Question 1

Which one of the following is an example of a frictionally unemployed individual?

Accepted Answer

A)  Martin, who lacks the skills necessary to be employed as a machinist 
B)  Lee, who lost his job as an art director because of a recession 
C)  Jan, who is a high school dropout and is working as a bus driver 
D)  Helena, who has just graduated from law school and is searching for a job 
A)  Martin, who lacks the skills necessary to be employed as a machinist 
B)  Lee, who lost his job as an art director because of a recession 
C)  Jan, who is a high school dropout and is working as a bus driver 
D)  Helena, who has just graduated from law school and is searching for a job

Question 2

Use the following to answer questions.
Exhibit: Real GDP Over Time  
-(Exhibit: Real GDP Over Time) The trough of the business cycle occurs:

Accepted Answer

A)  between t1 and t2. 
B)  at t1. 
C)  between t2 and t3. 
D)  at t2. 
A)  between t1 and t2. 
B)  at t1. 
C)  between t2 and t3. 
D)  at t2.

Question 3

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions .
Exhibit: Nominal and Real Income
  
-(Exhibit: Nominal and Real Income) Calculate the real income for an assistant professor in 1967.

Accepted Answer

A)  $2,381 
B)  $9,524 
C)  $10,000 
D)  $42,000 
A)  $2,381 
B)  $9,524 
C)  $10,000 
D)  $42,000

Question 5

The increased availability of job-related information online has lowered frictional unemployment.

Accepted Answer

A) True 
 B)False

Question 6

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

Accepted Answer

A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  The change in the unemployment rate will depend on the number of people aged 16 and above. 
A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  The change in the unemployment rate will depend on the number of people aged 16 and above.

Question 7

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

Accepted Answer

A)  1.00 
B)  1.15 
C)  1.30 
D)  2.00 
A)  1.00 
B)  1.15 
C)  1.30 
D)  2.00

Question 8

The Consumer Price Index is NOT used:

Accepted Answer

A)  to determine the purchasing power of people's nominal incomes. 
B)  to measure changes in the cost of living. 
C)  to measure the average price level of all final goods and services produced. 
D)  to compute the U.S. inflation rate. 
A)  to determine the purchasing power of people's nominal incomes. 
B)  to measure changes in the cost of living. 
C)  to measure the average price level of all final goods and services produced. 
D)  to compute the U.S. inflation rate.

Question 9

An indexed payment is a payment for which:

Accepted Answer

A)  the nominal value does not change with the rate of change in the price level. 
B)  the nominal value is constant. 
C)  the nominal value changes with the rate of change in the price level. 
D)  the nominal value is equal to the real value, when inflation is positive. 
A)  the nominal value does not change with the rate of change in the price level. 
B)  the nominal value is constant. 
C)  the nominal value changes with the rate of change in the price level. 
D)  the nominal value is equal to the real value, when inflation is positive.

Question 10

Over time, _____ has/have been the general trend for most economies.

Accepted Answer

A)  constant real GDP 
B)  rising real GDP 
C)  falling real GDP and a rising price level 
D)  constant nominal GDP and a falling price level 
A)  constant real GDP 
B)  rising real GDP 
C)  falling real GDP and a rising price level 
D)  constant nominal GDP and a falling price level

Question 11

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Accepted Answer

A)  excludes food and energy prices because the prices of these items can be volatile. 
B)  includes food and energy prices because these items account for a significant portion of the typical consumer's expenditures. 
C)  excludes non-durable goods and services since their consumption value decreases over time. 
D)  excludes prices for most components of personal consumption expenditures. 
A)  excludes food and energy prices because the prices of these items can be volatile. 
B)  includes food and energy prices because these items account for a significant portion of the typical consumer's expenditures. 
C)  excludes non-durable goods and services since their consumption value decreases over time. 
D)  excludes prices for most components of personal consumption expenditures.

Question 12

Nominal GDP of a particular year is calculated as the total value of final goods and services in that year in terms of the base-year prices.

Accepted Answer

A) True 
 B)False

Question 13

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year is _____.

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.33 
D)  1.50 
A)  0.75 
B)  1.00 
C)  1.33 
D)  1.50

Question 14

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Accepted Answer

A)  $8,860 billion 
B)  $15,880 billion 
C)  $12,140 billion 
D)  $17,360 billion 
A)  $8,860 billion 
B)  $15,880 billion 
C)  $12,140 billion 
D)  $17,360 billion

Question 15

A business cycle is complete when an economy moves from one peak to the next.

Accepted Answer

A) True 
 B)False

Question 16

A sustained period of falling real GDP is a(n)

Accepted Answer

A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession. 
A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession.

Question 17

A(n) _____ shows the movement in the average level of prices.

Accepted Answer

A)  interest rate 
B)  GDP growth rate 
C)  price index 
D)  natural rate of unemployment 
A)  interest rate 
B)  GDP growth rate 
C)  price index 
D)  natural rate of unemployment

Question 18

Which of the following is true of a price index that uses a fixed market basket?

Accepted Answer

A)  It accurately predicts the impact of rising prices when purchases are made at superstores. 
B)  It overstates the importance of items that fall in price. 
C)  It takes into account changes in quality while computing price changes. 
D)  It excludes new goods and services. 
A)  It accurately predicts the impact of rising prices when purchases are made at superstores. 
B)  It overstates the importance of items that fall in price. 
C)  It takes into account changes in quality while computing price changes. 
D)  It excludes new goods and services.

Question 19

Which of the following is NOT a consequence of deflation?

Accepted Answer

A)  Deflation causes uncertainty about the future. 
B)  The threat of deflation can make people reluctant to borrow for long periods. 
C)  Deflation causes the real value of money to fall. 
D)  Firms may be reluctant to undertake investments for fear that the prices at which they can sell their output will drop. 
A)  Deflation causes uncertainty about the future. 
B)  The threat of deflation can make people reluctant to borrow for long periods. 
C)  Deflation causes the real value of money to fall. 
D)  Firms may be reluctant to undertake investments for fear that the prices at which they can sell their output will drop.

Question 20

Assuming a constant level of nominal income, the real income of an individual rises:

Accepted Answer

A)  during an inflationary phase in the economy. 
B)  when deflation occurs in the economy. 
C)  if hyperinflation takes place. 
D)  with a rise in natural rate of unemployment. 
A)  during an inflationary phase in the economy. 
B)  when deflation occurs in the economy. 
C)  if hyperinflation takes place. 
D)  with a rise in natural rate of unemployment.

Which one of the following is an example of a frictionally unemployed individual?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time) The trough of the business cycle occurs:

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) Calculate the real income for an assistant professor in 1967.

The increased availability of job-related information online has lowered frictional unemployment.

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

The Consumer Price Index is NOT used:

An indexed payment is a payment for which:

Over time, _____ has/have been the general trend for most economies.

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Nominal GDP of a particular year is calculated as the total value of final goods and services in that year in terms of the base-year prices.

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year is _____.

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

A business cycle is complete when an economy moves from one peak to the next.

A sustained period of falling real GDP is a(n)

A(n) _____ shows the movement in the average level of prices.

Which of the following is true of a price index that uses a fixed market basket?

Which of the following is NOT a consequence of deflation?

Assuming a constant level of nominal income, the real income of an individual rises:

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters

Exam 5: Macroeconomics: the Big Picture

Which one of the following is an example of a frictionally unemployed individual?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time) The trough of the business cycle occurs:

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) Calculate the real income for an assistant professor in 1967.

The increased availability of job-related information online has lowered frictional unemployment.

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

The Consumer Price Index is NOT used:

An indexed payment is a payment for which:

Over time, _____ has/have been the general trend for most economies.

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Nominal GDP of a particular year is calculated as the total value of final goods and services in that year in terms of the base-year prices.

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year is _____.

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

A business cycle is complete when an economy moves from one peak to the next.

A sustained period of falling real GDP is a(n)

A(n) _____ shows the movement in the average level of prices.

Which of the following is true of a price index that uses a fixed market basket?

Which of the following is NOT a consequence of deflation?

Assuming a constant level of nominal income, the real income of an individual rises:

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters