micro 3 – Flashcards
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. Recurring upswings and downswings in an economy's real GDP over time are called:
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business cycles
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The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are
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capitol goods and durable consumers
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During a severe recession, we would expect output to fall the most in:
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consturction industry
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The phase of the business cycle in which real GDP declines is called:
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recession
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The phase of the business cycle in which real GDP is at a minimum is called:
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the trough
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The production of durable goods varies more than the production of nondurable goods because:
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durables purchases are postponable.
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A recession is defined as a period in which:
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??????
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In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
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expansion
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Most economists agree that the immediate cause of most business cycle variation is:
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an unexpected change in the level of total spending
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Refer to the given information. The labor force in Scoob is
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102
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Refer to the given information. The labor force in Scoob is
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6.9
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The United States' economy is considered to be at full employment when:
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about 4-5 percent of the labor force is unemployed.
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about 4-5 percent of the labor force is unemployed.
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afam teens
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The labor force includes:
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A. employed workers and persons who are officially unemployed.
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Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is:
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not in the labor force
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official unemployment stats
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B. understate unemployment because discouraged workers are not counted as unemployed.
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The presence of discouraged workers:
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may cause the official unemployment rate to understate the true amount of unemployment.
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The unemployment rate is the:
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C. percentage of the labor force that is unemployed.
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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:
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decline
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structural unemployment
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D. may involve a locational mismatch between unemployed workers and job openings.
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The type of unemployment associated with recessions is called:
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cyclical
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At the economy's natural rate of unemployment:
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A. the economy achieves its potential output.
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okun's law
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shows the relationship between the unemployment rate and the size of the negative GDP gap.
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For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:
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okun's law
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inflation
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C. prices on average are rising, although some particular prices may be falling.
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If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:
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deflation 3.33
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demand pull inflation
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occurs when total spending exceeds the economy's ability to provide output at the existing price level.
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Cost-push inflation:
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moves the economy inward from its production possibilities curve.
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costpush inflation caused by
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a negative supply shock.
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With a marginal propensity to save of .4, the marginal propensity to consume will be:
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1 - .4
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The MPC can be defined as that fraction of a:
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change in income that is spent.
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The consumption schedule shows:
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the amounts households plan or intend to consume at various possible levels of aggregate income.
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The consumption schedule shows:
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a direct relationship between aggregate consumption and aggregate income.
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The consumption schedule is drawn on the assumption that as income increases, consumption will:
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increase absolutely by decline as a percentage of income.
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Which of the following is correct?
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APC+APS=1.
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The size of the MPC is assumed to be:
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greater than 0 but less than 1
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If the MPC is .8 and disposable income is $200, then:
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consumption and savings cannot be determined from the given information.
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Suppose a family's consumption exceeds its disposable income. This means that its:
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APC is greater than 1
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not correct
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mps=mpc+1
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If the marginal propensity to consume is .9, then the marginal propensity to save must be:
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.1
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Refer to the diagram. At disposable income level D, consumption is equal to:
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D - CD
