answer

D. Macroeconomics

question

Long-term trends in demand that make some goods obsolete are likely to have their greatest impact on: A. Structural unemployment. B.Cyclical unemployment. C.Frictional unemployment. D. Seasonal unemployment.

answer

A. Structural unemployment

question

The uncertainty that results from inflation causes changes in:

answer

Consumption, saving, and investment behavior

question

Inflation functions as a redistribution mechanism because people: A. Buy different goods and services for which relative prices change during inflation. B. Own different kinds of assets for which relative market values change with inflation. C. Have differing abilities to raise their incomes. D. All of the above are correct.

answer

D. All of the above are correct

question

Based on the HEADLINE article titled "Inflation and the Weimar Republic," which of the following is the best illustration of a change in relative prices due to hyperinflation?

answer

"Wholesale prices rose fortyfold . . . while retail prices rose even more rapidly."

question

A stock person who is laid off by a department store because retail sales across the country have decreased is _______ unemployed.

answer

Cyclically

question

If the population of a country is 500,000, its labor force consists of 300,000, and 15,000 people are unemployed, the labor force participation rate is:

answer

60 percent

question

If the CPI is 126 in Year X, then it costs _______ in Year X to buy the same market basket that cost _______ in the base period. A. $100; $126. B. $126; $100. C. $26; $100. D. $100; $26.

answer

B. $126; $100

question

Generally speaking, which of the following groups would tend to gain real income from the wealth effects of inflation? A. People who invested in long-term bonds when interest rates were low. B. People who have passbook savings accounts. C. People who own assets that are appreciating faster than the inflation rate. D. People who hold all of their assets in the form of cash.

answer

C. People who owns assets that are appreciating faster than the inflation rate

question

To be officially counted as unemployed, one must be: A. Fired from previous employment. B. A participant in a state unemployment benefits program. C. Available for only full-time employment. D. Actively seeking employment and currently not working.

answer

D. Actively seeking employment and currently not working.

question

When the unemployment rate falls to the full-employment level: A. There is increased concern about inflation. B. There are fewer idle resources. C. The economy is producing on the production-possibilities curve. D. All of the above.

answer

D. All of the above.

question

An extremely deep and long period of negative economic growth is most accurately called: A. Inflation. B.Deflation. C. A recession. D. A depression.

answer

D. A depression

question

Inflation acts like a tax because: A. The government tends to benefit during periods of inflation. B. It takes income and wealth from some people and gives it to others. C. Inflation pushes everyone into higher tax brackets. D. Everyone loses purchasing power during periods of inflation just like everyone must pay taxes.

answer

B. It takes income and wealth from some people and gives it to others.

question

If the price of computers falls during a period when the average price level remains constant, then there has been: A. Inflation. B. A change in relative prices. C. Deflation. D. A recession.

answer

B. A change in relative prices

question

Frictional unemployment goes up when: A. Students quit work to return to school at the end of the summer. B. A corporation transfers a worker to another city. C. A worker quits one job in order to search for another. D. There is inadequate demand for labor.

answer

C. A worker quits one job in order to search for another.

question

1. If the inflation rate is zero, changes in relative prices signal a change in: A. The economy's desirable mix of output. B.How much sellers produce of different goods. C.How much buyers purchase of different goods. D. All of the above.

answer

D. All of the above

question

During a period of inflation: A. Specific prices are rising, and relative prices are falling. B.Both relative prices and average prices are rising. C. Relative prices are rising, but it is not certain what is happening to average prices. D. Average prices are rising, but it is not certain what is happening to relative prices.

answer

D. Average prices are rising, but it is not certain what is happening to relative prices

question

After quitting one job, some people find that it takes several months to find a new job. This is an example of which type of unemployment? A. Structural unemployment. B. Frictional unemployment. C. Cyclical unemployment. D. Seasonal unemployment.

answer

B. Frictional unemployment.

question

The labor force is smaller than the total population because the labor force does not include: A. People who have jobs. B. The very young and old. C. People looking for a job. D. All of the above.

answer

B. The very young and old.

question

Real income: A. Is income adjusted for inflation. B.Is the amount of money income, measured in constant dollars. C. Reflects the purchasing power of money. D. All of the above.

answer

D. All of the above.

question

Suppose a new graduate will have an annual nominal income of $35,000 for the first year she works. If the annual inflation rate is 10 percent, what salary would she need in the second year to maintain the same real income? A. $40,000. B. $38,500. C.$35,000. D. $31,500.

answer

B. $38,500

question

Ceteris paribus, based on the aggregate supply curve, if the price level _______ the quantity of real output _______ increases.

answer

Increases; produced.

question

A HEADLINE article in the textbook is titled "Hurricane Damage to Gulf Ports Delays Deliveries, Raises Costs." Increased costs are likely to cause:

answer

An increase in the price level and a decrease in real output.

question

The aggregate demand curve shows the relationship between the volume of purchases and:

answer

price level

question

Which of the following helps define a country's economic welfare? Answer The year-to-year expansion in production capacity. The average price of goods and services. The total volume of goods and services produced. All of the above.

answer

All of the above.

question

Monetary policy involves: Answer The use of money and interest rate controls to influence the macroeconomy. Changes in government spending. Changes in taxes. Shifting the aggregate supply curve.

answer

The use of money and interest rate controls to influence the macroeconomy.

question

Macro controversies focus on the: Answer Shape of the aggregate demand curve. Shape of the aggregate supply curve. Potential to shift the aggregate demand and supply curves. All of the above.

answer

All of the above.

question

Monetary theory is referred to as: Answer A factor-market theory. The business-cycle theory. A demand-side theory. A supply-side theory.

answer

A demand-side theory.

question

Which of the following is a measure of overall economic well being for the United States? Answer The U.S. unemployment rate. U.S. population growth. The change in the U.S. money supply. All of the above.

answer

The U.S. unemployment rate.

question

An aggregate demand curve most likely shifts to the right when: Answer Consumer spending falls. Taxes fall. Government spending falls. All of the above.

answer

Taxes fall.

question

According to supply-side theories, if producers are less willing and able to supply goods at prevailing prices, then aggregate: Answer Supply shifts to the left. Supply shifts to the right. Demand shifts to the left. Demand shifts to the right.

answer

Supply shifts to the left.

question

Ceteris paribus, a leftward shift of the aggregate supply curve will cause the equilibrium price level to _______ and equilibrium real output to _______. Answer Increase; increase. Increase; decrease. Decrease; increase. Decrease; decrease.

answer

Increase; decrease.

question

Which of the following is not an example of investment spending? Answer Construction of a new factory. The purchase of stock in the stock market. Inventory expenditures. New equipment.

answer

The purchase of stock in the stock market.

question

Which of the following is a Keynesian assumption? Answer Markets automatically self-adjust. The aggregate supply curve is vertical in a recession. The aggregate demand curve is vertical in a recession. Producers are willing to sell additional output without raising current prices in a recession.

answer

Producers are willing to sell additional output without raising current prices in a recession.

question

Which of the following will definitely reduce a budget deficit and provide fiscal restraint? Answer Greater government spending and lower taxes. Greater government spending and higher taxes. Lower government spending and lower taxes. Lower government spending and higher taxes.

answer

Lower government spending and higher taxes.

question

A budget deficit occurs if government spending: Answer Equals tax revenues. Is greater than tax revenues. Is less than tax revenues. Causes tax revenues to increase.

answer

Is greater than tax revenues.

question

If the marginal propensity to save is 0.1 and government spending is raised by $5 billion, then total aggregate spending will rise by: Answer $500 million per year. $5 billion per year. $10 billion per year. $50 billion per year.

answer

$50 billion per year.

question

Fiscal policy includes: Answer An increase in interest rates. An increase in taxes. A reduction in trade barriers. An increase in the minimum wage.

answer

An increase in taxes.

question

Which of the following is the appropriate fiscal policy during a recession? Answer A budget surplus. A budget deficit. A balanced budget. No change to the budget.

answer

A budget deficit.

question

All economists agree that in the short run: Answer Equilibrium may not be possible. Macro failure is possible. Full employment will occur. Demand-side policies are the best option.

answer

Macro failure is possible.

question

If aggregate supply is upward-sloping, an increase in aggregate demand will result in: Answer An increase in prices and a decrease in output. An increase in prices and an increase in output. A decrease in prices and a decrease in output. A decrease in prices and an increase in output.

answer

An increase in prices and an increase in output.

question

Suppose the economy is operating at a point below full employment. If the government wishes to increase aggregate spending and simultaneously keep the government sector as small as possible, which of the following policies would be most effective? Answer Increase government spending and leave tax rates unchanged. Decrease tax rates and leave government spending unchanged. Increase government spending and taxes by the same amount. Increase government spending by more than the increase in taxes.

answer

Decrease tax rates and leave government spending unchanged.

question

The Classical approach dominated economic policy during: A. The 1980s. B. The Vietnam War. C. World War II. D. The period before the Great Depression.

answer

D. The period before the Great Depression

question

Keynesian theory became important when Classical economic theory did not adequately explain a prolonged period of: A. Inflation with low unemployment. B. Inflation with high unemployment. C. Deflation with low unemployment. D. Deflation with high unemployment.

answer

D. Deflation with high unemployment

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