Question 1

Growth in potential GDP depends on

Accepted Answer

A) the labor force growth rate, capital stock growth rate, and rate of technical progress. 
B) government spending, growth in prices, and labor productivity. 
C) cyclical fluctuations and growth in the capital stock. 
D) growth in real GDP, nominal GDP, and the population. 
A) the labor force growth rate, capital stock growth rate, and rate of technical progress. 
B) government spending, growth in prices, and labor productivity. 
C) cyclical fluctuations and growth in the capital stock. 
D) growth in real GDP, nominal GDP, and the population.

Question 2

The basic data source to track the number of unemployed comes from a calculation of applications for new unemployment benefits.

Accepted Answer

A) True 
 B)False

Question 3

A decrease in the capital stock would be expected to

Accepted Answer

A) decrease the labor force. 
B) increase the level of output. 
C) decrease real GDP per capita. 
D) increase real GDP per capita. 
A) decrease the labor force. 
B) increase the level of output. 
C) decrease real GDP per capita. 
D) increase real GDP per capita.

Question 4

Hyperinflations are usually made possible by

Accepted Answer

A) multinational corporations. 
B) highly mobile international capital. 
C) governments printing money rapidly. 
D) higher and higher tax rates. 
A) multinational corporations. 
B) highly mobile international capital. 
C) governments printing money rapidly. 
D) higher and higher tax rates.

Question 5

Does the existence of unemployment insurance eliminate the economic costs of unemployment?

Accepted Answer

While unemployment insurance reduces the

Question 6

If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited to a 10 percent rate of return, then we should expect

Accepted Answer

A) increased investment by the utility. 
B) expansion of electric power generating capacity. 
C) future power shortages. 
D) excess investment by the electric utility. 
A) increased investment by the utility. 
B) expansion of electric power generating capacity. 
C) future power shortages. 
D) excess investment by the electric utility.

Question 7

Which of the following would impose the greatest costs to society?

Accepted Answer

A) high levels of expected inflation 
B) low levels of expected inflation 
C) variable rates of inflation 
D) stable rates of inflation 
A) high levels of expected inflation 
B) low levels of expected inflation 
C) variable rates of inflation 
D) stable rates of inflation

Question 8

From 1991 to 2007, the rate of inflation in the U.S.has been

Accepted Answer

A) zero. 
B) between zero and 2.1%. 
C) between 1.6% and 4.1%. 
D) between 3.2% and 7.2%. 
A) zero. 
B) between zero and 2.1%. 
C) between 1.6% and 4.1%. 
D) between 3.2% and 7.2%.

Question 9

When real GDP grows more slowly than potential GDP,

Accepted Answer

A) nominal GDP rises. 
B) the unemployment rate falls. 
C) labor productivity falls. 
D) the unemployment rate rises. 
A) nominal GDP rises. 
B) the unemployment rate falls. 
C) labor productivity falls. 
D) the unemployment rate rises.

Question 10

If economic output is increased by increasing the number of people working in the economy, then

Accepted Answer

A) both GDP per capita and labor productivity will increase. 
B) both GDP per capita and labor productivity will decrease. 
C) GDP per capita will increase. 
D) Labor productivity will increase. 
A) both GDP per capita and labor productivity will increase. 
B) both GDP per capita and labor productivity will decrease. 
C) GDP per capita will increase. 
D) Labor productivity will increase.

Question 11

Faster economic growth imposes an opportunity cost in the form of

Accepted Answer

A) reduced current consumption. 
B) a larger capital stock. 
C) increased investment. 
D) increased future income. 
A) reduced current consumption. 
B) a larger capital stock. 
C) increased investment. 
D) increased future income.

Question 12

"Hidden" or "disguised" unemployment consists of:

Accepted Answer

A) ​involuntary part time work 
B) ​loss of overtime 
C) ​shortened work hours 
D) ​All of the above. 
E) ​b and c only 
A) ​involuntary part time work 
B) ​loss of overtime 
C) ​shortened work hours 
D) ​All of the above. 
E) ​b and c only

Question 13

Businesses will want to borrow more funds as the real rate of interest decreases.

Accepted Answer

A) True 
 B)False

Question 14

Economists and psychologists are often on opposite sides of the economic growth debate.The nature of the debate is such that

Accepted Answer

A) economists emphasize the benefits of growth to finance valuable programs, and psychologists question whether more goods make people happier. 
B) economists emphasize that more money means more income for the government, and psychologists believe poorer people are happier. 
C) economists believe that economic growth imposes no serious costs on the economy, and psychologists question the statistical reliability of GDP numbers. 
D) economists stress the importance of money relative to leisure, and psychologists stress the importance of an unstructured life. 
A) economists emphasize the benefits of growth to finance valuable programs, and psychologists question whether more goods make people happier. 
B) economists emphasize that more money means more income for the government, and psychologists believe poorer people are happier. 
C) economists believe that economic growth imposes no serious costs on the economy, and psychologists question the statistical reliability of GDP numbers. 
D) economists stress the importance of money relative to leisure, and psychologists stress the importance of an unstructured life.

Question 15

If the capital stock increases, then the economy can produce ____ output with the ____ amount of labor.

Accepted Answer

A) same, same 
B) less, same 
C) more, same 
D) less, less 
A) same, same 
B) less, same 
C) more, same 
D) less, less

Question 16

Economists oppose limiting economic growth possibilities because such limits would inevitably involve

Accepted Answer

A) some expansion of private sector production. 
B) an increase in government spending. 
C) some form of mandatory controls on economic activity. 
D) mandated balanced federal budgets. 
A) some expansion of private sector production. 
B) an increase in government spending. 
C) some form of mandatory controls on economic activity. 
D) mandated balanced federal budgets.

Question 17

Prior to the Great Recession of 2007-2009, labor input in the U.S.was growing at nearly:

Accepted Answer

A) 1 percent per year 
B) 2 percent per year. 
C) 2.5 percent per year. 
D) 3 percent per year. 
A) 1 percent per year 
B) 2 percent per year. 
C) 2.5 percent per year. 
D) 3 percent per year.

Question 18

Increasing economic growth may be beneficial because

Accepted Answer

A) mass poverty is a serious problem in the United States. 
B) most Americans do not have the basic goods and services necessary for a decent life. 
C) the price level falls only if the economy is growing. 
D) most of the world is still below the poverty level of income. 
A) mass poverty is a serious problem in the United States. 
B) most Americans do not have the basic goods and services necessary for a decent life. 
C) the price level falls only if the economy is growing. 
D) most of the world is still below the poverty level of income.

Question 19

Due to the distortionary effects of inflation, capital investment may be reduced due to higher price levels.

Accepted Answer

A) True 
 B)False

Question 20

The production function shows the volume of output that can be produced from given inputs.

Accepted Answer

A) True 
 B)False

Exam 23: The Goals of Macroeconomic Policy

Growth in potential GDP depends on

The basic data source to track the number of unemployed comes from a calculation of applications for new unemployment benefits.

A decrease in the capital stock would be expected to

Hyperinflations are usually made possible by

Does the existence of unemployment insurance eliminate the economic costs of unemployment?

If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited to a 10 percent rate of return, then we should expect

Which of the following would impose the greatest costs to society?

From 1991 to 2007, the rate of inflation in the U.S.has been

When real GDP grows more slowly than potential GDP,

If economic output is increased by increasing the number of people working in the economy, then

Faster economic growth imposes an opportunity cost in the form of

"Hidden" or "disguised" unemployment consists of:

Businesses will want to borrow more funds as the real rate of interest decreases.

Economists and psychologists are often on opposite sides of the economic growth debate.The nature of the debate is such that

If the capital stock increases, then the economy can produce ____ output with the ____ amount of labor.

Economists oppose limiting economic growth possibilities because such limits would inevitably involve

Prior to the Great Recession of 2007-2009, labor input in the U.S.was growing at nearly:

Increasing economic growth may be beneficial because

Due to the distortionary effects of inflation, capital investment may be reduced due to higher price levels.

The production function shows the volume of output that can be produced from given inputs.

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

Filters

If the capital stock increases, then the economy can produce output with the amount of labor.