Question 1

Economists and psychologists are often on opposite sides of the economic growth debate.The nature of the debate is such that

Accepted Answer

A) economists emphasize the benefits of growth to finance valuable programs, and psychologists question whether more goods make people happier. 
B) economists emphasize that more money means more income for the government, and psychologists believe poorer people are happier. 
C) economists believe that economic growth imposes no serious costs on the economy, and psychologists question the statistical reliability of GDP numbers. 
D) economists stress the importance of money relative to leisure, and psychologists stress the importance of an unstructured life. 
A) economists emphasize the benefits of growth to finance valuable programs, and psychologists question whether more goods make people happier. 
B) economists emphasize that more money means more income for the government, and psychologists believe poorer people are happier. 
C) economists believe that economic growth imposes no serious costs on the economy, and psychologists question the statistical reliability of GDP numbers. 
D) economists stress the importance of money relative to leisure, and psychologists stress the importance of an unstructured life.

Question 2

Hyperinflation may cause the collapse of the market system.

Accepted Answer

A) True 
 B)False

Question 3

Since 1948, the history of real wage rates generally shows that

Accepted Answer

A) prices and wages have risen at the same rate. 
B) prices have risen at a slower rate than wages. 
C) prices have risen faster than wages. 
D) real wages have remained constant over the period. 
A) prices and wages have risen at the same rate. 
B) prices have risen at a slower rate than wages. 
C) prices have risen faster than wages. 
D) real wages have remained constant over the period.

Question 4

Which of the following would impose the greatest costs to society?

Accepted Answer

A) High levels of expected inflation 
B) Low levels of expected inflation 
C) Variable rates of inflation 
D) Stable rates of inflation 
A) High levels of expected inflation 
B) Low levels of expected inflation 
C) Variable rates of inflation 
D) Stable rates of inflation

Question 5

The United States has never suffered through periods of hyperinflation in its history.

Accepted Answer

A) True 
 B)False

Question 6

Real GDP is the product of the

Accepted Answer

A) total hours of work times the labor force. 
B) labor force times the output per hour. 
C) nation's capital stock times the output per hour. 
D) total hours of work times the output per hour. 
A) total hours of work times the labor force. 
B) labor force times the output per hour. 
C) nation's capital stock times the output per hour. 
D) total hours of work times the output per hour.

Question 7

Someone unemployed for a long period of time due to technological change would be described as structurally unemployed.

Accepted Answer

A) True 
 B)False

Question 8

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 9

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

Accepted Answer

A) low inflation periods are short lived. 
B) high inflation periods are short lived. 
C) high inflation periods are long lived. 
D) low inflation leads to high inflation. 
A) low inflation periods are short lived. 
B) high inflation periods are short lived. 
C) high inflation periods are long lived. 
D) low inflation leads to high inflation.

Question 10

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 11

Small differences in economic growth rates translate into significant differences in living standards.

Accepted Answer

A) True 
 B)False

Question 12

Cyclical unemployment occurs when real GDP falls below potential GDP.

Accepted Answer

A) True 
 B)False

Question 13

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

Accepted Answer

A) real rates were higher in 2001. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2001 because the nominal rate was lower. 
A) real rates were higher in 2001. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2001 because the nominal rate was lower.

Question 14

As the unemployment rate rises,

Accepted Answer

A) real GDP also rises. 
B) nominal GDP rises. 
C) the employment rate rises. 
D) lost national output rises. 
A) real GDP also rises. 
B) nominal GDP rises. 
C) the employment rate rises. 
D) lost national output rises.

Question 15

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of spinning class has risen from $20 to $30, then

Accepted Answer

A) pizzas have become relatively more expensive. 
B) spinning classes have become relatively more expensive. 
C) the relative prices of pizzas and spinning classes have remained constant. 
D) workers' real income must have decreased. 
A) pizzas have become relatively more expensive. 
B) spinning classes have become relatively more expensive. 
C) the relative prices of pizzas and spinning classes have remained constant. 
D) workers' real income must have decreased.

Question 16

The unemployment rate for married men is usually higher than the rate for teenagers.

Accepted Answer

A) True 
 B)False

Question 17

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 18

The unemployment rate is equal to

Accepted Answer

A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the population. 
C) the number unemployed divided by the number employed. 
D) the labor force divided by the population. 
A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the population. 
C) the number unemployed divided by the number employed. 
D) the labor force divided by the population.

Question 19

Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better.Why?

Accepted Answer

Environmentalists worry that the sheer i

Question 20

The growth rate of potential GDP is not affected by

Accepted Answer

A) the growth rate of the labor force. 
B) the growth rate of a nation's capital stock. 
C) the rate of technological progress. 
D) environmentalists' ability to pass regulations. 
A) the growth rate of the labor force. 
B) the growth rate of a nation's capital stock. 
C) the rate of technological progress. 
D) environmentalists' ability to pass regulations.

Exam 22: The Goals of Macroeconomic Policy

Economists and psychologists are often on opposite sides of the economic growth debate.The nature of the debate is such that

Hyperinflation may cause the collapse of the market system.

Since 1948, the history of real wage rates generally shows that

Which of the following would impose the greatest costs to society?

The United States has never suffered through periods of hyperinflation in its history.

Real GDP is the product of the

Someone unemployed for a long period of time due to technological change would be described as structurally unemployed.

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

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

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

Small differences in economic growth rates translate into significant differences in living standards.

Cyclical unemployment occurs when real GDP falls below potential GDP.

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

As the unemployment rate rises,

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of spinning class has risen from $20 to $30, then

The unemployment rate for married men is usually higher than the rate for teenagers.

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

The unemployment rate is equal to

Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better.Why?

The growth rate of potential GDP is not affected by

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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