Question 1

The growth rate in potential GDP is equal to the growth rate in the population.

Accepted Answer

A) True 
 B)False

Question 2

Labor productivity is defined as

Accepted Answer

A) the amount of output a typical worker turns out in an hour of work. 
B) the amount of output the best worker turns out in a day of work. 
C) the amount of output improvement in a year of work. 
D) the amount of average output improvement for a team in a year of work. 
A) the amount of output a typical worker turns out in an hour of work. 
B) the amount of output the best worker turns out in a day of work. 
C) the amount of output improvement in a year of work. 
D) the amount of average output improvement for a team in a year of work.

Question 3

Suppose the small country of Trantor has a steady growth rate of 2.5 percent.Its GDP is expected to double in

Accepted Answer

A) 70 years. 
B) 5 years. 
C) 2.5 years. 
D) 28 years. 
A) 70 years. 
B) 5 years. 
C) 2.5 years. 
D) 28 years.

Question 4

Describe the social costs of hyperinflation.

Accepted Answer

Hyperinflation occurs when a country exp

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) expected interest rate. 
B) real interest rate. 
C) implied interest rate. 
D) contractual interest rate. 
A) expected interest rate. 
B) real interest rate. 
C) implied interest rate. 
D) contractual interest rate.

Question 7

The economic benefits of owning a home are greater when home prices are

Accepted Answer

A) falling and interest rates are high. 
B) rising and interest rates are low. 
C) rising and interest rates are high. 
D) falling and interest rates are low. 
A) falling and interest rates are high. 
B) rising and interest rates are low. 
C) rising and interest rates are high. 
D) falling and interest rates are low.

Question 8

During inflationary periods

Accepted Answer

A) all prices rise at the rate of inflation. 
B) real wages must necessarily decline. 
C) some prices may fall. 
D) relative prices do not change. 
A) all prices rise at the rate of inflation. 
B) real wages must necessarily decline. 
C) some prices may fall. 
D) relative prices do not change.

Question 9

Unemployment is not caused by

Accepted Answer

A) drops in actual GDP. 
B) persons looking for more suitable jobs. 
C) inflation. 
D) technological disruption. 
A) drops in actual GDP. 
B) persons looking for more suitable jobs. 
C) inflation. 
D) technological disruption.

Question 10

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 11

Persons who have given up looking for work are classified as

Accepted Answer

A) unemployed. 
B) discouraged workers. 
C) in the labor force. 
D) temporarily unemployed. 
A) unemployed. 
B) discouraged workers. 
C) in the labor force. 
D) temporarily unemployed.

Question 12

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

Accepted Answer

A) consume. 
B) save. 
C) purchase financial assets. 
D) postpone current consumption plans. 
A) consume. 
B) save. 
C) purchase financial assets. 
D) postpone current consumption plans.

Question 13

If you purchased shares of common stock in 1990 for $1,000 and sold them for $2,000 in 2001 you would be liable for taxes on

Accepted Answer

A) $2,000. 
B) $1,000 less the rate of inflation. 
C) $1,000. 
D) $2,000 less the rate of inflation. 
A) $2,000. 
B) $1,000 less the rate of inflation. 
C) $1,000. 
D) $2,000 less the rate of inflation.

Question 14

Saving is often discouraged by usury laws during inflationary periods because

Accepted Answer

A) nominal rates of interest are kept above real rates of interest. 
B) nominal rates of interest are kept below inflation rates. 
C) nominal rates of interest are kept above inflation rates. 
D) real rates of interest are kept above inflation rates. 
A) nominal rates of interest are kept above real rates of interest. 
B) nominal rates of interest are kept below inflation rates. 
C) nominal rates of interest are kept above inflation rates. 
D) real rates of interest are kept above inflation rates.

Question 15

Martha was a grocery store clerk a local supermarket, until her job was replaced by self-checkout machines and the rise of online grocery deliveries.Show now must be trained for a completely new profession.Marth is experiencing

Accepted Answer

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

Question 16

Hours of work multiplied by output per hour equals

Accepted Answer

A) domestic income. 
B) investment. 
C) labor growth rate. 
D) GDP. 
A) domestic income. 
B) investment. 
C) labor growth rate. 
D) GDP.

Question 17

Last year your job at the university cafeteria paid you $9 an hour and the price of a music download was $1.00.This year your cafeteria job pays $9.90 per hour and download costs $1.10.You are clearly

Accepted Answer

A) worse off because of inflation. 
B) worse off because the download is now relatively more expensive. 
C) better off because your wage rate went up. 
D) better off because the download now costs less work. 
A) worse off because of inflation. 
B) worse off because the download is now relatively more expensive. 
C) better off because your wage rate went up. 
D) better off because the download now costs less work.

Question 18

A decrease in the stock of capital may

Accepted Answer

A) decrease potential GDP. 
B) increase labor productivity. 
C) increase real GDP. 
D) decrease skilled labor. 
A) decrease potential GDP. 
B) increase labor productivity. 
C) increase real GDP. 
D) decrease skilled labor.

Question 19

As inflation rates increase, borrowing and lending contracts tend to

Accepted Answer

A) increase in size. 
B) decrease in size. 
C) decrease in length of time. 
D) increase in length of time. 
A) increase in size. 
B) decrease in size. 
C) decrease in length of time. 
D) increase in length of time.

Question 20

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

Accepted Answer

A) High-school dropouts 
B) Married men 
C) Nonwhite teenagers 
D) Nonwhite women 
A) High-school dropouts 
B) Married men 
C) Nonwhite teenagers 
D) Nonwhite women

Exam 22: The Goals of Macroeconomic Policy

The growth rate in potential GDP is equal to the growth rate in the population.

Labor productivity is defined as

Suppose the small country of Trantor has a steady growth rate of 2.5 percent.Its GDP is expected to double in

Describe the social costs of hyperinflation.

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

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

The economic benefits of owning a home are greater when home prices are

During inflationary periods

Unemployment is not caused by

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

Persons who have given up looking for work are classified as

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

If you purchased shares of common stock in 1990 for $1,000 and sold them for $2,000 in 2001 you would be liable for taxes on

Saving is often discouraged by usury laws during inflationary periods because

Martha was a grocery store clerk a local supermarket, until her job was replaced by self-checkout machines and the rise of online grocery deliveries.Show now must be trained for a completely new profession.Marth is experiencing

Hours of work multiplied by output per hour equals

Last year your job at the university cafeteria paid you $9 an hour and the price of a music download was $1.00.This year your cafeteria job pays $9.90 per hour and download costs $1.10.You are clearly

A decrease in the stock of capital may

As inflation rates increase, borrowing and lending contracts tend to

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

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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