question

The employment population ratio measures the A. -- portion of the total population that is employed B. -- percentage of the working age population that is in the labor force C. -- percentage of the working age population that is not employed D. -- percentage of the working age population that is employed

answer

D

question

When an unemployed person drops out of the labor force, the unemployment rate A. -- Understates the true degree of joblessness in the economy B. -- overstates the true degree of joblessness in the economy C. -- is not affected by the existence of such workers D. -- becomes more reliable as all the potential erroneous data are removed

answer

A

question

When an unemployed person drops out of the labor force, it A. -- Does not affect the unemployment rate B. -- does not affect the employment population ratio C. -- does not affect the labor force participation rate D. -- affects employment population ratio

answer

B

question

How to get employment percentage

answer

100-Unemployment rate=

question

Formula used to calculate size of the labor force

answer

Number of employed/(Employment percentage/100)=

question

Formula used to get the unemployment rate

answer

Number of unemployed/Labor force X 100=

question

The labor force participation rate is the...

answer

Percentage of the working age population in the labor force

question

Formula used to get the labor force participation rate

answer

Labor force/working age population X 100=

question

People are considered unemployed...

answer

If they did not work in the previous week but were available for work and had actively looked for work at some time during the previous four weeks

question

The labor force is the ...

answer

Sum of the employed and unemployed

question

The unemployment rate is the...

answer

Percentage of the labor force that is unemployed

question

Discouraged workers are...

answer

People who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them

question

What would happen to the unemployment rate and the labor force participation rate if homemakers were included in the employment and labor force totals A -- both the unemployment rate and the labor force participation rate would increase B. -- Both the unemployment rate and the labor force participation rate would decrease C. -- the unemployment rate would increase and the labor force participation rate would decrease D. -- the unemployment rate would decrease and the labor force participation rate would increase

answer

D

question

How would it affect the unemployment rate if the BLS counted as unemployed both discouraged workers and people who work part time but would prefer to work full-time A -- the unemployment rate would remain the same because those people are already counted as unemployed B. -- The unemployment rate would increase C. -- the annual unemployment rate would have been close to 50% in the last decade D. -- the unemployment rate would decrease

answer

B

question

The natural rate of unemployment is a -- the sum of structural unemployment and frictional unemployment B. -- the sum of cyclical unemployment and frictional unemployment C. -- the sum of structural unemployment and cyclical employment

answer

A

question

When the economy is at full employment, unemployment is equal to A -- zero B. -- the natural rate of unemployment C. -- normal rate of unemployment

answer

B

question

During a recession, a person would prefer to work in an industry that produces A. -- an inferior good because the demand for inferior goods should increase with decreases in income during a recession B. -- a normal good because the demand for normal goods should increase with decreases in income during a recession C. -- an inferior good because the demand for inferior goods should decrease with increases in income during a recession

answer

A

question

Structural unemployment is...

answer

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs

question

Frictional unemployment is...

answer

short-term unemployment that arises from the process of matching workers with jobs

question

Cyclical Unemployment is...

answer

workers who lose their jobs because of a recession

question

Efficiency wage is...

answer

an above market wage that a firm pays to motivate workers to be more productive

question

Consumer price index is...

answer

An average of the prices of the goods and services purchased by the typical urban family of four

question

Inflation rate is...

answer

the percentage increase in the price level from one year to the next

question

formula to find CPI

answer

Expenditures(year x)/expenditures(base year) X 100

question

Formula to find percentage change in price index

answer

Price Index (year x) - price index (year y)/Price index (year y) X 100

question

Which of the following makes changes in the CPI overstate the true inflation rate? A. -- increase in quality bias B. -- substitution bias C. -- new product bias D. -- all of the above

answer

D

question

The difference between a nominal variable and a real variable is that A.-- real variables are divided by the price index and multiply by 100 to obtain nominal variables B. -- nominal variables are calculated in current year prices and the real variables are measured in dollars of the base year for that price index to correct the effects of inflation C. -- nominal variables are economic variables that are adjusted for inflation, whereas real variables are valued in today's dollars

answer

B

question

Formula to find the real average hourly wage

answer

Nominal average hourly wage/CPI X 100=

question

If inflation is expected to increase, A -- the nominal interest rate will decrease B. -- the real interest rate will decrease C. -- the nominal interest rate will remain the same D. -- the nominal interest rate will increase

answer

D

question

If income rises more slowly than the rate of inflation, purchasing power will rise. True or false?

answer

False

question

Formula to get real interest rate

answer

Real interest rate = nominal interest rate - inflation rate

question

What is the rule of 70? The rule of 70 A. -- is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double B. -- is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to increase by 200% C. -- is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to quadruple

answer

A

question

The two key factors that cause labor productivity to increase over time are A. -- the quantity of labor per hour worked and the level of technology B. -- the decline in unionization and slacking of labor laws C. -- the quantity of capital per hour worked on the level of technology

answer

C

question

Which of the following does not lead to long-run economic growth? A -- improved labor productivity B. -- increase in average wages C. -- increase in the capital stock D. -- technological change

answer

B

question

Potential GDP A. -- measures the maximum that a firm is capable of producing B. -- increases over time as the labor force grows C. -- increases over time as technological change occurs D. -- all of the above E. -- B. and C. only

answer

E

question

Which of the following is the best measure of the standard of living of the typical person in the country? A -- the inflation rate B. -- real GDP per person C. -- the unemployment rate D. -- real GDP

answer

B

question

Potential GDP is A -- always greater than actual real GDP B. -- sometimes greater, sometimes less, and sometimes equal to actual real GDP C. -- The level of GDP that would be produced when firms are operating at maximum capacity D. -- always less than actual real GDP

answer

B

question

The high point of economic activity is called a...

answer

peak

question

The low point of economic activity is called a...

answer

trough

question

The period between the high point of economic activity and the following low point is called a...

answer

recession

question

The period between the low point of economic activity and the following High Point is called an...

answer

expansion

question

What is the general relationship between the business cycle and unemployment and inflation? A -- during a recession, unemployment and inflation increase B. -- during an expansion, unemployment and inflation increase C. -- during a recession, unemployment and inflation decrease D. -- during an expansion, unemployment falls and inflation increases

answer

D

question

The agency that identifies a recession is the A. -- BEA Bureau of economic analysis B. -- BLS Bureau of labor statistics C. -- NBER national Bureau of economic research

answer

C

question

Which of the following contributes to shorter recessions, longer expansions, and less severe fluctuations in real GDP? A -- fiscal policy B. -- Social Security benefits C. -- a service-based economy D. -- all of the above

answer

D

question

Marginal propensity to consume (MPC) is...

answer

The slope of the consumption function: the amount by which consumption spending changes when disposable income changes

question

Marginal propensity to save (MPS) is...

answer

The change in saving divided by the change in disposable income

question

Formula to find MPC

answer

change in consumption/change in disposable income = MPC

question

if the government raises the amount of taxes, holding everything else constant, then A. -- disposable income will increase B. -- government purchases will have to decrease C. -- disposable income will remain unchanged D. -- disposable income will decrease

answer

D

question

The relationship between the MPC and the MPS can best be described as A. -- MPC = 1 - MPS B. -- MPC + MPS = 1 C. -- MPS = 1 - MPC D. -- all of the above

answer

D

question

Which of the following equalities is correct? A -- disposable income is equal to national income plus government transfer payments plus taxes B. -- government transfer payments minus taxes equals net taxes C. -- disposable income is equal to national income minus net taxes D. -- disposable income equals national income

answer

C

question

Would a larger multiplier lead to more severe recessions or less severe recessions? A. -- a larger multiplier means that small changes in spending lead to large changes in GDP, and thus recessions would be more severe B. -- a larger multiplier means that small changes in spending lead to large changes in GDP, and thus recessions would be less severe C. --a larger multiplier means that large changes in spending lead to small changes in GDP, and thus recessions would be more severe

answer

A

question

The multiplier represents the A -- total amount of additional increases in consumption spending induced by an initial change in aggregate expenditure B. -- total amount of additional increases in investment expenditures from an increase in consumption C. -- amount disposable income changes by when there is an increasing consumption

answer

A

question

Indicate which of the following is correct about the multiplier effect. A -- a decrease in autonomous spending decreases real GDP by a multiple of the change B. -- the multiplier ignores the effect on real GDP of imports, inflation, and interest rates C. -- the larger the MPC, the more additional consumption that occurs D. -- all of the above

answer

D

question

When the value of the multiplier increases, all else equal, a change in expenditure will raise aggregate expenditure by a_______________ amount.

answer

larger

question

The value of the multiplier is larger when A. -- the value of the MPC is larger B. -- the value of the MPC is smaller C. -- the value of the MPC is equal to the value of autonomous expenditure D. -- the value of the MPC equal zero

answer

A

question

The aggregate demand curve shows the relationship between A. -- the price level and the quantity of real GDP demand by households, burns, and the government B. -- the price level and the quantity of real GDP demanded by the private sector: households and firms C. -- the price level and the quantity of real GDP demanded by consumers

answer

A

question

The short run aggregate supply curve shows the relationship in the short run between A. -- the price level and the quantity of real GDP supplied by firms B. -- a price level and the quantity of real GDP demanded by firms C. -- the price level and the quantity of real GDP demanded by households, firms and the government

answer

A

question

An increase in government purchases will cause the aggregate demand curve to shift...

answer

Right

question

An increase in state income taxes will cause the aggregate demand curve to shift...

answer

Left

question

An increase in interest rates will cause the aggregate demand curve to shift...

answer

Left

question

A faster income growth in other countries will cause the US aggregate demand curve to shift

answer

Right

question

A change in expectations of households will cause the aggregate demand curve to shift...

answer

Right

question

Aggregate demand (AD) is comprised of expenditure components that include: a -- government spending, taxes, exports, and labor B. -- government spending, consumption, investment, and net exports C. -- consumption, government spending, exports, and labor

answer

B

question

Which of the following will cause a decrease in aggregate demand? A. -- a decrease in interest rates through monetary policy B. -- a depreciation in the US dollar relative to foreign currencies C. -- a decrease in government spending D. -- a decrease in taxes E. -- all of the above

answer

C

question

Which of the following factors does not cause aggregate demand curve to shift a -- a change in government monetary or fiscal policies B. -- a change in foreign variables C. -- a change in the price level

answer

C

question

How can government policies shift aggregate demand curve to the right? A -- by increasing personal income taxes B. -- by increasing government purchases C. -- by increasing business taxes

answer

B

question

The long-run aggregate supply curve is vertical because in the long run, A. -- changes in the size of the labor force, capital stock, and technology affect the price level but not the potential GDP B. -- the price level does not change, a potential GDP changes its value C. -- changes in the price level do not affect potential GDP, as potential GDP depends on the size of the labor force, Capital stock, and technology

answer

C

question

An increase in the working population will cause the long-run aggregate supply curve to shift to the...

answer

right

question

If the price level increases the LRAS curve will...

answer

Not change

question

If the labor force increases the LRAS will shift to the...

answer

Right

question

If there is an increase in the quantity of capital goods the LRAS will shift to the...

answer

Right

question

If Technological change occurs The LRAS will shift to the...

answer

Right

question

How does a decrease in the price level affect the quantity of real GDP supplied in the long run? A -- in the long run, a decrease in the price level increases inflation, which will decrease real GDP B. -- in the long run, a decrease in the price level decreases inflation, which will decrease real GDP C. -- changes in the price level do not affect the level of GDP in the long run D. -- in the long run, a decrease in the price level will increase real GDP

answer

C

question

The position of the long-run aggregate supply curve is determined by a -- the price level, the available technology, and sticky prices B. -- the price level and aggregate demand C. -- consumption, investment, government purchases, and net exports D. -- the number of workers, the amount of capital, and the available technology

answer

D

question

An increase in the labor force or capital stock shifts the short run aggregate supply to the...

answer

Right

question

An increase in the expected price of an Important Natural resource Shifts the short run aggregate supply to the...

answer

Left

question

An improvement in technology Shifts the short run aggregate supply to the...

answer

Right

question

An increase in expected future price level causes the short run aggregate supply to shift to the...

answer

Left

question

In the long run, changes in the price level do not affect the level of real GDP. True or false?

answer

True

question

Which of the following factors will cause the long-run aggregate supply curve to shift to the right? A -- the accumulation of more machinery and equipment B. -- technological change C. -- an increase in the number of workers in the economy D. -- all of the above

answer

D

question

Which of the following would cause a decrease in real GDP and, if large enough, a recession? A -- An increase in interest rates that causes aggregate demand to fall B. -- An increase in government purchases that causes aggregate demand to rise C. -- a reduction in consumer confidence and causes short run aggregate supply the fall

answer

A

question

Which of the following scenarios would lead to a reduction in real GDP and may even cause a recession? A -- a recession in a foreign trading partners country causing aggregate supply to fall B. -- a reduction in taxes causing aggregate demand to fall C. -- a reduction in the growth rate in foreign countries compared to United States because aggregate demand to fall

answer

C

question

Which of the following would cause an increase in the price level (example, a short run and intimidation) A -- An increase in the exchange rate of the dollar in relation to foreign currencies that decreases short run aggregate supply B. -- an increase in government purchases that decreases sure on aggregate supply C. -- an increase in government purchases that increases aggregate demand

answer

C

question

Which of the following scenarios would lead to an increase in the price level? A -- an increase in payroll taxes leading to an increase in aggregate demand B. -- an increase in business optimism regarding future profitability that increases every demand C. -- an increase in oil prices that leads to a reduction in aggregate demand

answer

B

question

If the economy adjusts Through the automatic mechanism, then a decline in aggregate demand causes A -- a recession in the short run and a decline in the price level in the long run B. -- an expansion in the short run and an increase in the price level in the long run C. -- an expansion in the short run and a decline in the price level in the long run

answer

A

question

If the economy is initially at full employment equilibrium, then an increase in aggregate demand causes________ in real GDP in the short run and________ in the price level in the long run. A -- a decrease, an increase B. -- an increase, a decrease C. -- an increase, an increase

answer

C

question

Which of the following is usually the cause of stagflation? A -- a reduction in government purchases B. -- an increase in investment as a result of a reduction in interest rates C. -- a supply shock as a result of an unexpected increase in the price of a natural resource

answer

C

question

In the dynamic aggregate demand and aggregate supply model, if aggregate demand increases faster than potential real GDP, there will be...

answer

Inflation

question

In the dynamic aggregate demand and aggregate supply model, If aggregate demand increases slower than potential real GDP, there will be...

answer

Recession

question

To have growth without inflation, which of the following must be true? A -- there must be no change in SRAS B. -- AD must decrease to reduce inflationary pressure C. -- there must be no change in AD D. -- AD, SRAS, and LRAS must increase by the same amount

answer

D

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