Question 1

The program of unemployment insurance in the United States was created during the

Accepted Answer

A) Great Depression. 
B) Reagan recession. 
C) Kennedy administration. 
D) Great Society. 
A) Great Depression. 
B) Reagan recession. 
C) Kennedy administration. 
D) Great Society.

Question 2

Changes in relative prices usually lead to increases in real income because prices have changed.

Accepted Answer

A) True 
 B)False

Question 3

When the growth rates of actual and potential GDP diverge, they usually diverge because

Accepted Answer

A) actual GDP growth equals potential GDP growth. 
B) actual GDP growth falls below potential GDP growth. 
C) potential GDP growth rates fall below actual GDP growth rates. 
D) potential GDP growth rates fluctuate while actual GDP growth rates remain stable. 
A) actual GDP growth equals potential GDP growth. 
B) actual GDP growth falls below potential GDP growth. 
C) potential GDP growth rates fall below actual GDP growth rates. 
D) potential GDP growth rates fluctuate while actual GDP growth rates remain stable.

Question 4

Technological change or the effects of automation cause

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 5

Define the following terms carefully:(a)Full employment(b)Purchasing power of money(c)Real wage rate(d)Relative price

Accepted Answer

(a)Full employment is a situation in whi

Question 6

Sharon buys some common stock in 1990 for $10,000 and sells it in 2000 for $15,000.During the same period, prices have risen by 75 percent.The net result of Sharon's stock purchases is that she will

Accepted Answer

A) pay no taxes because she earned negative real capital gains. 
B) lose purchasing power and have to pay taxes anyway. 
C) earn a real capital gain of $5,000 plus 75 percent. 
D) earn a real capital gain of $15,000 minus 75 percent. 
A) pay no taxes because she earned negative real capital gains. 
B) lose purchasing power and have to pay taxes anyway. 
C) earn a real capital gain of $5,000 plus 75 percent. 
D) earn a real capital gain of $15,000 minus 75 percent.

Question 7

The rate of interest written on a contract between a borrower and a lender is the

Accepted Answer

A) nominal interest rate. 
B) real interest rate. 
C) implied interest rate. 
D) expected interest rate. 
A) nominal interest rate. 
B) real interest rate. 
C) implied interest rate. 
D) expected interest rate.

Question 8

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

Accepted Answer

A) low inflation periods are short-lived. 
B) high inflation periods are short-lived. 
C) high inflation periods are long-lived. 
D) low inflation leads to high inflation. 
A) low inflation periods are short-lived. 
B) high inflation periods are short-lived. 
C) high inflation periods are long-lived. 
D) low inflation leads to high inflation.

Question 9

During the course of the twentieth century, the average workweek in the United States has gotten shorter and Americans have enjoyed greater amounts of leisure time.How has this development affected potential GDP and labor productivity?

Accepted Answer

Decreasing the length of the workweek, o

Question 10

The growth rates of actual and potential GDP

Accepted Answer

A) are similar in both the short and long run. 
B) are similar in the short run but not the long run. 
C) are similar in the long run but not the short run. 
D) are different in both the short and long run. 
A) are similar in both the short and long run. 
B) are similar in the short run but not the long run. 
C) are similar in the long run but not the short run. 
D) are different in both the short and long run.

Question 11

High unemployment is socially wasteful.Why?

Accepted Answer

High unemployment is socially wasteful.W

Question 12

The real wage rate is defined as the wage rate divided by

Accepted Answer

A) the interest rate. 
B) the money supply. 
C) nominal GDP. 
D) the price level. 
A) the interest rate. 
B) the money supply. 
C) nominal GDP. 
D) the price level.

Question 13

The difference between the purchase price of a financial asset and the sale price of the asset is called a(n)

Accepted Answer

A) capital gain. 
B) dividend. 
C) profit. 
D) investment. 
A) capital gain. 
B) dividend. 
C) profit. 
D) investment.

Question 14

Structural unemployment may be particularly severe for

Accepted Answer

A) younger workers 
B) college graduates. 
C) older workers. 
D) workers with "high tech" skills. 
A) younger workers 
B) college graduates. 
C) older workers. 
D) workers with "high tech" skills.

Question 15

The federal government collects taxes on

Accepted Answer

A) real capital gains. 
B) nominal capital gains. 
C) real capital losses. 
D) nominal capital losses. 
A) real capital gains. 
B) nominal capital gains. 
C) real capital losses. 
D) nominal capital losses.

Question 16

According to economists, one of the signs of an unhealthy economy is a(n)

Accepted Answer

A) rising labor productivity. 
B) increasing real GDP. 
C) declining real GDP. 
D) declining unemployment. 
A) rising labor productivity. 
B) increasing real GDP. 
C) declining real GDP. 
D) declining unemployment.

Question 17

Which of the following scenarios best illustrates the concept of cyclical unemployment?

Accepted Answer

A) Grace loses her job because of new automated machinery. 
B) Sean quits his job to look for work that is more fun. 
C) Ellen quits looking for work because she doesn't think she can find a suitable job. 
D) Marian loses her job because of a recession. 
A) Grace loses her job because of new automated machinery. 
B) Sean quits his job to look for work that is more fun. 
C) Ellen quits looking for work because she doesn't think she can find a suitable job. 
D) Marian loses her job because of a recession.

Question 18

When inflation occurs,

Accepted Answer

A) real wages must necessarily fall. 
B) real wages must necessarily rise. 
C) workers will experience falling real incomes. 
D) workers' real income may rise or fall. 
A) real wages must necessarily fall. 
B) real wages must necessarily rise. 
C) workers will experience falling real incomes. 
D) workers' real income may rise or fall.

Question 19

A new technological innovation would increase

Accepted Answer

A) the labor force. 
B) labor hours worked. 
C) labor productivity. 
D) population growth. 
A) the labor force. 
B) labor hours worked. 
C) labor productivity. 
D) population growth.

Question 20

Over the past few decades, nominal interest rates have been higher than real rates of interest.This means that

Accepted Answer

A) lenders must have expected inflation. 
B) borrowers must have expected deflation. 
C) lenders must have expected prices to fall. 
D) borrowers must have expected prices to fall. 
A) lenders must have expected inflation. 
B) borrowers must have expected deflation. 
C) lenders must have expected prices to fall. 
D) borrowers must have expected prices to fall.

Exam 23: The Goals of Macroeconomic Policy

The program of unemployment insurance in the United States was created during the

Changes in relative prices usually lead to increases in real income because prices have changed.

When the growth rates of actual and potential GDP diverge, they usually diverge because

Technological change or the effects of automation cause

Define the following terms carefully:(a)Full employment(b)Purchasing power of money(c)Real wage rate(d)Relative price

Sharon buys some common stock in 1990 for $10,000 and sells it in 2000 for $15,000.During the same period, prices have risen by 75 percent.The net result of Sharon's stock purchases is that she will

The rate of interest written on a contract between a borrower and a lender is the

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

During the course of the twentieth century, the average workweek in the United States has gotten shorter and Americans have enjoyed greater amounts of leisure time.How has this development affected potential GDP and labor productivity?

The growth rates of actual and potential GDP

High unemployment is socially wasteful.Why?

The real wage rate is defined as the wage rate divided by

The difference between the purchase price of a financial asset and the sale price of the asset is called a(n)

Structural unemployment may be particularly severe for

The federal government collects taxes on

According to economists, one of the signs of an unhealthy economy is a(n)

Which of the following scenarios best illustrates the concept of cyclical unemployment?

When inflation occurs,

A new technological innovation would increase

Over the past few decades, nominal interest rates have been higher than real rates of interest.This means that

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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