Question 1

If the discouraged workers were included in the labor force,

Accepted Answer

A)  the unemployment rate would fall. 
B)  the labor force would decrease. 
C)  the employment rate would rise. 
D)  the unemployment rate would rise. 
A)  the unemployment rate would fall. 
B)  the labor force would decrease. 
C)  the employment rate would rise. 
D)  the unemployment rate would rise.

Question 2

The estimate of potential GDP would decrease if

Accepted Answer

A)  the rate of capital depreciation increased. 
B)  the labor force decreased. 
C)  the price level grew. 
D)  All of the above would increase potential GDP. 
A)  the rate of capital depreciation increased. 
B)  the labor force decreased. 
C)  the price level grew. 
D)  All of the above would increase potential GDP.

Question 3

Economic growth is most likely to solve the problems of

Accepted Answer

A)  environmental pollution. 
B)  world poverty. 
C)  emotional stress. 
D)  social alienation. 
A)  environmental pollution. 
B)  world poverty. 
C)  emotional stress. 
D)  social alienation.

Question 4

High unemployment is socially wasteful.Why?

Accepted Answer

High unemployment is socially wasteful.W

Question 5

Over the past few decades, nominal interest rates have been higher than real rates of interest.This means that

Accepted Answer

A)  lenders must have expected inflation. 
B)  borrowers must have expected deflation. 
C)  lenders must have expected prices to fall. 
D)  borrowers must have expected prices to fall. 
A)  lenders must have expected inflation. 
B)  borrowers must have expected deflation. 
C)  lenders must have expected prices to fall. 
D)  borrowers must have expected prices to fall.

Question 6

The reason that inflation rarely harms workers is that

Accepted Answer

A)  wages rise at the same time prices rise. 
B)  wages fall when prices rise. 
C)  nominal income falls as prices rise. 
D)  the minimum wage rate automatically rises when the price level rises. 
A)  wages rise at the same time prices rise. 
B)  wages fall when prices rise. 
C)  nominal income falls as prices rise. 
D)  the minimum wage rate automatically rises when the price level rises.

Question 7

Economists feel that taxing nominal capital gains imposes costs on the economy due to

Accepted Answer

A)  increased consumption. 
B)  reduced consumption. 
C)  increased investment. 
D)  reduced investment. 
A)  increased consumption. 
B)  reduced consumption. 
C)  increased investment. 
D)  reduced investment.

Question 8

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

Accepted Answer

A)  real rates were higher in 2001. 
B)  real rates were higher in 1980. 
C)  credit was more expensive in 1980. 
D)  credit was cheaper in 2001 because the nominal rate was lower. 
A)  real rates were higher in 2001. 
B)  real rates were higher in 1980. 
C)  credit was more expensive in 1980. 
D)  credit was cheaper in 2001 because the nominal rate was lower.

Question 9

From 1991 to 2008, the rate of inflation in the U.S.has been

Accepted Answer

A)  zero. 
B)  between zero and 2.1%. 
C)  between 1.6% and 4.1%. 
D)  between 3.2% and 7.2%. 
A)  zero. 
B)  between zero and 2.1%. 
C)  between 1.6% and 4.1%. 
D)  between 3.2% and 7.2%.

Question 10

The growth rate in potential GDP is equal to the growth rate in the population.

Accepted Answer

A) True 
 B)False

Question 11

One of the key factors that determine an economy's real GDP is labor productivity, which is a measure of

Accepted Answer

A)  output per hour of work. 
B)  labor force per hour. 
C)  input per hour worked. 
D)  total hours worked. 
A)  output per hour of work. 
B)  labor force per hour. 
C)  input per hour worked. 
D)  total hours worked.

Question 12

Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better.Why?

Accepted Answer

Environmentalists worry that the sheer i

Question 13

Variable inflation rates may be more costly socially than low but predictable rates of inflation.

Accepted Answer

A) True 
 B)False

Question 14

Businesses will want to borrow more funds as the real rate of interest decreases.

Accepted Answer

A) True 
 B)False

Question 15

The United States has never suffered through periods of hyperinflation in its history.

Accepted Answer

A) True 
 B)False

Question 16

Taxes on capital gains and interest decline as inflation rates increase.

Accepted Answer

A) True 
 B)False

Question 17

One of the factors contributing to the existence of frictional unemployment is

Accepted Answer

A)  automation. 
B)  labor union strikes. 
C)  occupational mobility. 
D)  falling real GDP. 
A)  automation. 
B)  labor union strikes. 
C)  occupational mobility. 
D)  falling real GDP.

Question 18

People who failed to look for a job are classified as

Accepted Answer

A)  unemployed. 
B)  underemployed. 
C)  out of the labor force. 
D)  part time employed. 
A)  unemployed. 
B)  underemployed. 
C)  out of the labor force. 
D)  part time employed.

Question 19

When comparing the costs of inflation to society, it is important to distinguish between

Accepted Answer

A)  low versus high rates of inflation. 
B)  expected versus unexpected inflation. 
C)  high price levels and low price levels. 
D)  real versus nominal inflation. 
A)  low versus high rates of inflation. 
B)  expected versus unexpected inflation. 
C)  high price levels and low price levels. 
D)  real versus nominal inflation.

Question 20

The shortfall between actual real GDP and potential GDP

Accepted Answer

A)  decreases as the unemployment rate rises. 
B)  increases as the unemployment rate rises. 
C)  increases as the employment rate rises. 
D)  decreases as the labor force increases. 
A)  decreases as the unemployment rate rises. 
B)  increases as the unemployment rate rises. 
C)  increases as the employment rate rises. 
D)  decreases as the labor force increases.

Exam 23: The Goals of Macroeconomic Policy

If the discouraged workers were included in the labor force,

The estimate of potential GDP would decrease if

Economic growth is most likely to solve the problems of

High unemployment is socially wasteful.Why?

Over the past few decades, nominal interest rates have been higher than real rates of interest.This means that

The reason that inflation rarely harms workers is that

Economists feel that taxing nominal capital gains imposes costs on the economy due to

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

From 1991 to 2008, the rate of inflation in the U.S.has been

The growth rate in potential GDP is equal to the growth rate in the population.

One of the key factors that determine an economy's real GDP is labor productivity, which is a measure of

Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better.Why?

Variable inflation rates may be more costly socially than low but predictable rates of inflation.

Businesses will want to borrow more funds as the real rate of interest decreases.

The United States has never suffered through periods of hyperinflation in its history.

Taxes on capital gains and interest decline as inflation rates increase.

One of the factors contributing to the existence of frictional unemployment is

People who failed to look for a job are classified as

When comparing the costs of inflation to society, it is important to distinguish between

The shortfall between actual real GDP and potential GDP

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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