1.Inflation today is running at about two percent per year. This inflation is costly to

Select one:

A.Nobody because wages and dividends always go up by at least two percent each year

B.Individuals on fixed incomes (such as annuities and pensions)

C.Households who have borrowed money

D.The US Treasury which has to print more dollars

2.Which of the following would lead to an increase in household consumption?

Select one:

A.Higher interest rates

B.Stock prices decline by 10 percent

C.Tax rates for households decline

D.None of the above

3. Aggregate demand has increased. This will most likely lead to an increase in BOTH prices and GDP when

Select one:

A.GDP is well below potential GDP

B.GDP is at or near potential GDP

C.GDP is well above potential GDP

D.Potential GDP is growing

4. Aggregate supply will shift right when

Select one:

A.Energy prices fall

B.Labor force participation falls

C.Corporate taxes rise

D.Imports fall

5. Amazon is opening a new facility in northern Virginia for 25000 new employees. Overall, employment in northern Virginia will

Select one:

A.Not change

B.Increase but by less than 25000

C.Increase by 25000

D.Increase by more than 25000

6. The 2021 tax cuts shifted aggregate demand to the right. This will result in

Select one:

A.Higher GDP and a lower price level

B.Higher GDP and a higher price level

C.Lower GDP and a lower price level

D.Lower GDP and a higher price level

7. Jane did not work at all for pay last month. Instead she meant most of her time taking care of her elderly mother. How would Jane be classified regarding her employment status?

Select one:

A.Employed

B.Unemployed

C.Out of the labor force

D.Disabled

8. In April 2020, the unemployment rate in the US reached 14.7 percent. Which of the following contributed to that level of unemployment?

Select one:

A.Frictional unemployment

B.Structural unemployment

C.Cyclical unemployment

D.All of the above

9. In 2013 North Carolina made major changes to its unemployment benefits. Weekly payments were cut and unemployed workers could not collect for more than 20 weeks (compared to 26 weeks before the changes). What impact would these changes have on the natural rate of unemployment in North Carolina?

Select one:

A.It would go down

B.It would not change

C.It would increase

D.Cannot be determined based on economic reasoning

10.Suppose you wanted to compare the economic standard of living across different countries. Which of the following would be the most reliable measure?

Select one:

A.GDP

B.GDP per capita

C.Labor force participation rate

D.Stock market index

11.Which of the following would NOT be counted as part of the investment component of GDP?

Select one:

A.A family buys a new house

B.A couple buys stock in IBM

C.A firm adds to inventory for future sales

D.A firm buys a new bulldozer

12. This question is based on the New York Times article "Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate."

The national unemployment rate in January 2021 is 6.3 percent.Many experts argue that this understates the degree of distress in the labor market because

Select one:

a.unemployment benefits have become more generous

b.many jobs in hospitality and entertainment will not be back for some time

c.many workers, especially women, lost their jobs and then left the labor force

d.the Bureau of Labor Statistics has a hard time interviewing households during the pandemic

13. This question is based on the New York Times article "Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate."

During and immediately after the Great Recession in 2008-09, many workers who lost their jobs gave up looking for new positions and dropped out of the labor force.But then a couple of years later, those who exited the labor force

Select one:

a.were still out of the labor force

b.were back looking for jobs but not having any success

c.were back looking for jobs and in many cases finding them

d.were moving to other countries in search of work

14. This question is based on the New York Times article "Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate."

The Federal Reserve controls the money supply and interest rates, both of which are key determinants of aggregate demand.The Fed is responsible for price stability and full employment.As long as the Fed thinks we are well below full employment, we should expect

Select one:

a.the Fed to keep interest rates at their current low levels

b.the Fed to raise income taxes

c.the Fed to sell mortgage-backed securities

d.the Fed to collect more data on unemployments