Question 1

The nominal rate of interest is the difference between the real rate and the expected rate of inflation.

Accepted Answer

A) True 
 B)False

Question 2

When a lender underestimates the rate of inflation,

Accepted Answer

A) purchasing power is redistributed to the lender. 
B) purchasing power is redistributed to the borrower. 
C) the real rate of interest will be higher than expected. 
D) the nominal interest rate was set too low. 
A) purchasing power is redistributed to the lender. 
B) purchasing power is redistributed to the borrower. 
C) the real rate of interest will be higher than expected. 
D) the nominal interest rate was set too low.

Question 3

In the contemporary United States, labor productivity has been growing at approximately

Accepted Answer

A) 1.5 percent per year 
B) 2.0 percent per year. 
C) 2.6 percent per year. 
D) 3.9 percent per year. 
A) 1.5 percent per year 
B) 2.0 percent per year. 
C) 2.6 percent per year. 
D) 3.9 percent per year.

Question 4

Adding together the growth rate of labor input and the growth rate of labor productivity yields the growth rate of

Accepted Answer

A) nominal GDP. 
B) actual GDP. 
C) potential GDP. 
D) final GDP. 
A) nominal GDP. 
B) actual GDP. 
C) potential GDP. 
D) final GDP.

Question 5

Environmentalists concern with rapid economic growth is that it will

Accepted Answer

A) lead to increases in pollution, crowding, and waste disposal. 
B) turn naturalists into capitalists. 
C) prevent society from taking action to clean up excessive pollution. 
D) underutilize natural resources. 
A) lead to increases in pollution, crowding, and waste disposal. 
B) turn naturalists into capitalists. 
C) prevent society from taking action to clean up excessive pollution. 
D) underutilize natural resources.

Question 6

Faster economic growth imposes an opportunity cost in the form of

Accepted Answer

A) reduced current consumption. 
B) a larger capital stock. 
C) increased investment. 
D) increased future income. 
A) reduced current consumption. 
B) a larger capital stock. 
C) increased investment. 
D) increased future income.

Question 7

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 8

A principal benefit of inflation is that it makes economic decisions easier.

Accepted Answer

A) True 
 B)False

Question 9

is caused by drops in total production.

Accepted Answer

A) Structural unemployment 
B) Frictional unemployment 
C) Seasonal unemployment 
D) Cyclical unemployment 
A) Structural unemployment 
B) Frictional unemployment 
C) Seasonal unemployment 
D) Cyclical unemployment

Question 10

The real interest rate is equal to

Accepted Answer

A) the real GDP rate + savings rate. 
B) growth rate in prices. 
C) nominal interest rate + expected inflation rate. 
D) nominal interest rate - expected inflation rate. 
A) the real GDP rate + savings rate. 
B) growth rate in prices. 
C) nominal interest rate + expected inflation rate. 
D) nominal interest rate - expected inflation rate.

Question 11

The fastest growing economy between 1870 and 1979 was

Accepted Answer

A) the United Kingdom. 
B) the United States. 
C) Japan. 
D) Brazil. 
A) the United Kingdom. 
B) the United States. 
C) Japan. 
D) Brazil.

Question 12

If both borrowers and lenders anticipate the rate of inflation correctly, then

Accepted Answer

A) borrowers will lose real income. 
B) lenders will lose real income. 
C) both borrowers and lenders will lose real income. 
D) neither borrowers nor lenders will lose real income. 
A) borrowers will lose real income. 
B) lenders will lose real income. 
C) both borrowers and lenders will lose real income. 
D) neither borrowers nor lenders will lose real income.

Question 13

Given the labor force, either more capital or better technology will shift the production function downward.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following does not cause "hidden" or "disguised" unemployment?

Accepted Answer

A) Involuntary part time work 
B) Discouraged workers 
C) Shortened work hours 
D) Loss of overtime 
A) Involuntary part time work 
B) Discouraged workers 
C) Shortened work hours 
D) Loss of overtime

Question 15

The social costs of hyperinflation include i) decreases in purchasing power ii) borrowing and lending may cease iii) the value of savings will diminish.

Accepted Answer

A) i only. 
B) ii only. 
C) i, ii, and iii only. 
D) i and ii only. 
A) i only. 
B) ii only. 
C) i, ii, and iii only. 
D) i and ii only.

Question 16

Prior to the Great Recession of 2007-2009, labor input in the United States was growing at nearly

Accepted Answer

A) 1 percent per year 
B) 2 percent per year. 
C) 2.5 percent per year. 
D) 3 percent per year. 
A) 1 percent per year 
B) 2 percent per year. 
C) 2.5 percent per year. 
D) 3 percent per year.

Question 17

Policy should create an environment in which the economy can expand its productive capacity rapidly, because that is the ultimate source of higher living standards.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 18

The amount of goods and services the economy could produce if the labor force is fully employed is called

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) actual GDP. 
D) potential GDP. 
A) nominal GDP. 
B) real GDP. 
C) actual GDP. 
D) potential GDP.

Question 19

Cyrus just graduated from flight school.He received multiple offers, but is waiting to hear back from all the jobs he applied to before he makes a decision.Cyrus is experiencing

Accepted Answer

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

Question 20

If the rate of technical progress decreases, then the growth

Accepted Answer

A) of the labor force will decrease. 
B) of the capital stock will decrease. 
C) rate of potential GDP will decrease. 
D) rate of unemployment will decrease. 
A) of the labor force will decrease. 
B) of the capital stock will decrease. 
C) rate of potential GDP will decrease. 
D) rate of unemployment will decrease.

Exam 22: The Goals of Macroeconomic Policy

The nominal rate of interest is the difference between the real rate and the expected rate of inflation.

When a lender underestimates the rate of inflation,

In the contemporary United States, labor productivity has been growing at approximately

Adding together the growth rate of labor input and the growth rate of labor productivity yields the growth rate of

Environmentalists concern with rapid economic growth is that it will

Faster economic growth imposes an opportunity cost in the form of

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

A principal benefit of inflation is that it makes economic decisions easier.

is caused by drops in total production.

The real interest rate is equal to

The fastest growing economy between 1870 and 1979 was

If both borrowers and lenders anticipate the rate of inflation correctly, then

Given the labor force, either more capital or better technology will shift the production function downward.

Which of the following does not cause "hidden" or "disguised" unemployment?

The social costs of hyperinflation include i) decreases in purchasing power ii) borrowing and lending may cease iii) the value of savings will diminish.

Prior to the Great Recession of 2007-2009, labor input in the United States was growing at nearly

Policy should create an environment in which the economy can expand its productive capacity rapidly, because that is the ultimate source of higher living standards.This task is the realm of

The amount of goods and services the economy could produce if the labor force is fully employed is called

Cyrus just graduated from flight school.He received multiple offers, but is waiting to hear back from all the jobs he applied to before he makes a decision.Cyrus is experiencing

If the rate of technical progress decreases, then the growth

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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