Question 1

The principal effect of unemployment insurance on the entire U.S.economy is

Accepted Answer

A) that it spreads the costs of unemployment. 
B) that it eliminates the social costs of unemployment. 
C) that it reduces the social costs of unemployment. 
D) the reduction in the federal debt. 
A) that it spreads the costs of unemployment. 
B) that it eliminates the social costs of unemployment. 
C) that it reduces the social costs of unemployment. 
D) the reduction in the federal debt.

Question 2

Economists generally assume that ____ economic growth is better for society.

Accepted Answer

A) slower 
B) faster 
C) stable 
D) declining 
A) slower 
B) faster 
C) stable 
D) declining

Question 3

After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power.Therefore, it must be true that actual inflation was

Accepted Answer

A) greater than expected inflation. 
B) equal to expected inflation. 
C) less than expected inflation. 
D) greater than the nominal rate of interest. 
A) greater than expected inflation. 
B) equal to expected inflation. 
C) less than expected inflation. 
D) greater than the nominal rate of interest.

Question 4

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

Accepted Answer

A) real rates were higher in 2001. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2001 because the nominal rate was lower. 
A) real rates were higher in 2001. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2001 because the nominal rate was lower.

Question 5

Cyclical unemployment occurs when real GDP falls below potential GDP.

Accepted Answer

A) True 
 B)False

Question 6

If an investor had a $25,000 long-term capital gain on a $100,000 investment from 1984 to 2010, her real rate of return was most likely

Accepted Answer

A) equal to the expected rate of inflation. 
B) equal to the nominal rate of inflation. 
C) zero. 
D) negative. 
A) equal to the expected rate of inflation. 
B) equal to the nominal rate of inflation. 
C) zero. 
D) negative.

Question 7

To measure how productive workers in the economy are, the best measure to use would be

Accepted Answer

A) real GDP. 
B) GDP divided by the population. 
C) GDP divided by the nation's capital stock. 
D) GDP divided by hours worked. 
A) real GDP. 
B) GDP divided by the population. 
C) GDP divided by the nation's capital stock. 
D) GDP divided by hours worked.

Question 8

When nominal interest rates are held below inflation rates, then households will have an incentive to

Accepted Answer

A) consume. 
B) save. 
C) purchase financial assets. 
D) postpone current consumption plans. 
A) consume. 
B) save. 
C) purchase financial assets. 
D) postpone current consumption plans.

Question 9

Unemployment insurance benefits the macroeconomy by supporting purchasing power.

Accepted Answer

A) True 
 B)False

Question 10

Unemployment insurance has an important macroeconomic effect because it

Accepted Answer

A) props up aggregate supply. 
B) props up aggregate demand. 
C) props up aggregate exports. 
D) helps balance the federal budget. 
A) props up aggregate supply. 
B) props up aggregate demand. 
C) props up aggregate exports. 
D) helps balance the federal budget.

Question 11

The German inflation rate after World War I was measured in the thousands of percents.This condition is referred to as

Accepted Answer

A) fundamental inflation. 
B) environmental inflation. 
C) hyperinflation. 
D) episodic inflation. 
A) fundamental inflation. 
B) environmental inflation. 
C) hyperinflation. 
D) episodic inflation.

Question 12

Labor productivity measures output per hour of work.

Accepted Answer

A) True 
 B)False

Question 13

If you purchased shares of common stock in 1990 for $1,000 and sold them for $2,000 in 2001 you would be liable for taxes on

Accepted Answer

A) $2,000. 
B) $1,000 less the rate of inflation. 
C) $1,000. 
D) $2,000 less the rate of inflation. 
A) $2,000. 
B) $1,000 less the rate of inflation. 
C) $1,000. 
D) $2,000 less the rate of inflation.

Question 14

An increase 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 15

When prices rise

Accepted Answer

A) the rich benefit at the expense of the poor. 
B) the poor benefit at the expense of the rich. 
C) both the rich and poor lose real income. 
D) the effect in the rich and poor is uncertain. 
A) the rich benefit at the expense of the poor. 
B) the poor benefit at the expense of the rich. 
C) both the rich and poor lose real income. 
D) the effect in the rich and poor is uncertain.

Question 16

Does inflation always cause workers losses due to decreases in real wages?
 Why or why not?

Accepted Answer

During most inflationary periods, all pr

Question 17

The unemployment rate for married men is usually higher than the rate for teenagers.

Accepted Answer

A) True 
 B)False

Question 18

Potential GDP is an estimate of the economy's ability to produce goods and services if the

Accepted Answer

A) labor force is fully employed. 
B) price level is stable. 
C) trade balance is zero. 
D) federal budget is balanced. 
A) labor force is fully employed. 
B) price level is stable. 
C) trade balance is zero. 
D) federal budget is balanced.

Question 19

Inflation is a very minor problem for lenders because it is relatively easy to estimate future rates of inflation.

Accepted Answer

A) True 
 B)False

Question 20

Older Americans living on a pension and therefore on a fixed income, tend to be made

Accepted Answer

A) better off when prices rise. 
B) better off when inflation rates rise. 
C) worse off when prices rise. 
D) worse off when prices fall. 
A) better off when prices rise. 
B) better off when inflation rates rise. 
C) worse off when prices rise. 
D) worse off when prices fall.

Exam 23: The Goals of Macroeconomic Policy

The principal effect of unemployment insurance on the entire U.S.economy is

Economists generally assume that ____ economic growth is better for society.

After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power.Therefore, it must be true that actual inflation was

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

Cyclical unemployment occurs when real GDP falls below potential GDP.

If an investor had a $25,000 long-term capital gain on a $100,000 investment from 1984 to 2010, her real rate of return was most likely

To measure how productive workers in the economy are, the best measure to use would be

When nominal interest rates are held below inflation rates, then households will have an incentive to

Unemployment insurance benefits the macroeconomy by supporting purchasing power.

Unemployment insurance has an important macroeconomic effect because it

The German inflation rate after World War I was measured in the thousands of percents.This condition is referred to as

Labor productivity measures output per hour of work.

If you purchased shares of common stock in 1990 for $1,000 and sold them for $2,000 in 2001 you would be liable for taxes on

An increase in the capital stock would be expected to

When prices rise

Does inflation always cause workers losses due to decreases in real wages? Why or why not?

The unemployment rate for married men is usually higher than the rate for teenagers.

Potential GDP is an estimate of the economy's ability to produce goods and services if the

Inflation is a very minor problem for lenders because it is relatively easy to estimate future rates of inflation.

Older Americans living on a pension and therefore on a fixed income, tend to be made

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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