Exam 22: The Goals of Macroeconomic Policy

Unemployment insurance cannot eliminate the national costs of lost output due to unemployed labor.

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

If the population increase in India is smaller than the increase in Indian real GDP, then GDP per capita will

During inflationary periods,

As capital goods depreciate, potential output falls.

Older Americans living on a pension and therefore on a fixed income tend to be made

Over long periods of time, the growth rates of actual and potential GDP have been

The public often overestimates the negative effects of inflation due to a focus on nominal rates of interest.

Rachel agrees to lend Phoebe $100 for six months and charges her interest of 2 percent.At the end of the six-month period, prices have risen by 4 percent.

Economists generally assume that faster economic growth is negative for society.

If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your

When the expected inflation rate equals the actual inflation rate, the real interest rate was accurately estimated.

If inflation is expected by both borrowers and lenders, then we would expect

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

Mandatory controls on economic activity would

Potential GDP would decrease if

Structural unemployment may be particularly severe for

If borrowers and lenders expect a higher rate of inflation,

If prices rise, then persons living on fixed incomes will

Economic growth is most likely to solve the problems of