Question 1

If you anticipate that the inflation rate is going to rise from three percent to 10 percent next year, you should

Accepted Answer

A) save your funds at a fixed rate of interest. 
B) borrow funds at a fixed rate of interest. 
C) keep your funds in your sock drawer. 
D) wait to buy a house until next year. 
A) save your funds at a fixed rate of interest. 
B) borrow funds at a fixed rate of interest. 
C) keep your funds in your sock drawer. 
D) wait to buy a house until next year.

Question 2

Why is there a resource cost associated with inflation?

Accepted Answer

A) because unemployment increases when there is inflation 
B) because most workers end up working fewer hours during periods of inflation 
C) because consumers, workers, and firms devote resources to protecting themselves from the financial costs of inflation 
D) because the existence of inflation discourages people from placing their savings in interest-bearing accounts, where it is needed to fund capital investment 
A) because unemployment increases when there is inflation 
B) because most workers end up working fewer hours during periods of inflation 
C) because consumers, workers, and firms devote resources to protecting themselves from the financial costs of inflation 
D) because the existence of inflation discourages people from placing their savings in interest-bearing accounts, where it is needed to fund capital investment

Question 3

A person who has taken medical leave is

Accepted Answer

A) in the labor force. 
B) not in the labor force. 
C) unemployed. 
D) a job leaver. 
A) in the labor force. 
B) not in the labor force. 
C) unemployed. 
D) a job leaver.

Question 4

The statistical measure of the weighted average of prices of goods purchased by a typical individual is called the

Accepted Answer

A) Producer Price Index. 
B) Gross Domestic Product (GDP)deflator. 
C) Consumer Price Index. 
D) Personal Consumption Expenditure Index. 
A) Producer Price Index. 
B) Gross Domestic Product (GDP)deflator. 
C) Consumer Price Index. 
D) Personal Consumption Expenditure Index.

Question 5

A cutback in the space program due to a slow economy causes an increase in unemployment among aeronautical engineers. This is an example of

Accepted Answer

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

Question 6

-Refer to the above figure. A recession is best described as

Accepted Answer

A) the upward linear line. 
B) the period between Point B and Point C. 
C) the period between Point A and Point B. 
D) none of the above. 
A) the upward linear line. 
B) the period between Point B and Point C. 
C) the period between Point A and Point B. 
D) none of the above.

Question 7

Which of the following would be considered an external shock?

Accepted Answer

A) a decline in tax revenues during a recession 
B) a recession 
C) a depression 
D) a war 
A) a decline in tax revenues during a recession 
B) a recession 
C) a depression 
D) a war

Question 8

Which government agency compiles the consumer price index?

Accepted Answer

A) the Congressional Budget Office 
B) the Government Accounting Office 
C) the Bureau of Labor Statistics 
D) It is not compiled by a government agency, but rather by an independent research institution called the Conference Board. 
A) the Congressional Budget Office 
B) the Government Accounting Office 
C) the Bureau of Labor Statistics 
D) It is not compiled by a government agency, but rather by an independent research institution called the Conference Board.

Question 9

The real rate of interest is the

Accepted Answer

A) nominal rate of interest minus the anticipated rate of inflation. 
B) current rate actually paid by the borrower. 
C) difference between the bank's lending and savings rates. 
D) current rate which the government pays on its debt. 
A) nominal rate of interest minus the anticipated rate of inflation. 
B) current rate actually paid by the borrower. 
C) difference between the bank's lending and savings rates. 
D) current rate which the government pays on its debt.

Question 10

The United States experienced a deep recession between 2007 and 2009. Which type of unemployment would most likely increase during that period of recession?

Accepted Answer

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

Question 11

If Tim works at home taking care of the household

Accepted Answer

A) he is part of the labor force. 
B) he is not part of the labor force. 
C) he is considered to be employed. 
D) he is considered to be unemployed. 
A) he is part of the labor force. 
B) he is not part of the labor force. 
C) he is considered to be employed. 
D) he is considered to be unemployed.

Question 12

The real rate of interest is

Accepted Answer

A) the interest rate observed in the market. 
B) the interest rate observed in the market minus the anticipated inflation rate. 
C) not influenced by inflation. 
D) a value that depends upon the stock market. 
A) the interest rate observed in the market. 
B) the interest rate observed in the market minus the anticipated inflation rate. 
C) not influenced by inflation. 
D) a value that depends upon the stock market.

Question 13

The nominal value of a good is

Accepted Answer

A) the good's value expressed in purchasing power terms. 
B) the good's anticipated value one year from now. 
C) the price of the good in today's dollars, minus an anticipated inflation premium. 
D) the price of the good in today's dollars. 
A) the good's value expressed in purchasing power terms. 
B) the good's anticipated value one year from now. 
C) the price of the good in today's dollars, minus an anticipated inflation premium. 
D) the price of the good in today's dollars.

Question 14

The greater the inflation rate, the

Accepted Answer

A) faster the decrease in the purchasing power of money. 
B) slower the decrease in the purchasing power of money. 
C) better it is to hold money as cash. 
D) better it is to put money into savings accounts. 
A) faster the decrease in the purchasing power of money. 
B) slower the decrease in the purchasing power of money. 
C) better it is to hold money as cash. 
D) better it is to put money into savings accounts.

Question 15

If the rate of inflation is 5 percent and the real interest rate is 3 percent, the nominal interest rate should be

Accepted Answer

A) 1 percent. 
B) 2 percent. 
C) 8 percent. 
D) -2 percent. 
A) 1 percent. 
B) 2 percent. 
C) 8 percent. 
D) -2 percent.

Question 16

What are the four criteria used by the Bureau of Labor Statistics to determine whether an individual is unemployed or not?

Accepted Answer

First are job losers, who became unemplo

Question 17

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

Accepted Answer

A) The GDP deflator does not include enough items in its market basket. 
B) A base year cannot be defined for the GDP deflator. 
C) The GDP deflator reflects not only changes in prices, but also changes in consumption patterns as consumers substitute between goods. 
D) The GDP deflator overstates the true rate of inflation, whereas the CPI understates it. 
A) The GDP deflator does not include enough items in its market basket. 
B) A base year cannot be defined for the GDP deflator. 
C) The GDP deflator reflects not only changes in prices, but also changes in consumption patterns as consumers substitute between goods. 
D) The GDP deflator overstates the true rate of inflation, whereas the CPI understates it.

Question 18

Deflation is defined as a situation in which

Accepted Answer

A) the rate of inflation is below 2 percent. 
B) the average of all prices of goods and services in an economy is falling. 
C) the value of the dollar is rising relative to other currencies. 
D) the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter. 
A) the rate of inflation is below 2 percent. 
B) the average of all prices of goods and services in an economy is falling. 
C) the value of the dollar is rising relative to other currencies. 
D) the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.

Question 19

Who are discouraged workers, and how do they affect labor force participation and unemployment rates?

Accepted Answer

Discouraged workers are people who have

Question 20

The percentage of the noninstitutionalized working-age individuals who are employed or seeking work is known as

Accepted Answer

A) the labor force. 
B) the labor force participation rate. 
C) discouraged worker. 
D) the stock of employed and unemployed workers. 
A) the labor force. 
B) the labor force participation rate. 
C) discouraged worker. 
D) the stock of employed and unemployed workers.

If you anticipate that the inflation rate is going to rise from three percent to 10 percent next year, you should

Why is there a resource cost associated with inflation?

A person who has taken medical leave is

The statistical measure of the weighted average of prices of goods purchased by a typical individual is called the

A cutback in the space program due to a slow economy causes an increase in unemployment among aeronautical engineers. This is an example of

-Refer to the above figure. A recession is best described as

Which of the following would be considered an external shock?

Which government agency compiles the consumer price index?

The real rate of interest is the

The United States experienced a deep recession between 2007 and 2009. Which type of unemployment would most likely increase during that period of recession?

If Tim works at home taking care of the household

The real rate of interest is

The nominal value of a good is

The greater the inflation rate, the

If the rate of inflation is 5 percent and the real interest rate is 3 percent, the nominal interest rate should be

What are the four criteria used by the Bureau of Labor Statistics to determine whether an individual is unemployed or not?

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

Deflation is defined as a situation in which

Who are discouraged workers, and how do they affect labor force participation and unemployment rates?

The percentage of the noninstitutionalized working-age individuals who are employed or seeking work is known as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

If you anticipate that the inflation rate is going to rise from three percent to 10 percent next year, you should

Why is there a resource cost associated with inflation?

A person who has taken medical leave is

The statistical measure of the weighted average of prices of goods purchased by a typical individual is called the

A cutback in the space program due to a slow economy causes an increase in unemployment among aeronautical engineers. This is an example of

-Refer to the above figure. A recession is best described as

Which of the following would be considered an external shock?

Which government agency compiles the consumer price index?

The real rate of interest is the

The United States experienced a deep recession between 2007 and 2009. Which type of unemployment would most likely increase during that period of recession?

If Tim works at home taking care of the household

The real rate of interest is

The nominal value of a good is

The greater the inflation rate, the

If the rate of inflation is 5 percent and the real interest rate is 3 percent, the nominal interest rate should be

What are the four criteria used by the Bureau of Labor Statistics to determine whether an individual is unemployed or not?

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

Deflation is defined as a situation in which

Who are discouraged workers, and how do they affect labor force participation and unemployment rates?

The percentage of the noninstitutionalized working-age individuals who are employed or seeking work is known as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters