Econ Macro Test #2

Structural unemployment is caused by: job rationing.

long-lasting shocks to permanent features of an economy that make it more difficult for some workers to find jobs.

An increase in expected inflation will cause the economy's long-run aggregate supply curve to:

remain unchanged.

Which price index measures the average price received by suppliers?

the producer price index

One reason for an increased female labor force participation rate is that the birth control pill has:

reduced women's opportunity cost of working.

If spending growth is 3% and real GDP growth is 2%, what is the inflation rate?

1%

(Figure: Aggregate Demand) Point B on this aggregate demand curve represents an inflation rate of:

4%.

If the adult population of a country is 200 million, 100 million are employed, and 10 million are unemployed, this country's labor force participation rate is:

55%.

(Figure: Loanable Funds Contraction) Which of the following reasons could cause the supply curve for loanable funds to shift to the left from SLF to S1LF in the figure?

Consumers become less patient.

Which is NOT a reason people save during their working lifetimes?

They save to match income and spending from year to year.

What type of shock could be responsible for an increase in growth and a decrease in the inflation rate?

a positive real shock

Consider the three aggregate demand curves shown in the graph. Movement from Point A to Point D represents:

an increase in spending growth from 4% to 6%.

The inflation rate is the rate of change of the:

average level of prices.

A seasonal worker saves more when her income rises and saves less when her income falls. This behavior is referred to as:

consumption smoothing.

If the wage demands of workers are high relative to the prices of products,:

cyclical unemployment will be higher.

An unemployed person is best defined as an adult who:

does not have a job but is looking for work.

If spending grows by 2%, real GDP growth is 5%, and velocity is stable, then prices will be _____ at a rate of _____ according to the aggregate demand curve.

falling; 3%

Which type of unemployment is an outcome of economist Joseph Schumpeter's "creative destruction" process within an industry?

frictional unemployment

Discouraged workers are workers who have:

given up looking for work but would still like a job.

High oil prices tend to:

increase the demand for some products and reduce the demand for others.

When an increase in the money supply is unexpected by firms and workers, real GDP:

increases in the short run.

Even moderate inflation typically:

increases the amount of taxes that people pay over time.

The quantity theory of money assumes that real GDP:

is relatively stable.

The GDP deflator:

is the ratio of nominal GDP to real GDP multiplied by 100.

Money illusion occurs when people:

mistake changes in nominal prices for changes in real prices.

When economists state that "money is neutral," they mean that the:

money supply does not affect real GDP or unemployment.

The actual unemployment rate varies around the:

natural unemployment rate.

According to the quantity theory of money, a change in the money supply affects:

real GDP in the short run but not in the long run.

The economy's potential or "Solow" growth rate fluctuates over time because of:

real shocks.

The Fisher effect predicts that the nominal interest rate:

rises as the expected inflation rate rises.

A decrease in spending growth will cause the economy's aggregate demand curve to:

shift to the left.

During the Great Depression, the long-run aggregate supply curve:

shifted inward.

The phrase "persistent long-term unemployment" means:

that a substantial fraction of the unemployed have been so for more than one year and that this problem has lasted for a long time.

The decrease in private consumption and investment that occurs when the government borrows more is called:

the crowding-out effect.

Crowding-out is:

the decrease in private consumption and investment that occurs when government borrows more.

Which of the following elements reduces structural unemployment?

the enhancement of worker retraining programs