Question 1

The 10 percent tax surcharge of 1968 was intended to help alleviate

Accepted Answer

A)  a severe recession. 
B)  stagflation. 
C)  falling interest rates. 
D)  demand-side inflationary pressures. 
E)  structural unemployment. 
A)  a severe recession. 
B)  stagflation. 
C)  falling interest rates. 
D)  demand-side inflationary pressures. 
E)  structural unemployment.

Question 2

Inflation is sometimes called the arbitrary tax because

Accepted Answer

A)  we never know when inflation will occur. 
B)  the rate of inflation is very difficult for economists to predict. 
C)  the rate of inflation is set by the government. 
D)  inflation affects the prices of various commodities in unpredictable ways. 
E)  its rewards and penalties are meted out with little regard for society's values or goals. 
A)  we never know when inflation will occur. 
B)  the rate of inflation is very difficult for economists to predict. 
C)  the rate of inflation is set by the government. 
D)  inflation affects the prices of various commodities in unpredictable ways. 
E)  its rewards and penalties are meted out with little regard for society's values or goals.

Question 3

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

Accepted Answer

A)  as the unemployment rate decreases, it is easier for labor to get wage increases. 
B)  as the unemployment rate falls, demand for products and resources decreases. 
C)  as the unemployment rate increases, bottlenecks occur throughout the economy. 
D)  at low levels of unemployment, there is a significant amount of excess capacity. 
E)  as prices rise, unemployment also rises. 
A)  as the unemployment rate decreases, it is easier for labor to get wage increases. 
B)  as the unemployment rate falls, demand for products and resources decreases. 
C)  as the unemployment rate increases, bottlenecks occur throughout the economy. 
D)  at low levels of unemployment, there is a significant amount of excess capacity. 
E)  as prices rise, unemployment also rises.

Question 4

In part,supply-side inflation

Accepted Answer

A)  is at the heart of demand-side inflation. 
B)  is an example of too little money chasing too many goods. 
C)  is an outgrowth of a perfectly competitive market structure. 
D)  occurs when labor productivity rises faster than wage rates. 
E)  results from significant price increases of important resources. 
A)  is at the heart of demand-side inflation. 
B)  is an example of too little money chasing too many goods. 
C)  is an outgrowth of a perfectly competitive market structure. 
D)  occurs when labor productivity rises faster than wage rates. 
E)  results from significant price increases of important resources.

Question 5

The nonaccelerating inflation rate of unemployment (NAIRU)is

Accepted Answer

A)  a measure of those temporarily unemployed because of a recession. 
B)  calculated by dividing the unemployment rate by the employment rate. 
C)  considered by most economists to be no greater than 1-2 percent of the labor force. 
D)  based on the assumption that many people will not work unless they are forced to. 
E)  the unemployment rate associated with a constant rate of inflation. 
A)  a measure of those temporarily unemployed because of a recession. 
B)  calculated by dividing the unemployment rate by the employment rate. 
C)  considered by most economists to be no greater than 1-2 percent of the labor force. 
D)  based on the assumption that many people will not work unless they are forced to. 
E)  the unemployment rate associated with a constant rate of inflation.

Question 6

The consumer price index

Accepted Answer

A)  is a 10-year moving average of commodity prices. 
B)  establishes the maximum price sellers may charge consumers. 
C)  lists the annual ratios of consumption to disposable income. 
D)  shows the ratio of cost of a market basket of goods and services in a given year to a base year. 
E)  is another name for aggregate demand. 
A)  is a 10-year moving average of commodity prices. 
B)  establishes the maximum price sellers may charge consumers. 
C)  lists the annual ratios of consumption to disposable income. 
D)  shows the ratio of cost of a market basket of goods and services in a given year to a base year. 
E)  is another name for aggregate demand.

Question 7

Which of the following must decline for demand-side inflation to slow?

Accepted Answer

A)  productivity 
B)  spending 
C)  taxes 
D)  population 
E)  unemployment 
A)  productivity 
B)  spending 
C)  taxes 
D)  population 
E)  unemployment

Question 8

If the economy operates with 8 percent unemployment,the significance of the curve is that it implies that any economic policy that drives unemployment down to 5 percent does so at the cost of

Accepted Answer

A)  adding about 3 percentage points to the rate of inflation. 
B)  adding about 4 percentage points to the rate of inflation. 
C)  adding about 5 percentage points to the rate of inflation. 
D)  adding about 7 percentage points to the rate of inflation. 
E)  increasing the rate of inflation by more than 7 percentage points. 
A)  adding about 3 percentage points to the rate of inflation. 
B)  adding about 4 percentage points to the rate of inflation. 
C)  adding about 5 percentage points to the rate of inflation. 
D)  adding about 7 percentage points to the rate of inflation. 
E)  increasing the rate of inflation by more than 7 percentage points.

Question 9

The effects of inflation are less severe when the inflation is ________ inflation.

Accepted Answer

A)  runaway 
B)  supply-side 
C)  anticipated 
D)  sedentary 
E)  accelerating 
A)  runaway 
B)  supply-side 
C)  anticipated 
D)  sedentary 
E)  accelerating

Question 10

Historically,the inverse relationship between the level of unemployment and the rate of increase of wages is known as the ________ curve.

Accepted Answer

A)  labor demand 
B)  aggregate supply 
C)  Phillips 
D)  Laffer 
E)  production possibilities 
A)  labor demand 
B)  aggregate supply 
C)  Phillips 
D)  Laffer 
E)  production possibilities

Question 11

Inflation

Accepted Answer

A)  depreciates money. 
B)  benefits lenders. 
C)  leaves income distribution unchanged. 
D)  penalizes speculators. 
E)  encourages the productive uses of savings. 
A)  depreciates money. 
B)  benefits lenders. 
C)  leaves income distribution unchanged. 
D)  penalizes speculators. 
E)  encourages the productive uses of savings.

Question 12

Inflationary conditions that emerge because of specific resource shortages or scarcities are called ________ 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 13

Supply-side inflation is best illustrated by a

Accepted Answer

A)  rightward shift in the aggregate supply curve. 
B)  rightward shift in the aggregate demand curve. 
C)  leftward shift in the aggregate supply curve. 
D)  leftward shift in the aggregate demand curve. 
E)  simultaneous rightward shift in the aggregate supply curve and a leftward shift in the aggregate demand curve. 
A)  rightward shift in the aggregate supply curve. 
B)  rightward shift in the aggregate demand curve. 
C)  leftward shift in the aggregate supply curve. 
D)  leftward shift in the aggregate demand curve. 
E)  simultaneous rightward shift in the aggregate supply curve and a leftward shift in the aggregate demand curve.

Question 14

In 1997,weekly payrolls in manufacturing were $553,while the consumer price index was 161 (1982-84 = 100).In terms of base-period dollars,real weekly earnings for the quarter were

Accepted Answer

A)  identical to real weekly earnings in 1982-84. 
B)  greater than $553. 
C)  equal to $553. 
D)  less than $553. 
E)  impossible to determine from the information given. 
A)  identical to real weekly earnings in 1982-84. 
B)  greater than $553. 
C)  equal to $553. 
D)  less than $553. 
E)  impossible to determine from the information given.

Question 15

The following question are based on the following diagram:
  
-The tradeoff between unemployment and inflation occurs primarily 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 16

Germany's decision after World War I to print more money rather than tax its citizens to pay reparations resulted in

Accepted Answer

A)  runaway inflation that totally destroyed Germany's middle class. 
B)  severe creeping inflation that took several years to control. 
C)  decreased inflation. 
D)  a mild, temporary inflation that actually boosted economic production. 
E)  the value of the mark rising relative to the U.S. dollar. 
A)  runaway inflation that totally destroyed Germany's middle class. 
B)  severe creeping inflation that took several years to control. 
C)  decreased inflation. 
D)  a mild, temporary inflation that actually boosted economic production. 
E)  the value of the mark rising relative to the U.S. dollar.

Question 17

On a Keynesian-style aggregate supply curve,increases in aggregate demand produce the greatest inflationary pressure 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 18

According to Michael Harrington in the video,the primary reason why the poor are those most affected by inflation is that they

Accepted Answer

A)  tend to be unskilled. 
B)  are not organized. 
C)  do not really wish to work. 
D)  are not being reached by government programs. 
E)  are socially necessary so that rich people can behave charitably. 
A)  tend to be unskilled. 
B)  are not organized. 
C)  do not really wish to work. 
D)  are not being reached by government programs. 
E)  are socially necessary so that rich people can behave charitably.

Question 19

Demand-side inflations indicate that the aggregate demand curve is shifting to the right along the ________ portion of an aggregate supply curve.

Accepted Answer

A)  horizontal 
B)  downward-sloping 
C)  upward-sloping 
D)  backward-bending 
E)  rightward-shifting 
A)  horizontal 
B)  downward-sloping 
C)  upward-sloping 
D)  backward-bending 
E)  rightward-shifting

Question 20

In 1973,a 1.75 liter bottle of your professor's favorite beverage cost $16.Today it costs $32.
The consumer price index for 1973 was 44.4 and the current consumer price index is 184
(1983-84 = 100).If the price of this beverage had kept pace with the rate of inflation,this
Bottle would cost your professor

Accepted Answer

A)  $17. 
B)  $23. 
C)  $36. 
D)  $66. 
E)  $72. 
A)  $17. 
B)  $23. 
C)  $36. 
D)  $66. 
E)  $72.

Exam 19: Inflation

The 10 percent tax surcharge of 1968 was intended to help alleviate

Inflation is sometimes called the arbitrary tax because

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

In part,supply-side inflation

The nonaccelerating inflation rate of unemployment (NAIRU)is

The consumer price index

Which of the following must decline for demand-side inflation to slow?

If the economy operates with 8 percent unemployment,the significance of the curve is that it implies that any economic policy that drives unemployment down to 5 percent does so at the cost of

The effects of inflation are less severe when the inflation is ________ inflation.

Historically,the inverse relationship between the level of unemployment and the rate of increase of wages is known as the ________ curve.

Inflation

Inflationary conditions that emerge because of specific resource shortages or scarcities are called ________ inflations.

Supply-side inflation is best illustrated by a

In 1997,weekly payrolls in manufacturing were $553,while the consumer price index was 161 (1982-84 = 100).In terms of base-period dollars,real weekly earnings for the quarter were

The following question are based on the following diagram: -The tradeoff between unemployment and inflation occurs primarily when the economy's aggregate demand curve intersects the aggregate supply curve in

Germany's decision after World War I to print more money rather than tax its citizens to pay reparations resulted in

On a Keynesian-style aggregate supply curve,increases in aggregate demand produce the greatest inflationary pressure when the economy operates in the ________ range.

According to Michael Harrington in the video,the primary reason why the poor are those most affected by inflation is that they

Demand-side inflations indicate that the aggregate demand curve is shifting to the right along the ________ portion of an aggregate supply curve.

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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