QUESTION 1

1. If the real interest rate is 3% and the inflation rate is 6%, the nominal interest rate is
2. a.3%
3. b.9%
4. c.2%
5. d.18%

1 points

QUESTION 2

1. Many scholars believe that the importance of research and development is understated. Efforts in research and development can include:
2. a.the introduction of new products.
3. b.management improvements.
4. c.production innovations.
5. d.any of the above.

1 points

QUESTION 3

1. If consumption in the United States was 68 percent of GDP, investment was 19 percent, government purchases were 13 percent, exports were 14 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.
2. a.28
3. b.-28
4. c.0
5. d.-1

1 points

QUESTION 4

1. A person who works 25 hours per week:
2. a.is considered to be a discouraged worker.
3. b.is considered to be unemployed.
4. c.is considered to part of the labor force.
5. d.none of the above

1 points

QUESTION 5

1. Enforcement of property rights is likely to result in:
2. a.lower rates of economic growth.
3. b.corruption.
4. c.political instability.
5. d.more incentives to invest.

1 points

QUESTION 6

1. For individuals who are holding money or fixed dollar value assets, inflation has the effect of:
2. a.reducing their ability to purchase goods and services with those dollars.
3. b.demonstrating the interest rate effect.
4. c.improving their ability to purchase goods and services with those dollars.
5. d.increasing the purchasing power of those dollars.

1 points

QUESTION 7

1. Exhibit 10-4
3. Assume that 2014 is the base year with a price index of 100 and that one of each good is included in the market basket.
6. Hot Dog
7. Soft Drink
8. Program
9. 2014
10. $10.00
11. $8.00
12. $ 16.00
13. 2015
14. $11.00
15. $9.50
16. $ 18.00
17. 2016
18. $12.00
19. $11.00
20. $20.00
23. Refer toExhibit 10-4. What would the price index equal in 2015?
24. a.88.3
25. b.126.5
26. c.113.2
27. d.101.1

1 points

QUESTION 8

1. The official unemployment rate may not reflect the true state of unemployment because:
2. a.part-time employees who want to work more hours are treated the same statistically as those who hold full-time jobs.
3. b.some individuals who want to work may become discouraged and cease actively looking for work.
4. c.workers laid off from their jobs and looking for new ones are not counted among the unemployed.
5. d.(a) and (b) only.

1 points

QUESTION 9

1. Which of the following is true?
2. a.At below the natural rate of unemployment, the economy is considered to be beyond full employment.
3. b.At above full employment, the economy is producing more than potential output.
4. c.At above full employment, unemployment would be below its natural rate.
5. d.All of the above are true.

1 points

QUESTION 10

1. An increase in growth rates will cause:
2. a.a movement from a point on an economy's production possibilities curve to a point inside the curve.
3. b.an outward shift of an economy's production possibilities curve.
4. c.an economy's production possibilities curve to slope upward.
5. d.an inward shift of an economy's production possibilities curve.

1 points

QUESTION 11

1. If a country's annual growth rate is 2%, then its output will double in approximately ____ years.
2. a.35
3. b.10
4. c.2
5. d.25

1 points

QUESTION 12

1. GDP is:
2. a.national income after taxes.
3. b.the value of all final goods and services produced domestically within a given period.
4. c.the total value of all final goods and services plus intermediate goods and services produced domestically within a given period.
5. d.the total value of all consumer expenditures within a given period.

1 points

QUESTION 13

1. Cost-push inflation is caused by:
2. a.a decrease in aggregate demand.
3. b.an increase in short-run aggregate supply.
4. c.a decrease in short-run aggregate supply.
5. d.an increase in aggregate demand.

1 points

QUESTION 14

1. If government spending increased by $200 billion and the MPC within the economy was 0.9, what would be the total impact on real GDP?
2. a.$380 billion increase
3. b.$222 billion increase
4. c.$2.0 trillion increase
5. d.$180 billion increase

1 points

QUESTION 15

1. Short-run aggregate supply:
2. a.reflects how much RGDP suppliers are willing and able to produce at different price levels.
3. b.is a fixed volume of output.
4. c.shifts only when theLRASshifts.
5. d.is not affected at all by the price level.

1 points

QUESTION 16

1. The CPI:
2. a.is the broadest generally reported measure of inflation.
3. b.ignores imported goods purchased by consumers.
4. c.includes fewer goods and services than the GDP deflator.
5. d.generally rises substantially slower than the GDP deflator during inflationary conditions.

1 points

QUESTION 17

1. The short-run aggregate supply curve is drawn with:
2. a.the price level on the vertical axis and real GDP on the horizontal axis.
3. b.the price level on the vertical axis and nominal GDP on the horizontal axis.
4. c.real GDP on the horizontal axis and the rate of unemployment on the vertical axis.
5. d.nominal GDP on the vertical axis and real GDP on the horizontal axis.

1 points

QUESTION 18

1. If frictional unemployment increased, but structural unemployment decreased by more, the natural rate of unemployment:
2. a.Would decrease
3. b.Would not change
4. c.Would be affected in an unpredictable manner
5. d.Would increase

1 points

QUESTION 19

1. An individual who voluntarily leaves one job and spends a period of time seeking another is considered:
2. a.seasonally unemployed.
3. b.structurally unemployed.
4. c.frictionally unemployed.
5. d.cyclically unemployed.

1 points

QUESTION 20

1. Offering employees an efficiency wage may:
2. a.reduce turnover.
3. b.attract the most productive workers.
4. c.lead to a reduction in training costs.
5. d.result in any of the above.

1 points

QUESTION 21

1. The faster the rate of technological progress:
2. a.the greater the rate of economic growth.
3. b.the slower the rate of growth of the money supply.
4. c.the greater the rate of population growth.
5. d.the slower the rate of economic growth.

1 points

QUESTION 22

1. A long run equilibrium:
2. a.Will be at a smaller output level than the natural level of real output.
3. b.Will be at a greater output level than the natural level of real output.
4. c.Long-run equilibrium could be at any of the above levels of output.
5. d.Will be at the natural level of real output.

1 points

QUESTION 23

1. If you are living in a period of continued high inflation on a fixed income, the cost of the goods and services you buy ____ and your nominal income ____.
2. a.increases, increases
3. b.decreases, decreases
4. c.increases, remains the same
5. d.decreases, remains the same

1 points

QUESTION 24

1. If the GDP deflator increases from one year to the next, it can be concluded that the economy has experienced:
2. a.inflation.
3. b.stagnation.
4. c.stagflation.
5. d.growth.

1 points

QUESTION 25

1. Exhibit 11-1
3. GDP - Expenditure Approach
6. Category
7. Amount
8. (billions of current dollars)
9. Percent of GDP
10. Consumption(C)
12. 70%
13. Investment(I)
15. 20%
16. Government purchases(G)
18. 15%
19. Net exports of goods and services(XM)
22. Gross domestic product
23. $9,000
24. 100%
26. Refer toExhibit 11-1. Government purchases(G)for the year in question is:
27. a.$2,550 billion.
28. b.$3,400 billion.
29. c.$1,350 billion.
30. d.$2,100 billion.

1 points

QUESTION 26

1. If the economy is operating with full employment, which of the following is essentially eliminated?
2. a.frictional unemployment
3. b.structural unemployment
4. c.cyclical unemployment
5. d.all of the above

1 points

QUESTION 27

1. Which of the following is true?
2. a.During the contractionary phase of the business cycle, the rate of unemployment is generally quite low.
3. b.The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.
4. c.A depression is a recession that is mild and relatively brief.
5. d.The timing of business fluctuations is regular and therefore easily predictable.

1 points

QUESTION 28

1. An economic slowdown in Europe is likely to lead to a(n):
2. a.increase in U.S. exports and U.S. aggregate demand.
3. b.decrease in U.S. imports and U.S. aggregate demand.
4. c.decrease in U.S. exports and U.S. aggregate demand.
5. d.increase in U.S. imports and U.S. aggregate demand.

1 points

QUESTION 29

1. TheSRASis ____; theLRASis ____.
2. a.vertical; upward sloping
3. b.vertical; vertical
4. c.upward sloping; vertical
5. d.upward sloping; upward sloping

1 points

QUESTION 30

1. A federal program aimed at retraining the unemployed workers of the declining auto and steel industries is designed to reduce which type of unemployment?
2. a.cyclical
3. b.frictional
4. c.seasonal
5. d.structural

1 points

QUESTION 31

1. If the overall unemployment rate is 8 percent, it is likely that:
2. a.It is greater than 8 percent for teenagers.
3. b.It is less than 8 percent for college=educated middle-aged men.
4. c.It is more than 8 percent for those without a high school diploma.
5. d.All of the above are true.

1 points

QUESTION 32

1. When there is a recessionary gap:
2. a.Employment exceeds full employment.
3. b.Employment equals full employment.
4. c.Employment is less than full employment.
5. d.Any of the above is possible.

1 points

QUESTION 33

1. Which of the following individuals would be considered unemployed?
2. a.a full time student who feel that he is taking too many classes to work
3. b.a lawyer temporarily working as an assistant in a law firm
4. c.a computer technician who has not worked for 10 months and gave up looking 4 months ago
5. d.none of the above

1 points

QUESTION 34

1. Suzie Homemaker works in her home as a full-time caretaker and homemaker. Officially, she is:
2. a.a discouraged worker.
3. b.not in the labor force.
4. c.unemployed.
5. d.employed.

1 points

QUESTION 35

1. Exhibit14-2
4. InExhibit14-2, which curve represents short-run aggregate supply?
5. a.A
6. b.B
7. c.C
8. d.none of the above

1 points

QUESTION 36

1. In the national income accounts, investment includes:
2. a.expenditures on durable consumer goods.
3. b.additions to business inventories.
4. c.government construction of a new dam.
5. d.purchases of used machinery by businesses.

1 points

QUESTION 37

1. The natural rate of unemployment:
2. a.includes only structural unemployment.
3. b.includes only frictional unemployment.
4. c.includes only cyclical unemployment.
5. d.is the sum of both frictional and structural unemployment when they are at a maximum.

1 points

QUESTION 38

1. The interest rate effect suggests that the negative slope of the aggregate demand curve results at least in part because changes in the price level affect:
2. a.the holdings of money by households and firms.
3. b.domestic purchases of foreign goods.
4. c.the level of income.
5. d.the real purchasing power of assets.

1 points

QUESTION 39

1. Which of the following expenditures would be counted as consumption in GDP accounts?
2. a.Juan leases a new computer for his graphic design company.
3. b.Leslie, an EPA scientist, buys a new computer for her lab at work.
4. c.Mark buys a new computer for his medical economic consulting business.
5. d.Mary buys a new home computer to check her e-mail and play computer games.

1 points

QUESTION 40

1. Which of the following is an example of an intermediate good?
2. a.a share of Wal-Mart stock
3. b.a used Ford Mustang sold from one neighbor to another
4. c.cloth sold to a suit manufacturer
5. d.a pair of jeans sold by a clothing retailer

1 points

QUESTION 41

1. The ____ shows roughly how long it will take a nation to double its output at various growth rates.
2. a.duopoly rule
3. b.rule of rapid growth
4. c.rule of 70
5. d.rule of 1950

1 points

QUESTION 42

1. Increases in the capital stock:
2. a.Shift the short run aggregate supply curve to the right.
3. b.Shift the long run aggregate supply curve to the right.
4. c.Shift both short run and long run aggregate supply curves to the right.
5. d.Do none of the above

1 points

QUESTION 43

1. The formula from the expenditure method indicates that GDP is equal to:
2. a.C + I + G + MX
3. b.C + I + G + XM
4. c.C + IG + XM
5. d.C + IGXM

1 points

QUESTION 44

1. If nominal GDP rose by 10 percent and the price index increased from 100 to 105 in a given year, real GDP:
2. a.rose by 5 percent.
3. b.rose by roughly 9.5 percent.
4. c.fell by 5 percent.
5. d.rose by 15 percent.

1 points

QUESTION 45

1. Which of the following will decrease aggregate demand?
2. a.exports falling faster than imports
3. b.exports rising faster than imports
4. c.exports rising the same amount as imports
5. d.exports rising and imports falling

1 points

QUESTION 46

1. Which of the following isnotconsidered a factor that contributes to economic growth?
2. a.the migration of resources from areas of low productivity to areas of high productivity
3. b.increased labor productivity
4. c.increased infant mortality rates
5. d.technological advances

1 points

QUESTION 47

1. If real GDP is increasing more rapidly than the population, then:
2. a.interest rates must be falling.
3. b.per capita real GDP will be increasing.
4. c.per capita real GDP will be decreasing.
5. d.the economy must be experiencing inflation.

1 points

QUESTION 48

1. Which of the following factors contribute to economic growth?
2. a.growth in physical capital
3. b.technological advances
4. c.an increase in the productivity of labor
5. d.all of the above

1 points

QUESTION 49

1. In some rural regions of the United States, residents harvest much of their food supplies directly from nature by hunting, fishing, and gathering. With regard to these subsistence activities:
2. a.GDP will underestimate the true value of the nation's production of final goods and services only when the income approach is used.
3. b.GDP will overestimate the true value of the nation's production of final goods and services.
4. c.GDP will underestimate the true value of the nation's production of final goods and services.
5. d.GDP will correctly estimate the true value of the nation's production of final goods and services.

1 points

QUESTION 50

1. Structural unemployment occurs when:
2. a.steelworkers are laid off due to a downturn in the economy.
3. b.a person leaves a job to seek a better position and has not yet found the job he or she wants.
4. c.frictional unemployment exceeds 5 percent of the labor force.
5. d.automation reduces the need for welders in Detroit.