Question 1

The amount of goods and services the economy could produce if the labor force is fully employed is called

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) actual GDP. 
D) potential GDP. 
A) nominal GDP. 
B) real GDP. 
C) actual GDP. 
D) potential GDP.

Question 2

Inflation affects borrowers and lenders differently.After signing a contract with a fixed nominal interest rate, it can be expected that

Accepted Answer

A) borrowers will hope that prices fall. 
B) lenders will hope that prices rise. 
C) lenders will hope that the purchasing power of money will fall. 
D) borrowers will hope that prices rise. 
A) borrowers will hope that prices fall. 
B) lenders will hope that prices rise. 
C) lenders will hope that the purchasing power of money will fall. 
D) borrowers will hope that prices rise.

Question 3

One of the factors contributing to the existence of frictional unemployment is

Accepted Answer

A) automation. 
B) labor union strikes. 
C) occupational mobility. 
D) falling real GDP. 
A) automation. 
B) labor union strikes. 
C) occupational mobility. 
D) falling real GDP.

Question 4

Changes in relative prices during inflationary periods usually lead to

Accepted Answer

A) decreases in real income. 
B) some people gaining real income. 
C) increases in the purchasing power of money. 
D) increases in real income. 
A) decreases in real income. 
B) some people gaining real income. 
C) increases in the purchasing power of money. 
D) increases in real income.

Question 5

Structural unemployment arises when

Accepted Answer

A) marginal productivity of labor becomes zero. 
B) there is a cyclical change in the economy. 
C) jobs are eliminated by changes in the economy. 
D) people change their jobs. 
A) marginal productivity of labor becomes zero. 
B) there is a cyclical change in the economy. 
C) jobs are eliminated by changes in the economy. 
D) people change their jobs.

Question 6

The production function has ____ on the horizontal axis.

Accepted Answer

A) real GDP 
B) capital stock 
C) technology 
D) labor input 
A) real GDP 
B) capital stock 
C) technology 
D) labor input

Question 7

Labor productivity is defined as

Accepted Answer

A) the amount of output a typical worker turns out in an hour of work. 
B) the amount of output the best worker turns out in a day of work. 
C) the amount of output improvement in a year of work. 
D) the amount of average output improvement for a team in a year of work. 
A) the amount of output a typical worker turns out in an hour of work. 
B) the amount of output the best worker turns out in a day of work. 
C) the amount of output improvement in a year of work. 
D) the amount of average output improvement for a team in a year of work.

Question 8

Which of the following groups would be most optimistic about the effects of economic growth?

Accepted Answer

A) Environmentalists 
B) Psychologists 
C) Economists 
D) All would be similar in their views 
A) Environmentalists 
B) Psychologists 
C) Economists 
D) All would be similar in their views

Question 9

The unemployment rate is equal to

Accepted Answer

A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the population. 
C) the number unemployed divided by the number employed. 
D) the labor force divided by the population. 
A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the population. 
C) the number unemployed divided by the number employed. 
D) the labor force divided by the population.

Question 10

Inflation often bestows unearned income on

Accepted Answer

A) homeowners. 
B) lenders. 
C) creditors. 
D) fixed income receivers. 
A) homeowners. 
B) lenders. 
C) creditors. 
D) fixed income receivers.

Question 11

Paying into a pension fund while you are earning wages and salaries is equivalent to

Accepted Answer

A) borrowing money. 
B) lending money. 
C) withdrawing from a savings account. 
D) paying off debt. 
A) borrowing money. 
B) lending money. 
C) withdrawing from a savings account. 
D) paying off debt.

Question 12

If part of the labor force is unemployed, the foregone goods and services are

Accepted Answer

A) lost until the unemployed find jobs. 
B) are replaced by unemployment insurance. 
C) are lost forever. 
D) are replaced by an equal amount of imports. 
A) lost until the unemployed find jobs. 
B) are replaced by unemployment insurance. 
C) are lost forever. 
D) are replaced by an equal amount of imports.

Question 13

If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your

Accepted Answer

A) real rate of interest is 13 percent. 
B) expected rate of inflation is 5 percent. 
C) expected rate of inflation is 13 percent. 
D) real rate of interest is 36 percent. 
A) real rate of interest is 13 percent. 
B) expected rate of inflation is 5 percent. 
C) expected rate of inflation is 13 percent. 
D) real rate of interest is 36 percent.

Question 14

Full employment is defined by all economists as precisely 5 percent of the labor force.

Accepted Answer

A) True 
 B)False

Question 15

Someone who is out of work because they are between jobs is experiencing

Accepted Answer

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

Question 16

Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce.This task is the realm of

Accepted Answer

A) growth policy. 
B) stabilization policy. 
C) labor policy. 
D) inflation policy. 
A) growth policy. 
B) stabilization policy. 
C) labor policy. 
D) inflation policy.

Question 17

Explain how the current U.S.tax system levies taxes on capital gains and earned interest.What does this mean for the costs of inflation?

Accepted Answer

The U.S.tax system levies taxes on nomin

Question 18

Which of the following groups would most likely to benefit from inflation?

Accepted Answer

A) borrowers 
B) lenders 
C) creditors 
D) pensioners 
A) borrowers 
B) lenders 
C) creditors 
D) pensioners

Question 19

Full employment implies which of the following is reduced to zero?

Accepted Answer

A) cyclical unemployment only 
B) frictional unemployment only 
C) frictional and structural unemployment only 
D) frictional, structural, and cyclical unemployment 
A) cyclical unemployment only 
B) frictional unemployment only 
C) frictional and structural unemployment only 
D) frictional, structural, and cyclical unemployment

Question 20

Which of the following groups would have the lowest unemployment rates?

Accepted Answer

A) high-school dropouts 
B) married men 
C) nonwhite teenagers 
D) nonwhite women 
A) high-school dropouts 
B) married men 
C) nonwhite teenagers 
D) nonwhite women

Exam 23: The Goals of Macroeconomic Policy

The amount of goods and services the economy could produce if the labor force is fully employed is called

Inflation affects borrowers and lenders differently.After signing a contract with a fixed nominal interest rate, it can be expected that

One of the factors contributing to the existence of frictional unemployment is

Changes in relative prices during inflationary periods usually lead to

Structural unemployment arises when

The production function has ____ on the horizontal axis.

Labor productivity is defined as

Which of the following groups would be most optimistic about the effects of economic growth?

The unemployment rate is equal to

Inflation often bestows unearned income on

Paying into a pension fund while you are earning wages and salaries is equivalent to

If part of the labor force is unemployed, the foregone goods and services are

If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your

Full employment is defined by all economists as precisely 5 percent of the labor force.

Someone who is out of work because they are between jobs is experiencing

Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce.This task is the realm of

Explain how the current U.S.tax system levies taxes on capital gains and earned interest.What does this mean for the costs of inflation?

Which of the following groups would most likely to benefit from inflation?

Full employment implies which of the following is reduced to zero?

Which of the following groups would have the lowest unemployment rates?

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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