Question 1

Economists feel that taxing nominal capital gains imposes costs on the economy due to

Accepted Answer

A) increased consumption. 
B) reduced consumption. 
C) increased investment. 
D) reduced investment. 
A) increased consumption. 
B) reduced consumption. 
C) increased investment. 
D) reduced investment.

Question 2

In the contemporary United States, labor productivity has been growing at approximately

Accepted Answer

A) 1.5 percent per year 
B) 2.0 percent per year. 
C) 2.6 percent per year. 
D) 3.9 percent per year. 
A) 1.5 percent per year 
B) 2.0 percent per year. 
C) 2.6 percent per year. 
D) 3.9 percent per year.

Question 3

The growth rate of potential GDP depends, among other factors, on the

Accepted Answer

A) rate of technological progress. 
B) unemployment rate. 
C) size of the labor force. 
D) rate of capital stock depreciation. 
A) rate of technological progress. 
B) unemployment rate. 
C) size of the labor force. 
D) rate of capital stock depreciation.

Question 4

What is a GDP deflator?
 Why do some economists consider the GDP deflator to be a better measure of overall inflation than the Consumer Price Index?

Accepted Answer

The price index used to deflate nominal

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

The term frictional unemployment refers to persons who are out of work

Accepted Answer

A) due to technological change. 
B) due to strikes or lockouts. 
C) and have given up looking for work. 
D) because they are between jobs. 
A) due to technological change. 
B) due to strikes or lockouts. 
C) and have given up looking for work. 
D) because they are between jobs.

Question 7

When various firms fail because their output is not demanded by society, workers may suffer

Accepted Answer

A) structural unemployment. 
B) frictional unemployment. 
C) seasonal unemployment. 
D) cyclical unemployment. 
A) structural unemployment. 
B) frictional unemployment. 
C) seasonal unemployment. 
D) cyclical unemployment.

Question 8

Throughout the period from 1996 to 2010, U.S.Real GDP growth has been

Accepted Answer

A) constant. 
B) declining. 
C) steadily increasing. 
D) fluctuating. 
A) constant. 
B) declining. 
C) steadily increasing. 
D) fluctuating.

Question 9

The nominal interest rate is the sum of the

Accepted Answer

A) real interest rate and the historic rate of inflation. 
B) real interest rate and the expected rate of inflation. 
C) historic rate of inflation and the expected rate of inflation. 
D) expected rate of inflation and the rate of price level increase. 
A) real interest rate and the historic rate of inflation. 
B) real interest rate and the expected rate of inflation. 
C) historic rate of inflation and the expected rate of inflation. 
D) expected rate of inflation and the rate of price level increase.

Question 10

One of the key factors that determine an economy's real GDP is labor productivity, which is a measure of

Accepted Answer

A) output per hour of work. 
B) labor force per hour. 
C) input per hour worked. 
D) total hours worked. 
A) output per hour of work. 
B) labor force per hour. 
C) input per hour worked. 
D) total hours worked.

Question 11

Discouraged workers are included in the

Accepted Answer

A) labor force category. 
B) unemployed category. 
C) not in the labor force category. 
D) employed category. 
A) labor force category. 
B) unemployed category. 
C) not in the labor force category. 
D) employed category.

Question 12

A nation's standard of living depends on its population and labor productivity.

Accepted Answer

A) True 
 B)False

Question 13

Workers in country A receive an increase in wages of 10 percent at the same time the inflation rate in country A is 8 percent.Workers in country B receive an increase in wages of 3 percent and the inflation rate in country B is 1 percent.In which country are workers better off?

Accepted Answer

A) Country A because their real wages rise by 18 percent. 
B) Country A because their real wages rise by 10 percent. 
C) Country B because the inflation rate is lower. 
D) Neither country because the increase in real wages is the same. 
A) Country A because their real wages rise by 18 percent. 
B) Country A because their real wages rise by 10 percent. 
C) Country B because the inflation rate is lower. 
D) Neither country because the increase in real wages is the same.

Question 14

Unemployment rates differ widely among various groups in the population.

Accepted Answer

A) True 
 B)False

Question 15

If inflation is expected by both borrowers and lenders, then we would expect

Accepted Answer

A) real rates to be higher than nominal rates of interest. 
B) real rates to be equal to nominal rates of interest. 
C) real rates to be lower than nominal rates of interest. 
D) nominal rates of interest to be less than the expected inflation rate. 
A) real rates to be higher than nominal rates of interest. 
B) real rates to be equal to nominal rates of interest. 
C) real rates to be lower than nominal rates of interest. 
D) nominal rates of interest to be less than the expected inflation rate.

Question 16

Inflation is a serious problem because inflation causes real wages to decline.

Accepted Answer

A) True 
 B)False

Question 17

As capital goods depreciate, the growth of labor productivity will increase.

Accepted Answer

A) True 
 B)False

Question 18

The unemployment rate is the number of unemployed people, expressed as

Accepted Answer

A) a ratio of total employed to the population. 
B) a ratio of unemployed to the total employed. 
C) a percentage of the labor force. 
D) a percentage of the population. 
A) a ratio of total employed to the population. 
B) a ratio of unemployed to the total employed. 
C) a percentage of the labor force. 
D) a percentage of the population.

Question 19

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 20

Low inflation rates tend to accelerate into higher and higher rates of inflation.

Accepted Answer

A) True 
 B)False

Exam 23: The Goals of Macroeconomic Policy

Economists feel that taxing nominal capital gains imposes costs on the economy due to

In the contemporary United States, labor productivity has been growing at approximately

The growth rate of potential GDP depends, among other factors, on the

What is a GDP deflator? Why do some economists consider the GDP deflator to be a better measure of overall inflation than the Consumer Price Index?

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

The term frictional unemployment refers to persons who are out of work

When various firms fail because their output is not demanded by society, workers may suffer

Throughout the period from 1996 to 2010, U.S.Real GDP growth has been

The nominal interest rate is the sum of the

One of the key factors that determine an economy's real GDP is labor productivity, which is a measure of

Discouraged workers are included in the

A nation's standard of living depends on its population and labor productivity.

Workers in country A receive an increase in wages of 10 percent at the same time the inflation rate in country A is 8 percent.Workers in country B receive an increase in wages of 3 percent and the inflation rate in country B is 1 percent.In which country are workers better off?

Unemployment rates differ widely among various groups in the population.

If inflation is expected by both borrowers and lenders, then we would expect

Inflation is a serious problem because inflation causes real wages to decline.

As capital goods depreciate, the growth of labor productivity will increase.

The unemployment rate is the number of unemployed people, expressed as

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

Low inflation rates tend to accelerate into higher and higher rates of inflation.

What Is Economics

The Economy: 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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

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