Exam 23: The Goals of Macroeconomic Policy

The most important determinant of the decisions to lend or borrow is the real rate of interest.

Real GDP is the product of the

Gladys agrees to lend Kay $1,000 for one year at a nominal rate of interest of 5 percent.At the end of the year prices have actually risen by 7 percent.

In the United States, labor productivity is approximately

Which of the following groups would most likely be harmed by inflation?

Does inflation always cause workers losses due to decreases in real wages? Why or why not?

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

Describe how the labor force, the nation's capital stock, and the rate of technical progress contribute to potential GDP growth and labor productivity.

To protect themselves from the effects of inflation, lenders try to estimate the expected rate of inflation.

When nominal interest rates are held below inflation rates, then households will have an incentive to

Labor productivity is defined as

Technological change and labor productivity are negatively related.

The growth rate of potential GDP depends on

An increase in capital stock will shift the production function

Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce.This task is the realm of

Full employment is defined by all economists as precisely 5 percent of the labor force.

Persons who have given up looking for work are classified as

A decrease in the capital stock would be expected to

If actual inflation is less than the expected rate of inflation, then probably

The costs of unemployment to an individual out of work are larger now than in the 1930s.