Question 1

One of the following individuals tend to benefit from inflation.

Accepted Answer

A)  Retirees 
B)  Government employees 
C)  Seasoned workers 
D)  Homeowners

Question 2

Potential GDP would increase if

Accepted Answer

A)  the rate of capital depreciation increased. 
B)  the labor force decreased. 
C)  the price level grew. 
D)  the rate of capital growth increased.

Question 3

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

Accepted Answer

The answer of Does inflation always cause workers losses due...

Question 4

Structural unemployment may be particularly severe for

Accepted Answer

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

Question 5

An economy could produce above its potential GDP for a short period of time by

Accepted Answer

A)  reducing the size of the labor force. 
B)  increasing the price of final goods and services. 
C)  adding extra shifts of work, such as overtime or night shifts. 
D)  increasing the money supply.

Question 6

The unemployment rate is the number of unemployed people, expressed as

Accepted Answer

A)  a ratio of total employed to the population. 
B)  a ratio of unemployed to the total employed. 
C)  a percentage of the labor force. 
D)  a percentage of the population.

Question 7

Discouraged workers are included in the

Accepted Answer

A)  labor force category. 
B)  unemployed category. 
C)  not in the labor force category. 
D)  employed category.

Question 8

Given the labor force, either more capital or better technology will shift the production function downward.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

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.

Question 12

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.

Question 13

The term frictional unemployment refers to persons who are out of work

Accepted Answer

A)  due to technological change. 
B)  due to strikes or lockouts. 
C)  and have given up looking for work. 
D)  because they are between jobs.

Question 14

The production function has ____ on the horizontal axis.

Accepted Answer

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

Question 15

Full employment is defined by most economists as the minimization of

Accepted Answer

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

Question 16

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.

Question 17

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.

Question 18

One of the determinants of real GDP is output per hour of labor. This statistic is called labor

Accepted Answer

A)  force growth. 
B)  productivity. 
C)  force participation. 
D)  force input.

Question 19

Americans viewed the 12 percent mortgage interest rates of the 1980s as exorbitantly high while they considered the 7 percent mortgage interest rates of the late 1990s as reasonable. This represents a confusion of

Accepted Answer

A)  actual and expected inflation. 
B)  real versus nominal inflation. 
C)  real versus expected mortgage payments. 
D)  real versus nominal interest rates.

Question 20

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.

Exam 22: The Goals of Macroeconomic Policy

One of the following individuals tend to benefit from inflation.

Potential GDP would increase if

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

Structural unemployment may be particularly severe for

An economy could produce above its potential GDP for a short period of time by

The unemployment rate is the number of unemployed people, expressed as

Discouraged workers are included in the

Given the labor force, either more capital or better technology will shift the production function downward.

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

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

An increase in the capital stock would be expected to

When prices rise,

The term frictional unemployment refers to persons who are out of work

The production function has ____ on the horizontal axis.

Full employment is defined by most economists as the minimization of

The unemployment rate is equal to

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

One of the determinants of real GDP is output per hour of labor. This statistic is called labor

Americans viewed the 12 percent mortgage interest rates of the 1980s as exorbitantly high while they considered the 7 percent mortgage interest rates of the late 1990s as reasonable. This represents a confusion of

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