Question 1

The growth rates of actual and potential GDP

Accepted Answer

A)  are similar in both the short and long run. 
B)  are similar in the short run but not the long run. 
C)  are similar in the long run but not the short run. 
D)  are different in both the short and long run. 
A)  are similar in both the short and long run. 
B)  are similar in the short run but not the long run. 
C)  are similar in the long run but not the short run. 
D)  are different in both the short and long run.

Question 2

Unemployment rates differ widely among various groups in the population.

Accepted Answer

A) True 
 B)False

Question 3

Inflation tends to redistribute real income from lenders to borrowers.

Accepted Answer

A) True 
 B)False

Question 4

Inflation affects borrowers and lenders differently.After signing a contract with a fixed nominal interest rate, it can be expected that

Accepted Answer

A)  borrowers will hope that prices fall. 
B)  lenders will hope that prices rise. 
C)  lenders will hope that the purchasing power of money will fall. 
D)  borrowers will hope that prices rise. 
A)  borrowers will hope that prices fall. 
B)  lenders will hope that prices rise. 
C)  lenders will hope that the purchasing power of money will fall. 
D)  borrowers will hope that prices rise.

Question 5

The German inflation rate after World War I was measured in the thousands of percents.This condition is referred to as

Accepted Answer

A)  fundamental inflation. 
B)  environmental inflation. 
C)  hyperinflation. 
D)  episodic inflation. 
A)  fundamental inflation. 
B)  environmental inflation. 
C)  hyperinflation. 
D)  episodic inflation.

Question 6

Frictional unemployment is a "necessary" cost of a dynamic economy.

Accepted Answer

A) True 
 B)False

Question 7

If a borrower arbitrarily gains purchasing power as the result of a particular loan agreement, then

Accepted Answer

A)  actual inflation was greater than expected inflation. 
B)  actual inflation was equal to expected inflation. 
C)  actual inflation was less than expected inflation. 
D)  the real interest rate was greater than the nominal interest rate. 
A)  actual inflation was greater than expected inflation. 
B)  actual inflation was equal to expected inflation. 
C)  actual inflation was less than expected inflation. 
D)  the real interest rate was greater than the nominal interest rate.

Question 8

To measure how productive workers in the economy are, the best measure to use would be

Accepted Answer

A)  real GDP. 
B)  GDP divided by the population. 
C)  GDP divided by the nation's capital stock. 
D)  GDP divided by hours worked. 
A)  real GDP. 
B)  GDP divided by the population. 
C)  GDP divided by the nation's capital stock. 
D)  GDP divided by hours worked.

Question 9

When prices rise

Accepted Answer

A)  the rich benefit at the expense of the poor. 
B)  the poor benefit at the expense of the rich. 
C)  both the rich and poor lose real income. 
D)  the effect in the rich and poor is uncertain. 
A)  the rich benefit at the expense of the poor. 
B)  the poor benefit at the expense of the rich. 
C)  both the rich and poor lose real income. 
D)  the effect in the rich and poor is uncertain.

Question 10

Compared to the unemployed during the Great Depression, persons unemployed in today's economy are

Accepted Answer

A)  worse off due to higher price levels. 
B)  worse off due to higher rates of unemployment in the 1990s. 
C)  better off due to unemployment insurance. 
D)  better off due to lower price levels. 
A)  worse off due to higher price levels. 
B)  worse off due to higher rates of unemployment in the 1990s. 
C)  better off due to unemployment insurance. 
D)  better off due to lower price levels.

Question 11

Some economists believe that technological progress could be increased if the federal government

Accepted Answer

A)  nationalized research facilities. 
B)  levied taxes on nominal capital gains. 
C)  levied taxes on real capital gains. 
D)  levied taxes on gross rather than net investment. 
A)  nationalized research facilities. 
B)  levied taxes on nominal capital gains. 
C)  levied taxes on real capital gains. 
D)  levied taxes on gross rather than net investment.

Question 12

The federal government collects taxes on

Accepted Answer

A)  real capital gains. 
B)  nominal capital gains. 
C)  real capital losses. 
D)  nominal capital losses. 
A)  real capital gains. 
B)  nominal capital gains. 
C)  real capital losses. 
D)  nominal capital losses.

Question 13

If the capital stock decreases, then the economy will produce ____ output with the ____ amount of labor.

Accepted Answer

A)  same, same 
B)  less, same 
C)  more, same 
D)  more, decreased 
A)  same, same 
B)  less, same 
C)  more, same 
D)  more, decreased

Question 14

Which of the following groups would have the highest unemployment rates?

Accepted Answer

A)  married men 
B)  white workers 
C)  college graduates 
D)  teenagers 
A)  married men 
B)  white workers 
C)  college graduates 
D)  teenagers

Question 15

An economy could produce above its potential GDP for a short period of time by

Accepted Answer

A)  reducing the size of the labor force. 
B)  increasing the price of final goods and services. 
C)  adding extra shifts of work, such as overtime or night shifts. 
D)  increasing the money supply. 
A)  reducing the size of the labor force. 
B)  increasing the price of final goods and services. 
C)  adding extra shifts of work, such as overtime or night shifts. 
D)  increasing the money supply.

Question 16

During the course of the twentieth century, the average workweek in the United States has gotten shorter and Americans have enjoyed greater amounts of leisure time.How has this development affected potential GDP and labor productivity?

Accepted Answer

Decreasing the length of the workweek, o

Question 17

The principal benefit of unemployment insurance is that it

Accepted Answer

A)  reduces the occurrence of unemployment in the economy. 
B)  replaces income lost due to unemployment. 
C)  increases labor force participation. 
D)  helps reduce the period of unemployment. 
A)  reduces the occurrence of unemployment in the economy. 
B)  replaces income lost due to unemployment. 
C)  increases labor force participation. 
D)  helps reduce the period of unemployment.

Question 18

If an investor had a $25,000 long-term capital gain on a $100,000 investment from 1984 to 2010, her real rate of return was most likely

Accepted Answer

A)  equal to the expected rate of inflation. 
B)  equal to the nominal rate of inflation. 
C)  zero. 
D)  negative. 
A)  equal to the expected rate of inflation. 
B)  equal to the nominal rate of inflation. 
C)  zero. 
D)  negative.

Question 19

Full employment is defined by most economists as the minimization of

Accepted Answer

A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  seasonal unemployment. 
D)  structural unemployment. 
A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  seasonal unemployment. 
D)  structural unemployment.

Question 20

Which of the following scenarios best illustrates the concept of cyclical unemployment?

Accepted Answer

A)  Grace loses her job because of new automated machinery. 
B)  Sean quits his job to look for work that is more fun. 
C)  Ellen quits looking for work because she doesn't think she can find a suitable job. 
D)  Marian loses her job because of a recession. 
A)  Grace loses her job because of new automated machinery. 
B)  Sean quits his job to look for work that is more fun. 
C)  Ellen quits looking for work because she doesn't think she can find a suitable job. 
D)  Marian loses her job because of a recession.

Exam 23: The Goals of Macroeconomic Policy

The growth rates of actual and potential GDP

Unemployment rates differ widely among various groups in the population.

Inflation tends to redistribute real income from lenders to borrowers.

Inflation affects borrowers and lenders differently.After signing a contract with a fixed nominal interest rate, it can be expected that

The German inflation rate after World War I was measured in the thousands of percents.This condition is referred to as

Frictional unemployment is a "necessary" cost of a dynamic economy.

If a borrower arbitrarily gains purchasing power as the result of a particular loan agreement, then

To measure how productive workers in the economy are, the best measure to use would be

When prices rise

Compared to the unemployed during the Great Depression, persons unemployed in today's economy are

Some economists believe that technological progress could be increased if the federal government

The federal government collects taxes on

If the capital stock decreases, then the economy will produce ____ output with the ____ amount of labor.

Which of the following groups would have the highest unemployment rates?

An economy could produce above its potential GDP for a short period of time by

During the course of the twentieth century, the average workweek in the United States has gotten shorter and Americans have enjoyed greater amounts of leisure time.How has this development affected potential GDP and labor productivity?

The principal benefit of unemployment insurance is that it

If an investor had a $25,000 long-term capital gain on a $100,000 investment from 1984 to 2010, her real rate of return was most likely

Full employment is defined by most economists as the minimization of

Which of the following scenarios best illustrates the concept of cyclical unemployment?

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

Filters

If the capital stock decreases, then the economy will produce output with the amount of labor.