Question 1

High unemployment is socially wasteful.Why?

Accepted Answer

High unemployment is socially wasteful.When the economy does not create enough jobs to employ everyone who is willing to work, a valuable resource is lost.Potential goods and services that might have been produced and enjoyed by consumers are lost forever.This lost output is the central economic cost of high unemployment, and we can measure it by comparing actual and potential GDP.

Question 2

The basic data source to track the number of unemployed comes from a calculation of applications for new unemployment benefits.

Accepted Answer

A) True 
 B)False  False

Question 3

The growth of the labor force and the growth of labor productivity help determine the rate of GDP growth.

Accepted Answer

A) True 
 B)False  True

Question 4

According to the U.S.Bureau of Labor Statistics, the term "employed" includes all full time workers and part-time workers.

Accepted Answer

A) True 
 B)False

Question 5

By excluding discouraged workers from the labor force,

Accepted Answer

A) the unemployment rate would fall. 
B) labor productivity increases. 
C) the unemployment rate would rise. 
D) the unemployment rate stays the same. 
A) the unemployment rate would fall. 
B) labor productivity increases. 
C) the unemployment rate would rise. 
D) the unemployment rate stays the same.

Question 6

GDP equals hours of work times

Accepted Answer

A) labor force. 
B) output per hour. 
C) population. 
D) capital stock. 
A) labor force. 
B) output per hour. 
C) population. 
D) capital stock.

Question 7

Define the following terms carefully:
(a) Full employment
(b) Purchasing power of money
(c) Real wage rate
(d) Relative price

Accepted Answer

(a) Full employment is a situation in wh

Question 8

The major impact unemployment insurance has on the U.S.economy is that it

Accepted Answer

A) incentivizes people to work. 
B) spreads the cost of unemployment. 
C) eliminates the social cost of job loss. 
D) prevents the emotional impact of job loss. 
A) incentivizes people to work. 
B) spreads the cost of unemployment. 
C) eliminates the social cost of job loss. 
D) prevents the emotional impact of job loss.

Question 9

Inflation is a very minor problem for lenders because it is relatively easy to estimate future rates of inflation.

Accepted Answer

A) True 
 B)False

Question 10

Discouraged workers are included in the

Accepted Answer

A) labor force category. 
B) unemployed category. 
C) not in the labor force category. 
D) employed category. 
A) labor force category. 
B) unemployed category. 
C) not in the labor force category. 
D) employed category.

Question 11

What two growth rates comprise of the growth rate of potential GDP?

Accepted Answer

A) Capital gains and investment 
B) Money and prices 
C) Labor input and hours worked 
D) Government spending and net exports 
A) Capital gains and investment 
B) Money and prices 
C) Labor input and hours worked 
D) Government spending and net exports

Question 12

Full employment implies which of the following is reduced to zero?

Accepted Answer

A) Cyclical unemployment only 
B) Frictional unemployment only 
C) Frictional and structural unemployment only 
D) Frictional, structural, and cyclical unemployment 
A) Cyclical unemployment only 
B) Frictional unemployment only 
C) Frictional and structural unemployment only 
D) Frictional, structural, and cyclical unemployment

Question 13

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

Accepted Answer

A) growth policy. 
B) stabilization policy. 
C) labor policy. 
D) inflation policy. 
A) growth policy. 
B) stabilization policy. 
C) labor policy. 
D) inflation policy.

Question 14

Are there key differences between an increase in the capital stock and an improvement in the level of technology?

Accepted Answer

There is no significant difference to an

Question 15

The main cost that low inflation imposes on an economy is that low inflation

Accepted Answer

A) inevitably leads to high inflation. 
B) distorts some economic decisions. 
C) reduces real wages. 
D) benefits lenders at the expense of borrowers. 
A) inevitably leads to high inflation. 
B) distorts some economic decisions. 
C) reduces real wages. 
D) benefits lenders at the expense of borrowers.

Question 16

After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power.Therefore, it must be true that actual inflation was

Accepted Answer

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

Question 17

Due to the distortionary effects of inflation, capital investment may be reduced due to higher price levels.

Accepted Answer

A) True 
 B)False

Question 18

If wages rise by 12 percent at the same time prices rise by 3 percent, then the increase in real wages is equal to

Accepted Answer

A) 12 percent. 
B) 9 percent. 
C) 6 percent. 
D) 3 percent. 
A) 12 percent. 
B) 9 percent. 
C) 6 percent. 
D) 3 percent.

Question 19

Frictional unemployment will typically be a short-term problem for someone between jobs.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 22: The Goals of Macroeconomic Policy

High unemployment is socially wasteful.Why?

The basic data source to track the number of unemployed comes from a calculation of applications for new unemployment benefits.

The growth of the labor force and the growth of labor productivity help determine the rate of GDP growth.

According to the U.S.Bureau of Labor Statistics, the term "employed" includes all full time workers and part-time workers.

By excluding discouraged workers from the labor force,

GDP equals hours of work times

Define the following terms carefully: (a) Full employment (b) Purchasing power of money (c) Real wage rate (d) Relative price

The major impact unemployment insurance has on the U.S.economy is that it

Inflation is a very minor problem for lenders because it is relatively easy to estimate future rates of inflation.

Discouraged workers are included in the

What two growth rates comprise of the growth rate of potential GDP?

Full employment implies which of the following is reduced to zero?

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

Are there key differences between an increase in the capital stock and an improvement in the level of technology?

The main cost that low inflation imposes on an economy is that low inflation

After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power.Therefore, it must be true that actual inflation was

Due to the distortionary effects of inflation, capital investment may be reduced due to higher price levels.

If wages rise by 12 percent at the same time prices rise by 3 percent, then the increase in real wages is equal to

Frictional unemployment will typically be a short-term problem for someone between jobs.

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

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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