Question 1

Technological change and labor productivity are negatively related.

Accepted Answer

A) True 
 B)False

Question 2

The production function shows the volume of output that can be produced from given inputs.

Accepted Answer

A) True 
 B)False

Question 3

Inflation tends to redistribute real income from lenders to borrowers.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The most likely group of the following that would be eligible for unemployment insurance benefits is

Accepted Answer

A)  new college graduates looking for their first job. 
B)  mothers returning to the labor force after caring for young children. 
C)  workers who quit their jobs. 
D)  experienced workers recently laid off. 
A)  new college graduates looking for their first job. 
B)  mothers returning to the labor force after caring for young children. 
C)  workers who quit their jobs. 
D)  experienced workers recently laid off.

Question 6

In the United States, labor productivity is approximately

Accepted Answer

A)  $73 per hour. 
B)  $94 per hour. 
C)  $102 per hour. 
D)  $110 per hour. 
A)  $73 per hour. 
B)  $94 per hour. 
C)  $102 per hour. 
D)  $110 per hour.

Question 7

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 8

During inflationary periods, consumers will

Accepted Answer

A)  increase their time taken to search for the lowest prices of goods. 
B)  may purchase goods when they need them. 
C)  stick to one store. 
D)  will save more of their income. 
A)  increase their time taken to search for the lowest prices of goods. 
B)  may purchase goods when they need them. 
C)  stick to one store. 
D)  will save more of their income.

Question 9

Describe the social costs of hyperinflation.

Accepted Answer

Hyperinflation occurs when a country exp

Question 10

The German inflation rate after World War I was measured in the thousands of percent. This condition is referred to as

Accepted Answer

A)  fundamental inflation. 
B)  environmental inflation. 
C)  hyperinflation. 
D)  episodic inflation. 
A)  fundamental inflation. 
B)  environmental inflation. 
C)  hyperinflation. 
D)  episodic inflation.

Question 11

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 12

If the labor force grows faster than the number employed, the

Accepted Answer

A)  unemployment rate will fall. 
B)  unemployment rate will rise. 
C)  labor force rate will rise. 
D)  employment rate will rise. 
A)  unemployment rate will fall. 
B)  unemployment rate will rise. 
C)  labor force rate will rise. 
D)  employment rate will rise.

Question 13

Countries like Germany, Russia, and Zimbabwe have experienced hyperinflation within the last century. It occurred mainly due to the

Accepted Answer

A)  the lack of inflationary controls. 
B)  government mistakenly believed it could "inflate" way its debt. 
C)  government-run dictatorships. 
D)  government believed its policies would attract foreign investment. 
A)  the lack of inflationary controls. 
B)  government mistakenly believed it could "inflate" way its debt. 
C)  government-run dictatorships. 
D)  government believed its policies would attract foreign investment.

Question 14

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 15

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 16

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

Accepted Answer

A)  Grace loses her job because of new automated machinery. 
B)  Sean quits his job to look for work that is more fun. 
C)  Ellen quits looking for work because she doesn't think she can find a suitable job. 
D)  Marian loses her job because of a recession. 
A)  Grace loses her job because of new automated machinery. 
B)  Sean quits his job to look for work that is more fun. 
C)  Ellen quits looking for work because she doesn't think she can find a suitable job. 
D)  Marian loses her job because of a recession.

Question 17

The difference between the purchase price of a financial asset and the sale price of the asset is called a(n)

Accepted Answer

A)  capital gain. 
B)  dividend. 
C)  profit. 
D)  investment. 
A)  capital gain. 
B)  dividend. 
C)  profit. 
D)  investment.

Question 18

Frictional unemployment is a sign of a healthy economy because

Accepted Answer

A)  workers become more productive after taking vacations. 
B)  economic growth remains steady. 
C)  workers seek labor where they can provide the most value to their respective employer. 
D)  wages fall, which forces workers to compete. 
A)  workers become more productive after taking vacations. 
B)  economic growth remains steady. 
C)  workers seek labor where they can provide the most value to their respective employer. 
D)  wages fall, which forces workers to compete.

Question 19

As the real interest rate increases, households will make less purchases on credit cards.

Accepted Answer

A) True 
 B)False

Question 20

Real wages more accurately reflect the payment to labor because they are adjusted for the effects of inflation.

Accepted Answer

A) True 
 B)False

Exam 22: The Goals of Macroeconomic Policy

Technological change and labor productivity are negatively related.

The production function shows the volume of output that can be produced from given inputs.

Inflation tends to redistribute real income from lenders to borrowers.

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

The most likely group of the following that would be eligible for unemployment insurance benefits is

In the United States, labor productivity is approximately

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

During inflationary periods, consumers will

Describe the social costs of hyperinflation.

The German inflation rate after World War I was measured in the thousands of percent. This condition is referred to as

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

If the labor force grows faster than the number employed, the

Countries like Germany, Russia, and Zimbabwe have experienced hyperinflation within the last century. It occurred mainly due to the

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

By excluding discouraged workers from the labor force,

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

The difference between the purchase price of a financial asset and the sale price of the asset is called a(n)

Frictional unemployment is a sign of a healthy economy because

As the real interest rate increases, households will make less purchases on credit cards.

Real wages more accurately reflect the payment to labor because they are adjusted for the effects of inflation.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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 Us Economy

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