Question 1

Taxes on capital gains and interest decline as inflation rates increase.

Accepted Answer

A) True 
 B)False

Question 2

The public often overestimates the negative effects of inflation due to a focus on nominal rates of interest.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following groups would most likely be harmed by inflation?

Accepted Answer

A) workers 
B) borrowers 
C) debtors 
D) retirees 
A) workers 
B) borrowers 
C) debtors 
D) retirees

Question 4

One of the social benefits of frictional unemployment is that

Accepted Answer

A) workers get time off from work. 
B) economic growth is limited. 
C) workers move from less to more valuable firms. 
D) wage rates decrease. 
A) workers get time off from work. 
B) economic growth is limited. 
C) workers move from less to more valuable firms. 
D) wage rates decrease.

Question 5

Persons who have given up looking for work are classified as

Accepted Answer

A) unemployed. 
B) discouraged workers. 
C) in the labor force. 
D) temporarily unemployed. 
A) unemployed. 
B) discouraged workers. 
C) in the labor force. 
D) temporarily unemployed.

Question 6

If both borrowers and lenders anticipate the rate of inflation correctly, then

Accepted Answer

A) borrowers will lose real income. 
B) lenders will lose real income. 
C) both borrowers and lenders will lose real income. 
D) neither borrowers nor lenders will lose real income. 
A) borrowers will lose real income. 
B) lenders will lose real income. 
C) both borrowers and lenders will lose real income. 
D) neither borrowers nor lenders will lose real income.

Question 7

As inflation rates increase, borrowing and lending contracts tend to

Accepted Answer

A) increase in size. 
B) decrease in size. 
C) decrease in length of time. 
D) increase in length of time. 
A) increase in size. 
B) decrease in size. 
C) decrease in length of time. 
D) increase in length of time.

Question 8

The use of automated teller machines (ATMs) has caused some bank tellers to lose their jobs.This is an example of

Accepted Answer

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

An increase in the capital stock has the same effect on the production function as an increase in

Accepted Answer

A) labor. 
B) output. 
C) GDP. 
D) technology. 
A) labor. 
B) output. 
C) GDP. 
D) technology.

Question 11

The most important determinant of the decisions to lend or borrow is the real rate of interest.

Accepted Answer

A) True 
 B)False

Question 12

To protect themselves from the effects of inflation, lenders try to estimate the expected rate of inflation.

Accepted Answer

A) True 
 B)False

Exam 23: The Goals of Macroeconomic Policy

Taxes on capital gains and interest decline as inflation rates increase.

The public often overestimates the negative effects of inflation due to a focus on nominal rates of interest.

Which of the following groups would most likely be harmed by inflation?

One of the social benefits of frictional unemployment is that

Persons who have given up looking for work are classified as

If both borrowers and lenders anticipate the rate of inflation correctly, then

As inflation rates increase, borrowing and lending contracts tend to

The use of automated teller machines (ATMs) has caused some bank tellers to lose their jobs.This is an example of

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

An increase in the capital stock has the same effect on the production function as an increase in

The most important determinant of the decisions to lend or borrow is the real rate of interest.

To protect themselves from the effects of inflation, lenders try to estimate the expected rate 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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