Question 1

Runaway inflation

Accepted Answer

A)  is less damaging to an economy than creeping inflation. 
B)  means that real income rises more rapidly than money income. 
C)  increases the value of money quickly and thoroughly. 
D)  results from rapidly escalating the amount of money being printed. 
E)  makes it less likely that people will engage in speculation. 
A)  is less damaging to an economy than creeping inflation. 
B)  means that real income rises more rapidly than money income. 
C)  increases the value of money quickly and thoroughly. 
D)  results from rapidly escalating the amount of money being printed. 
E)  makes it less likely that people will engage in speculation. D

Question 2

The following question are based on the following aggregate supply-aggregate demand diagram:
  
-The vertical axis shows

Accepted Answer

A)  the money supply. 
B)  total real output. 
C)  the unemployment rate. 
D)  the price level. 
E)  wage rates. 
A)  the money supply. 
B)  total real output. 
C)  the unemployment rate. 
D)  the price level. 
E)  wage rates. D

Question 3

Over the past 50 years,the value of a U.S.dollar

Accepted Answer

A)  has remained remarkably stable. 
B)  has steadily shrunk to less than one-sixth its previous value. 
C)  has gone up and down, finally declining to about one-half its former value. 
D)  declined steadily until the early 1980s, when it began to slowly rise again. 
E)  has risen steadily, hurting people on fixed incomes. 
A)  has remained remarkably stable. 
B)  has steadily shrunk to less than one-sixth its previous value. 
C)  has gone up and down, finally declining to about one-half its former value. 
D)  declined steadily until the early 1980s, when it began to slowly rise again. 
E)  has risen steadily, hurting people on fixed incomes. B

Question 4

Demand-side inflation is most likely to occur when the economy

Accepted Answer

A)  has substantial excess capacity. 
B)  is approaching or operating at full employment. 
C)  has an aggregate demand curve shifting to the left. 
D)  has a horizontal aggregate supply curve. 
E)  has labor productivity rising faster than wages. 
A)  has substantial excess capacity. 
B)  is approaching or operating at full employment. 
C)  has an aggregate demand curve shifting to the left. 
D)  has a horizontal aggregate supply curve. 
E)  has labor productivity rising faster than wages.

Question 5

On a Keynesian-style aggregate supply curve,expansionary fiscal and monetary policies result in increases in real GDP,employment,and the price level when the economy operates in the ________ range.

Accepted Answer

A)  horizontal 
B)  coincident 
C)  intermediate 
D)  vertical 
E)  optimal 
A)  horizontal 
B)  coincident 
C)  intermediate 
D)  vertical 
E)  optimal

Question 6

During periods of high inflation,investors tend to buy real estate,art,and commodities like gold because

Accepted Answer

A)  during inflation these are the only items that are not in short supply. 
B)  such items tend to grow in value at a rate higher than the inflation rate. 
C)  real estate and commodities are very cheap during periods of inflation. 
D)  banks and other lenders are very eager to support such investments. 
E)  the purchasing power of money rises during inflationary periods. 
A)  during inflation these are the only items that are not in short supply. 
B)  such items tend to grow in value at a rate higher than the inflation rate. 
C)  real estate and commodities are very cheap during periods of inflation. 
D)  banks and other lenders are very eager to support such investments. 
E)  the purchasing power of money rises during inflationary periods.

Question 7

On a Keynesian-style aggregate supply curve,expansionary fiscal and monetary policies have the smallest impact on the price level when the economy is operating in the ________ range.

Accepted Answer

A)  horizontal 
B)  coincident 
C)  intermediate 
D)  vertical 
E)  optimal 
A)  horizontal 
B)  coincident 
C)  intermediate 
D)  vertical 
E)  optimal

Question 8

In 1997 the U.S.Treasury for the first time in its history issued bonds that were

Accepted Answer

A)  available in denominations smaller than $2,500. 
B)  without a fixed maturity date. 
C)  payable in gold at maturity. 
D)  specifically targeted for foreign lenders. 
E)  indexed for inflation. 
A)  available in denominations smaller than $2,500. 
B)  without a fixed maturity date. 
C)  payable in gold at maturity. 
D)  specifically targeted for foreign lenders. 
E)  indexed for inflation.

Question 9

Demand-side inflation results in a downward-sloping Phillips curve when the

Accepted Answer

A)  aggregate demand curve slopes downward. 
B)  aggregate supply curve shifts to the left. 
C)  aggregate demand curve does not shift to the right or the left. 
D)  aggregate supply curve slopes upward. 
E)  price level is constant. 
A)  aggregate demand curve slopes downward. 
B)  aggregate supply curve shifts to the left. 
C)  aggregate demand curve does not shift to the right or the left. 
D)  aggregate supply curve slopes upward. 
E)  price level is constant.

Question 10

The following question are based on the following aggregate supply-aggregate demand diagram:
  
-The horizontal axis shows

Accepted Answer

A)  the money supply. 
B)  total real output. 
C)  the unemployment rate. 
D)  the price level. 
E)  wage rates. 
A)  the money supply. 
B)  total real output. 
C)  the unemployment rate. 
D)  the price level. 
E)  wage rates.

Question 11

Over the last four decades,the value of the NAIRU has tended to change because of

Accepted Answer

A)  the stability of the Phillips curve. 
B)  disagreements over the definition of full employment. 
C)  revisions in the consumer price index. 
D)  changes in productivity growth. 
E)  the Employment Act of 1946. 
A)  the stability of the Phillips curve. 
B)  disagreements over the definition of full employment. 
C)  revisions in the consumer price index. 
D)  changes in productivity growth. 
E)  the Employment Act of 1946.

Question 12

The ________ administration is associated with a 10 percent surcharge on income taxes to reduce inflationary pressure.

Accepted Answer

A)  Kennedy 
B)  Johnson 
C)  Ford 
D)  Carter 
E)  Reagan 
A)  Kennedy 
B)  Johnson 
C)  Ford 
D)  Carter 
E)  Reagan

Question 13

Inflation occurs whenever

Accepted Answer

A)  aggregate demand rises. 
B)  the price of any given commodity rises. 
C)  the money supply increases more rapidly than output. 
D)  the tax rate is lower than the government spending rate. 
E)  the money supply falls. 
A)  aggregate demand rises. 
B)  the price of any given commodity rises. 
C)  the money supply increases more rapidly than output. 
D)  the tax rate is lower than the government spending rate. 
E)  the money supply falls.

Question 14

Why were Johnson's 10 percent surtax and Nixon's price-control program ineffective in controlling the inflationary pressures they were designed to stop?

Accepted Answer

A)  Both programs were based on the assumption that the aggregate supply was horizontal. 
B)  Both presidents misread the economic signs of the times that clearly pointed to no inflationary pressures. 
C)  Both were temporary in nature and so did little to deal with strong inflationary expectations. 
D)  These measures never received the approval or support of the Council of Economic Advisers. 
E)  The inflationary pressures had subsided by the time these programs were enacted. 
A)  Both programs were based on the assumption that the aggregate supply was horizontal. 
B)  Both presidents misread the economic signs of the times that clearly pointed to no inflationary pressures. 
C)  Both were temporary in nature and so did little to deal with strong inflationary expectations. 
D)  These measures never received the approval or support of the Council of Economic Advisers. 
E)  The inflationary pressures had subsided by the time these programs were enacted.

Question 15

The Phillips curve illustrates the relationship between

Accepted Answer

A)  aggregate demand and aggregate supply. 
B)  the interest rate and the money supply. 
C)  the rate of inflation and the rate of unemployment. 
D)  investment and the interest rate. 
E)  disposable income and saving. 
A)  aggregate demand and aggregate supply. 
B)  the interest rate and the money supply. 
C)  the rate of inflation and the rate of unemployment. 
D)  investment and the interest rate. 
E)  disposable income and saving.

Question 16

Suppose that the consumer price index is 160,using the base year of 1982-84.If a market basket of goods and services costs $525,what did it cost in the base year?

Accepted Answer

A)  $30 
B)  $100 
C)  $160 
D)  $328 
E)  $525 
A)  $30 
B)  $100 
C)  $160 
D)  $328 
E)  $525

Question 17

Wartime inflations are generally ________ inflations.

Accepted Answer

A)  cost-overrun 
B)  sedentary-spending 
C)  supply-side 
D)  demand-side 
E)  parity-price 
A)  cost-overrun 
B)  sedentary-spending 
C)  supply-side 
D)  demand-side 
E)  parity-price

Question 18

The following question are based on the following aggregate supply-aggregate demand diagram:
  
-The economy is experiencing

Accepted Answer

A)  demand-side inflation. 
B)  a serious recession. 
C)  falling money GDP. 
D)  too many goods chasing too few dollars. 
E)  price stability. 
A)  demand-side inflation. 
B)  a serious recession. 
C)  falling money GDP. 
D)  too many goods chasing too few dollars. 
E)  price stability.

Question 19

The current thinking of economists is that the full-employment rate of unemployment in the United States occurs when about

Accepted Answer

A)  100 percent of the labor force is employed. 
B)  5 percent of the labor force is unemployed. 
C)  90 percent of the total population is employed. 
D)  7.5 percent of the labor force is unemployed. 
E)  67 percent of production costs are the result of employed labor. 
A)  100 percent of the labor force is employed. 
B)  5 percent of the labor force is unemployed. 
C)  90 percent of the total population is employed. 
D)  7.5 percent of the labor force is unemployed. 
E)  67 percent of production costs are the result of employed labor.

Question 20

Inflation caused by increases in total intended spending is called

Accepted Answer

A)  cost-push inflation. 
B)  the wage price spiral. 
C)  the crowding-out effect. 
D)  supply-side accommodation. 
E)  demand-side inflation. 
A)  cost-push inflation. 
B)  the wage price spiral. 
C)  the crowding-out effect. 
D)  supply-side accommodation. 
E)  demand-side inflation.

Exam 19: Inflation

Runaway inflation

The following question are based on the following aggregate supply-aggregate demand diagram: -The vertical axis shows

Over the past 50 years,the value of a U.S.dollar

Demand-side inflation is most likely to occur when the economy

On a Keynesian-style aggregate supply curve,expansionary fiscal and monetary policies result in increases in real GDP,employment,and the price level when the economy operates in the ________ range.

During periods of high inflation,investors tend to buy real estate,art,and commodities like gold because

On a Keynesian-style aggregate supply curve,expansionary fiscal and monetary policies have the smallest impact on the price level when the economy is operating in the ________ range.

In 1997 the U.S.Treasury for the first time in its history issued bonds that were

Demand-side inflation results in a downward-sloping Phillips curve when the

The following question are based on the following aggregate supply-aggregate demand diagram: -The horizontal axis shows

Over the last four decades,the value of the NAIRU has tended to change because of

The ________ administration is associated with a 10 percent surcharge on income taxes to reduce inflationary pressure.

Inflation occurs whenever

Why were Johnson's 10 percent surtax and Nixon's price-control program ineffective in controlling the inflationary pressures they were designed to stop?

The Phillips curve illustrates the relationship between

Suppose that the consumer price index is 160,using the base year of 1982-84.If a market basket of goods and services costs $525,what did it cost in the base year?

Wartime inflations are generally ________ inflations.

The following question are based on the following aggregate supply-aggregate demand diagram: -The economy is experiencing

The current thinking of economists is that the full-employment rate of unemployment in the United States occurs when about

Inflation caused by increases in total intended spending is called

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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