Question 1

High rates of inflation often characterize

Accepted Answer

A)  depressions. 
B)  times of great unemployment. 
C)  wartime. 
D)  periods of falling aggregate demand. 
E)  rural areas. 
A)  depressions. 
B)  times of great unemployment. 
C)  wartime. 
D)  periods of falling aggregate demand. 
E)  rural areas.

Question 2

Suppose your employer agrees to increase your wage for next year at the same rate as the increase in the consumer price index for this year over last year.If the consumer price index for last year was 179.9 and the consumer price index for this year is 184.0 (1982-84 = 100),then your wage will go up by ________ percent.

Accepted Answer

A)  2.3 
B)  4.1 
C)  9.7 
D)  84 
E)  100 
A)  2.3 
B)  4.1 
C)  9.7 
D)  84 
E)  100

Question 3

In the base year,a price index has a value of

Accepted Answer

A)  -1. 
B)  zero. 
C)  1/100. 
D)  100 × 100. 
E)  100. 
A)  -1. 
B)  zero. 
C)  1/100. 
D)  100 × 100. 
E)  100.

Question 4

Inflation that wipes out the value of money quickly and thoroughly is called

Accepted Answer

A)  runaway inflation. 
B)  deflation. 
C)  push-pull inflation. 
D)  stagflation. 
E)  reflation. 
A)  runaway inflation. 
B)  deflation. 
C)  push-pull inflation. 
D)  stagflation. 
E)  reflation.

Question 5

The following question are based on the following diagram:
  
-The maximum national output and employment occur when the economy's aggregate demand curve intersects the aggregate supply curve in

Accepted Answer

A)  the horizontal range. 
B)  the upward-sloping range. 
C)  the vertical range. 
D)  all three ranges. 
E)  a manner impossible to determine from the diagram. 
A)  the horizontal range. 
B)  the upward-sloping range. 
C)  the vertical range. 
D)  all three ranges. 
E)  a manner impossible to determine from the diagram.

Question 6

Creeping inflation

Accepted Answer

A)  erodes the value of a country's money over a long period of time. 
B)  inevitably tends to die out. 
C)  has been the experience of the United States since its founding. 
D)  does not tend to redistribute income. 
E)  inevitably leads to runaway inflation. 
A)  erodes the value of a country's money over a long period of time. 
B)  inevitably tends to die out. 
C)  has been the experience of the United States since its founding. 
D)  does not tend to redistribute income. 
E)  inevitably leads to runaway inflation.

Question 7

The most widely quoted measure of inflation in the United States is the

Accepted Answer

A)  Phillips curve. 
B)  price output ratio. 
C)  consumer price index. 
D)  cost of living adjustment. 
E)  Dow Jones Industrial Average. 
A)  Phillips curve. 
B)  price output ratio. 
C)  consumer price index. 
D)  cost of living adjustment. 
E)  Dow Jones Industrial Average.

Question 8

Income adjusted for changes in the price level is called ________ income.

Accepted Answer

A)  fixed 
B)  money 
C)  nominal 
D)  current 
E)  real 
A)  fixed 
B)  money 
C)  nominal 
D)  current 
E)  real

Question 9

Inflation is said to be occurring when the

Accepted Answer

A)  price of an individual commodity rises steadily because of increases in demand. 
B)  price of an individual commodity rises steadily because of decreases in supply. 
C)  value of the dollar increases. 
D)  consumer price index falls. 
E)  money income grows at a faster rate than real income. 
A)  price of an individual commodity rises steadily because of increases in demand. 
B)  price of an individual commodity rises steadily because of decreases in supply. 
C)  value of the dollar increases. 
D)  consumer price index falls. 
E)  money income grows at a faster rate than real income.

Question 10

From the standpoint of society,a stable Phillips curve indicates that

Accepted Answer

A)  it is possible to have lower rates of inflation and unemployment simultaneously. 
B)  policies to increase employment also increase the price level. 
C)  wage increases that exceed productivity increases result in lower prices. 
D)  government policy makers need to make no fundamental choices between price stability and unemployment. 
E)  full employment can be defined as the unemployment rate at which price increases equal productivity increases. 
A)  it is possible to have lower rates of inflation and unemployment simultaneously. 
B)  policies to increase employment also increase the price level. 
C)  wage increases that exceed productivity increases result in lower prices. 
D)  government policy makers need to make no fundamental choices between price stability and unemployment. 
E)  full employment can be defined as the unemployment rate at which price increases equal productivity increases.

Question 11

If national output is fixed and there is a 10 percent increase in total spending,the price level will

Accepted Answer

A)  fall by 10 percent. 
B)  remain constant. 
C)  rise by 10 percent. 
D)  rise by 10 percent times the multiplier. 
E)  rise by 10 percent times the dollar value of output. 
A)  fall by 10 percent. 
B)  remain constant. 
C)  rise by 10 percent. 
D)  rise by 10 percent times the multiplier. 
E)  rise by 10 percent times the dollar value of output.

Question 12

Inflation

Accepted Answer

A)  hurts people living on fixed incomes. 
B)  inevitably tends to die out. 
C)  has been the experience of this country since its founding. 
D)  does not tend to redistribute income. 
E)  inevitably leads to deflation. 
A)  hurts people living on fixed incomes. 
B)  inevitably tends to die out. 
C)  has been the experience of this country since its founding. 
D)  does not tend to redistribute income. 
E)  inevitably leads to deflation.

Question 13

A leftward shift in the aggregate supply curve produces

Accepted Answer

A)  demand-side inflation. 
B)  increases in real output. 
C)  supply-side inflation. 
D)  a higher standard of living. 
E)  a horizontal Phillips curve. 
A)  demand-side inflation. 
B)  increases in real output. 
C)  supply-side inflation. 
D)  a higher standard of living. 
E)  a horizontal Phillips curve.

Question 14

Increases in the price level accompanied by reductions in total real output mean that the economy is experiencing

Accepted Answer

A)  leftward shifts in the aggregate demand curve. 
B)  full employment. 
C)  technological advances leading to increased productivity. 
D)  leftward shifts in the Phillips curve. 
E)  supply-side inflation. 
A)  leftward shifts in the aggregate demand curve. 
B)  full employment. 
C)  technological advances leading to increased productivity. 
D)  leftward shifts in the Phillips curve. 
E)  supply-side inflation.

Question 15

The inverse relationship between the inflation rate and the unemployment rate is a result of the assumption that

Accepted Answer

A)  all inflation is demand-side inflation. 
B)  as the unemployment rate falls, demand for products and resources decreases. 
C)  as the unemployment rate rises, bottlenecks occur throughout the economy. 
D)  there is a significant amount of excess capacity at low unemployment rates. 
E)  as prices rise, unemployment also rises. 
A)  all inflation is demand-side inflation. 
B)  as the unemployment rate falls, demand for products and resources decreases. 
C)  as the unemployment rate rises, bottlenecks occur throughout the economy. 
D)  there is a significant amount of excess capacity at low unemployment rates. 
E)  as prices rise, unemployment also rises.

Question 16

The supply-side inflation episodes of the 1970s

Accepted Answer

A)  occurred during periods of full employment of both human and capital resources. 
B) shifted the aggregate supply curve downward to the right. 
C) were largely the result of crude oil price increases. 
D) were touched off by a sharp decline in the money supply. 
E) were caused, in part, by the lack of market power of labor unions and large corporations. 
A)  occurred during periods of full employment of both human and capital resources. 
B) shifted the aggregate supply curve downward to the right. 
C) were largely the result of crude oil price increases. 
D) were touched off by a sharp decline in the money supply. 
E) were caused, in part, by the lack of market power of labor unions and large corporations.

Question 17

Demand-side and supply-side inflations differ in that,in one case

Accepted Answer

A)  total real output rises, and in the other, it falls. 
B)  the price level rises, and in the other, it falls. 
C)  borrowers benefit, and in the other, savers benefit. 
D)  businesses benefit, and in the other, householders benefit. 
E)  inflation is temporary, and in the other, it is permanent. 
A)  total real output rises, and in the other, it falls. 
B)  the price level rises, and in the other, it falls. 
C)  borrowers benefit, and in the other, savers benefit. 
D)  businesses benefit, and in the other, householders benefit. 
E)  inflation is temporary, and in the other, it is permanent.

Question 18

The value of money

Accepted Answer

A)  rises during periods of inflation. 
B)  is inversely related to the price level. 
C)  is unaffected by creeping inflation. 
D)  has remained relatively constant in the United States over the past 25 years. 
E)  falls as real income rises. 
A)  rises during periods of inflation. 
B)  is inversely related to the price level. 
C)  is unaffected by creeping inflation. 
D)  has remained relatively constant in the United States over the past 25 years. 
E)  falls as real income rises.

Question 19

The redistributive effects of high inflation rates tend to favor

Accepted Answer

A)  the saver who keeps money in a cookie jar. 
B)  those who work under long-term contracts. 
C)  no one because the prices of goods and services rise. 
D)  pensioners and others who live on fixed incomes. 
E)  speculators in assets such as land, art, and bullion. 
A)  the saver who keeps money in a cookie jar. 
B)  those who work under long-term contracts. 
C)  no one because the prices of goods and services rise. 
D)  pensioners and others who live on fixed incomes. 
E)  speculators in assets such as land, art, and bullion.

Question 20

One adverse effect of unexpectedly high rates of inflation is that such inflation

Accepted Answer

A)  redistributes income away from those with fixed money incomes. 
B)  redistributes income to lenders. 
C)  increases the value of savings. 
D)  encourages productive rather than speculative uses of saving. 
E)  causes real incomes to rise more rapidly than money incomes. 
A)  redistributes income away from those with fixed money incomes. 
B)  redistributes income to lenders. 
C)  increases the value of savings. 
D)  encourages productive rather than speculative uses of saving. 
E)  causes real incomes to rise more rapidly than money incomes.

Exam 19: Inflation

High rates of inflation often characterize

In the base year,a price index has a value of

Inflation that wipes out the value of money quickly and thoroughly is called

The following question are based on the following diagram: -The maximum national output and employment occur when the economy's aggregate demand curve intersects the aggregate supply curve in

Creeping inflation

The most widely quoted measure of inflation in the United States is the

Income adjusted for changes in the price level is called ________ income.

Inflation is said to be occurring when the

From the standpoint of society,a stable Phillips curve indicates that

If national output is fixed and there is a 10 percent increase in total spending,the price level will

Inflation

A leftward shift in the aggregate supply curve produces

Increases in the price level accompanied by reductions in total real output mean that the economy is experiencing

The inverse relationship between the inflation rate and the unemployment rate is a result of the assumption that

The supply-side inflation episodes of the 1970s

Demand-side and supply-side inflations differ in that,in one case

The value of money

The redistributive effects of high inflation rates tend to favor

One adverse effect of unexpectedly high rates of inflation is that such inflation

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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