macro final
During expansions, a. sales fall, but profits rise. b. sales and profits rise. c. sales and profits fall. d. sales rise, but profits fall.
B
Velocity of money
(P x Y)/M
labor force participation rate
(labor force/ adult population) x 100
unemployment rate
(unemployed/ labor force) x 100
In 2015, the Bureau of Labor Statistics (BLS) announced that of all adult Americans, 148,834,000 were employed, 8,296,000 were unemployed, and 93,671,000 were not in the labor force. The size of the labor force is _________, and the labor force participation rate is___________.
157,130,000; 62.7%
In 2015, the Bureau of Labor Statistics (BLS) announced that of all adult Americans, 148,834,000 were employed, 8,296,000 were unemployed, and 93,671,000 were not in the labor force. What is the adult population? 1. 157,130,000 2. 8,296,000 3. 148,834,000 4. 250,801,000
250,801,000
A change in weather could ____ a. shift the long-run aggregate-supply curve. b. cause a left to right movement along the long-run aggregate-supply curve. c. cause a right to left movement along the long-run aggregate-supply curve. d. not change the long-run aggregate-supply curve.
A
An increase in the availability of an important major resource such as oil shifts the: a. aggregate-supply curve to the right. b. aggregate-demand curve to the right. c. aggregate-supply curve to the left. d. aggregate-demand curve to the left.
A
As inflation rises, a. menu costs and shoeleather costs of inflation increase. b. menu costs increase, whereas shoeleather costs of inflation decrease. c. menu costs and shoeleather costs of inflation decrease. d. menu costs decrease, whereas shoeleather costs of inflation increase.
A
As recessions begin, employment a. and income both fall. b. rises and income falls. c. and income both rise. d. falls and income rises.
A
Bertha purchased 100 shares of BestSnack, Inc. stock for $20 per share; in one year, she sold the 100 shares for $25 a share. Over the year, the inflation rate was 3%. If the tax rate on nominal capital gain is 50%, how much did Bertha earn? a. $242.5. b. $500 c. $250 d. $1,250.
A
During recessions, changes in investment spending are the biggest contributor to changes in a. real GDP. b. retail sales. c. personal income. d. consumer spending.
A
Economic variables whose values are measured in monetary units are called a. Nominal variables b. Dichotomous variables c. Classical variables d. Real variables
A
Efficiency wages a. Increase productivity but increase unemployment b. Increase productivity and reduce unemployment c. Decrease productivity and increase unemployment d. Decrease productivity but reduce unemployment
A
From 2001 to 2005 there was a dramatic change in the price of houses. This change made people feel wealthier and shifted aggregate demand curve to the right. The price of houses must have a. risen. b. fallen. c. no effect on wealth and aggregate demand. d. remained constant.
A
From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted a. Aggregate demand right b. Aggregate demand left c. Aggregate supply left d. Aggregate supply right
A
In 1898 (when gold served as money), prospectors on the Klondike River discovered gold. This discovery caused an unexpected price level to a. Increase that benefited debtors at the expense of creditors b. Decrease that benefited debtors at the expense of creditors c. Increase that benefited creditors at the expense of debtors d. Decrease that benefited creditors at the expense of debtors
A
Optimism: Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time. Refer to Optimism. How is the new long-run equilibrium different from the original one? a. The price level is higher and real GDP is the same b. Both price and real GDP are lower c. The price level is the same and GDP is higher d. Both price and real GDP are higher
A
Suppose the nominal interest rate is 8%, the inflation rate is 3% and the tax rate is 45%. What is after-tax real rate of interest? a. 1.4%. b. 11% c. 4.4% d. 5%
A
Suppose the stock prices rise which shifts AD to the right. To offset the resulting change in output, the Federal Reserve could a. Decrease the money supply. This decrease would also move the price level closer to its value before the rise in stock prices b. Increase the money supply. This increase would also move the price level closer to its value before the rise in stock prices c. Decrease the money supply. However, this decrease would move the price level farther from its value before the rise in stock prices d. Increase the money supply. However, this increase would move the price level farther from its value before the rise in stock prices
A
The AD shifts to the left and if the aggregate demand curve shifts to the left from point A to B, if the economy is at point B, a policy to restore full employment would be a. An increase in government purchases b. A decrease in the money supply c. An increase in taxes d. All of the above are correct
A
The AD shifts to the left and if the economy is at point B, a policy to restore full employment would be a. An increase in the money supply b. A decrease in government purchases c. An increase in taxes d. All of the above are correct
A
The government builds a new recycling plant. The manager of the company hires workers and pays them an annual salary. These workers then increase their spending. The firms that sell the goods these workers buy also increase their output. This type of effect on spending illustrates the a. multiplier effect. b. crowding-out effect. c. wealth effect. d. interest-rate effect.
A
The labor-force participation rate tells us the fraction of the population that a. Has chosen to participate in the labor market b. Has chosen not to participate in the labor market c. Is able to participate in the labor market d. Has ever been employed
A
The multiplier effect a. Amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects b. And the crowding-out effect both diminish the effects of an increase in government expenditures c. And the crowing-out effect both amplify the effects of an increase in government expenditures d. Diminishes the effects of an increase in government expenditures, while the crowding-out effect amplifies the effects
A
The source of hyperinflation is primarily a. Increases in money-supply growth b. Lower output growth c. Continuing increases in money demand d. Continuing declines in velocity
A
Troy is looking for work after school, but everywhere he fills out an application, the managers say they always have a lot more applications than open positions. Ben has a business degree. Several companies have made him offers, but he thinks he might be able to find a job in a more desirable location. a.Troy is structurally unemployed, and Ben is frictionally unemployed. b.Troy and Ben are both structurally unemployed. c.Troy is frictionally unemployed, and Ben is structurally unemployed. d.Troy and Ben are both frictionally unemployed.
A
When taxes decrease, consumption a. Increases as shown by a shift of the aggregate demand curve to the right b. Increases as shown by a movement to the right along a given aggregate-demand curve c. Decreases as shown by a movement to the left along a given aggregate-demand curve d. Decreases as shown by a shift of the aggregate demand curve to the left
A
When the money market is drawn with the value of money on the vertical axis, if the Fed sells bonds then a. The money supply and the price level decrease b. The money supply increases and the price level decreases c. The money supply increases and the price level increases d. The money supply and the price level increase
A
Which of the following is an example of an increase in government purchases? a. The government builds new bridges. b. The Federal Reserve sells government bonds. c. The government decreases Social Security payments. d. The government increases corporate taxes.
A
Which of the following reforms would allow for the taxation of only real interest earnings? a.Indexing the tax system to take into account the effects of inflation. b.Allow investing only in government bonds. c.Pay workers only real wages. d.Eliminating the marginal tax rate.
A
scenario 34-1. Take the following information as given for small, imaginary economy:When income is $10,000, consumption spending is $6,500.When income is $11,000, consumption spending is $7,100.Refer to the scenario. For this economy, an initial increase of $200 in net exports translates into a _________ increase in aggregate demand in the absence of the crowding-out effect. a. $500 b. $1,000 c. $800 d. $120
A
scenario 34-1. Take the following information as given for small, imaginary economy:When income is $10,000, consumption spending is $6,500.When income is $11,000, consumption spending is $7,100.Refer to the scenario. The marginal propensity to consume for this economy is a. 0.60 b. 0.75 c. 0.80 d. 0.50
A
efficiency wage theory
A theory stating that wages influence worker productivity
An increase in the price level and a reduction in output would result from a. A fall in stock prices b. Natural disasters such as hurricanes, floods, and droughts c. Declining government expenditures d. Tax rebates
B
If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to ________ the quantity of goods and services they produce. a. increase slightly b. reduce c. increase substantially d. make no changes to
B
In the mid- 1970s the price level of oil rose dramatically. This a. Caused U.S. prices to fall b. Shifted aggregate supply left c. Was the consequence of OPEC increasing oil production d. All of the above are correct
B
In which of the following cases would the quantity of money demanded be largest? a. r = 0.03, P = 1.2 b. r = 0.03, P = 1.3 c. r = 0.05, P = 0.9 d. r = 0.04, P = 1.2
B
Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be. The real interest rate she earns is a. Higher than she had expected, and the real value of the loan is lower than she had expected b. Lower than she had expected, and the real value of the loan is lower than she had expected c. Lower than she had expected, and the real value of the loan is higher than she had expected d. Higher than she had expected, and the real value of the loan is higher than she had expected
B
Minimum-wage laws, unions, and efficiency wages contribute to a. Structural unemployment, but not the natural rate of unemployment b. Both structural unemployment and the natural rate of unemployment c. Neither structural unemployment nor the natural rate of unemployment d. The natural rate of unemployment, but not structural unemployment
B
Of the following groups, who is eligible for unemployment insurance benefits? a. The unemployed who just entered the labor force b. The unemployed who were laid off because their previous employers no longer needed their skills c. The unemployed who quit their jobs d. The unemployed who were fired for cause
B
Suppose that consumers decide to ride buses more often and own fewer cars. Bus companies hire more drivers, while automobile companies lay off workers. The unemployment this creates is an example of a.structural unemployment created by efficiency wages. b.frictional unemployment created by sectoral shifts. c.structural unemployment created by sectoral shifts. d.frictional unemployment created by efficiency wages.
B
Suppose the economy is in long-run equilibrium. If there is a decrease in the supply of labor as well as a decrease in the money supply, then we would expect that in the short run, a. real GDP will rise and the price level might rise, fall, or stay the same. b. real GDP will fall and the price level might rise, fall, or stay the same. c. the price level will rise, and real GDP might rise, fall, or stay the same. d. the price level will fall, and real GDP might rise, fall, or stay the same.
B
Suppose there are a large number of teens who used to work or seek work who now no longer do either, but instead focus on school work to prepare for college and careers. Other things the same, this makes a.the number of people unemployed fall but does not change the labor force. b.both the number of people unemployed and the labor force fall. c.the number of people unemployed rise but makes the labor force fall. d.the number of people unemployed rise but does not change the labor force.
B
The Bureau of Labor Statistics places people in the "employed" category if they a. Are without a job, but are available for work and have tried to find a job during the previous 4 weeks b. Work without pay in a family member's business c. Are waiting to be recalled to a job from which they had been laid off d. All of the above are correct
B
To increase the money supply, the Fed could a. Sell government bonds b. Decrease the discount rate c. Increase the reserve requirement d. None of the above is correct
B
U.S. tax laws allow taxpayers, in computing the amount of tax they owe, to use the real value, as opposed to the nominal value, of a. Both interest income and capital gains b. Neither interest income nor capital gains c. Interest income but not capital gains d. Capital gains but not interest income
B
Unemployment data are collected a. From unemployment insurance claims b. Through a regular survey of about 60,000 households c. Through a regular survey of about 20,000 firms d. Using all of the above
B
When the money market is drawn with the value of money on the vertical axis, the price level increases if a. Either money demand or money supply shifts right b. Money demand shifts left or money supply shifts right c. Either money demand or money supply shifts left d. Money demand shifts right or money supply shifts left
B
Which of the following would decrease the price level? a. a decrease in taxes. b. a decrease in the money supply. c. an increase in the expected price level. d. an increase in the natural rate of unemployment.
B
Which of the following would not explain why the aggregate demand curve slopes downward? a. A lower price level causes U.S. interest rates to fall, the real value of the dollar to decline in foreign exchange markets, and U.S. net exports to rise. b. A higher price level increases real wealth, which stimulates spending on consumption. c. A lower price level reduces the interest rate, which encourages greater spending on investment goods. d. A higher price level lowers the real value of money and makes consumers poorer, which in turn encourages them to spend less.
B
Which of the following would raise the price level in both the short and long run? a. A decrease in the minimum wage b. An increase in government expenditures c. An increase in taxes d. An increase in the capital stock
B
You bought some shares of stock and, over the next year, the price per share increased by 5 %, as did the price level. Before taxes, you experienced a. Both a nominal gain and a real gain, and you paid taxes only on the real gain b. A nominal gain, but no real gain, and you paid taxes on the nominal gain c. A nominal gain, but no real gain, and you paid no taxes on the transaction d. Both a nominal gain and a real gain, and you paid taxes on the nominal gain
B
A difference between the unemployment arising from minimum-wage laws and from frictional unemployment is that with minimum-wage laws people are ____ for jobs and with frictional unemployment, people are ____ for jobs. a.searching, waiting. b.applying, waiting. c.waiting, searching. d.advertising, waiting.
C
A situation in which the Fed's target interest rate has fallen as far as it can fall is sometimes described as a a. Open-market trap b. Liquidity preference c. Liquidity trap d. Interest-rate contraction
C
About what percentage of manufacturing jobs are destroyed every year, and about what percentage of workers leave their jobs in a typical month? a.3% and 10% b.5% and 7% c.10% and 3% d.7% and 5%
C
According to 2012 data for U.S. teenagers (ages 16-19) ______ had the highest unemployment rate and _______ had the lowest unemployment rate. a.black males, white males. b.white females, black males. c.black males, white females. d.white males, black females.
C
According to the aggregate demand and aggregate supply model, in the long run an increase in the money supply leads to a. Increase in both the price level and real GDP b. An increase in real GDP but does not change the price level c. An increase in the price level but does not change real GDP d. No change in either the price level or real GDP
C
As the price level decreases, a. the value of money decreases. b. the value of money increases but the quantity of money must not change. c. the value of money increases. d. the quantity of money increases.
C
As the price level increases, a. the value of money does not change but the quantity of money decreases. b. the value of money decreases but the quantity of money does not change. c. the value of money decreases. d. the quantity of money decreases.
C
Consider an economy producing only widgets, which cost $2 each. If you have $100, what is the real value of the money you hold? a. $200. If the price of widgets increases, you will need more money. b. $200. If the price of widgets increases, you will need less money. c. 50 widgets. If the price of widgets increases, you will need more money. d. 50 widgets. If the price of widgets increases, you will need less money.
C
Economists use the word "money" to refer to a. Income generated by the production of goods and services b. Any type of wealth c. Those assets regularly used to buy goods and services d. Financial assets such as stocks and bonds
C
Evidence shows that unemployment benefits may _________ job search efforts which by itself would ________. a.reduce, raise structural unemployment b.raise, raise structural unemployment. c.reduce, raise frictional unemployment. d.raise, raise frictional unemployment
C
If the marginal propensity to consume is 0.80, and there is no investment accelerator or crowding out, a $10 billion increase in government expenditures would shift the aggregate demand curve to the right by a. $10 billion b. $8 billion c. $50 billion d. $40 billion
C
In response to the sharp decline in stock prices in October 1987, the Federal Reserve a. Increased interest rates, and the economy avoided a recession b. Increased interest rates, but the economy was unable to avoid a recession c. Decreased interest rates to avoid a recession d. Decreased interest rates to avoid a boom
C
In the 1990's Ireland made unemployment benefits less generous. This change would likely have a. Reduced structural unemployment and the natural rate of unemployment b. Reduced structural unemployment but not the natural rate of unemployment c. Reduced frictional unemployment and the natural rate of unemployment d. Reduced frictional unemployment but not the natural rate of unemployment
C
Most economists believe that fiscal policy a. Only affects aggregate demand and not aggregate supply b. Only affects aggregate supply and not aggregate demand c. Primarily affects aggregate demand d. Primarily affects aggregate supply
C
Suppose P denotes the price of goods and services measured in terms of money. a. A decrease in the value of money is associated with a decrease in P. b. P can be interpreted as the inflation rate. c. A decrease in the value of money is associated with an increase in P. d. An increase in the value of money is associated with an increase in P.
C
Suppose P is the price level (the GDP deflator), Y the quantity of output (real GDP), and M the quantity of money. If M = 1,000, P = 2, and Y= 3,000, what is velocity (V)? a. 3 b. 1.5 c. 6 d. 0.002
C
Suppose the Consumer Price Index has increased from 100 to 105. What is the inflation rate? a. 1.05% b. 10.5% c. 5% d. 0.05%
C
Suppose the Consumer Price Index has increased from 105 to 107. What is the inflation rate? a. -1.9% b. 0.98% c. 1.9% d. 7.00%
C
Suppose the price level has increased from 103 to 107. Which of the following is the inflation rate? a. -3.74% b. 0.96% c. 3.88% d. 4.03%
C
The Bureau of Labor Statistics includes a.those who worked in a family business without pay and those waiting to be recalled to a job from which they have been laid off as unemployed b.those who worked in a family business without pay as unemployed and those waiting to be recalled to a job from which they have been laid off as employed. c.those who worked in a family business without pay as employed and those waiting to be recalled to a job from which they have been laid off as unemployed. d.those who worked in a family business without pay and those waiting to be recalled to a job from which they have been laid off as employed.
C
The Federal Funds rate is the interest rate a. The Fed charges depository institutions for short-term loans b. The Fed pays on deposits c. Banks charge each other for short-term loans d. Interest rate on 3 month Treasury bills
C
The long-run effect of a decrease in household consumption is to lower a. both real output and the price level. b. real output and raise the price level. c. the price level and leave real output unchanged. d. real output and leave the price level unchanged.
C
Which of the following decreases in response to the interest-rate effect from an increase in the price level? a. Investment but not consumption b. Consumption but not investment c. Both investment and consumption d. Neither investment nor consumption
C
Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting a. Aggregate demand left b. Aggregate supply left c. Aggregate supply right d. Aggregate demand right
D
Which of the following describes the effect of a decrease in the money supply? a. The money supply curve shifts to the right, the price level decreases causing the value of money to increase. b. The money supply curve shifts to the right, the price level increases causing the value of money to decrease. c. The money supply curve shifts to the left, the price level decreases causing the value of money to increase. d. The money supply curve shifts to the left, the price level increases causing the value of money to decrease.
C
Which of the following describes the relationship between the value of money and the price level? a. As the price level falls, the value of money falls. b. As the price level falls, the value of money does not change. c. As the price level falls, the value of money rises. d. As the price level rises, the value of money rises.
C
Which of the following events would cause the Fed to stabilize output through increasing the money supply? a. a decrease in interest rates b. an increase in government spending c. an increase in taxes d. an increase in net exports
C
Which of the following explains why the demand curve for money is downward sloping? a. The quantity of money supplied is fixed by the consumer demand. b. People want to hold a larger quantity of money when each dollar buys more. c. People want to hold a larger quantity of money when each dollar buys less. d. The quantity of money supplied is fixed by the Federal Reserve.
C
Which of the following shifts aggregate demand to the right? a. The price level rises b. The price level falls c. The Fed purchases government bonds on the open market d. None of the above are correct
C
According to classical macroeconomic theory, nominal variables, but not real variables, are affected by changes in the a. labor supply. b. aggregate supply. c. supply schedule. d. money supply.
D
Aggregate demand shifts right if at a given price level a. Net exports fall and shift right if the money supply increases b. Net exports rise and shifts left if the money supply increases c. Net exports fall and shifts left if the money supply increases d. Net exports rise and shifts right if the money supply increases
D
An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level a. Falls, shifting aggregate supply left b. Rises, shifting aggregate demand left c. Rises, shifting aggregate demand right d. Falls, shifting aggregate supply right
D
An increase in U.S. net exports would shift U.S. aggregate demand a. leftward. In an attempt to stabilize the economy, the government could increase expenditures. b. rightward. In an attempt to stabilize the economy, the government could increase expenditures. c. leftward. In an attempt to stabilize the economy, the government could decrease expenditures. d. rightward. In an attempt to stabilize the economy, the government could decrease expenditures.
D
Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to a. The classical dichotomy, but not the quantity theory of money n b. The quantity theory of money, but not the classical dichotomy c. Neither the classical dichotomy nor the quantity theory of money d. Both the classical dichotomy and the quantity theory of money
D
Critics of stabilization policy argue that a. There is a lag between the time policy is passed and the time policy has an impact on the economy b. The impact of policy may last longer than the problem it was designed to offset c. Policy can be a source of, instead of a cure for, economic fluctuations d. All of the above are correct
D
Cyclical unemployment is caused by a. Frictional and structural unemployment b. Frictional but not structural unemployment c. Structural but not frictional unemployment d. Neither frictional nor structural unemployment
D
Edgar is working part-time. Diane is on temporary layoff. Who is included in the Bureau of Labor Statistics "employed" category? a. Only Diane b. Both Edgar and Diane c. Neither Edgar nor Diane d. Only Edgar
D
Historical evidence for the U.S. economy indicates that changes in investment over the business cycle are the biggest cause of changes in a. consumer spending. b. profits. c. auto sales. d. real GDP.
D
If the actual price level is 165, but people had been expecting it to be 160, then a. The quantity of output supplied rises in the short run and the long run b. The quantity of output supplied falls, but only in the short run c. The quantity of output supplied falls in the short run and the long run d. The quantity of output supplied rises, but only in the short run
D
If the natural rate of unemployment is 5 percent and the actual rate of unemployment is 5.5 percent, then by definition there is a.structural unemployment amounting to -0.5 percent of the labor force. b.structural unemployment amounting to 0.5 percent of the labor force. c.cyclical unemployment amounting to -0.5 percent of the labor force. d.cyclical unemployment amounting to 0.5 percent of the labor force.
D
In recent years, the Fed has chosen to target interest rates rather than the money supply because a. The President requested them to do so b. Changes in the interest rate change aggregate demand, but changes in the money supply do not c. Congress passed a law requiring them to do so d. The money supply is hard to measure with sufficient precision
D
Some economists argue that a. Monetary policy should actively be used to stabilize the economy b. Fiscal policy should actively be used to stabilize the economy c. Fiscal policy can be sued to shift the AD curve d. All of the above are correct
D
Steve is having a policy debate with his brother Brian. He points the fact that business firms make investment plans far in advance. This is a lag problem associated with a. neither monetary policy nor fiscal policy. b. fiscal policy. c. both monetary policy and fiscal policy. d. monetary policy.
D
Steve manages a warehouse where workers need to find, pack, and ship items ordered by online customers. He considers raising wages hoping that workers will spend more time doing their work and less time chatting with each other and checking their cell phones. According to efficiency wage theory if Steve decides to pay higher wages a.profits will fall and he will hire fewer workers. b.profits will rise and he will hire more workers. c.profits will fall but he will hire more workers. d.profits will rise but he will hire fewer workers.
D
Suppose that M is fixed but that P falls. According to the quantity equation which of the following could both by themselves explain the decrease in P? a. Y rose, V rose b. Y fell, V rose c. Y fell, V fell d. Y rose, V fell
D
Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases a. Neither the inflation rate nor the nominal interest rate b. Nominal interest rates but by less than the percentage point increase in the inflation rate c. The inflation rate but not the nominal interest d. The inflation rate and the nominal interest rate by the same number of percentage points
D
The price level falls. This might be because the federal reserve a. Bought bonds which reduced the money supply b. Bought bonds which raised the money supply c. Sold bonds which raised the money supply d. Sold bonds which reduced the money supply
D
The primary argument against active monetary and fiscal policy is that a. These policies affect the economy too quickly and with too much impact b. Attempts to stabilize the economy do not constitute a proper role for government in a democratic society c. History demonstrates that interest rates respond unpredictably to active policies, leading to unpredictable effects on income d. These policies affect the economy with a long lag
D
Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate rises, then a. Both the nominal rate and the real interest rate rise b. The real interest rate rises, but the nominal interest rate does not c. Neither the nominal nor the real interest rate rise d. The nominal rate rises, but the real interest rate does not
D
When prices and unemployment rise, such an event is sometimes called a. inflation. b. depreciation. c. expansion. d. stagflation.
D
Which of the following Fed actions would decrease the money supply? a. Buying bonds b. Lowering the reserve requirement c. Decreasing the discount rate d. Raising the reserve requirement
D
According to liquidity preference theory, the opportunity cost of holding money is the inflation rate. True False
False
Refer to the Figure. You can explain a decrease in Y from Y1 to Y2 in the following way: A decrease in P in P2 to P1 causes the money-demand curve to shift from MD1to MD2; this shift of MD causes r to increase from r1 to r2; and this increase in r causes Y to decrease from Y1 to Y2. True False
False
Someone who loses his job at a futon store because the demand for futons has fallen and the demand for other types of beds has risen, is structurally unemployed. True False
False
quantity theory of money equation
MV= PY
According to liquidity preference theory, the money-supply curve would shift if the Fed engaged in open-market operations. True False
True
Cyclical unemployment is closely associated with the short-run ups and downs of economic activity. True False
True
Keynes would agree with the statement that irrational waves of pessimism cause aggregate demand to be unstable. True False
True
The tax system is the most important automatic stabilizer. True False
True
unemployment insurance
a government program that partially protects workers' incomes when they become unemployed
medium of exchange
an item that buyers give to sellers when they want to purchase goods and services
store of value
an item that people can use to transfer purchasing power from the present to the future
Bureau of Labor Statistics (BLS)
calculates unemployment, length of average workweek, duration of unemployment
labor force
employed + unemployed
adult population
employed + unemployed + not in the labor force
Unemployment generated by the existence of labor unions is frictional unemployment and so contributes to the natural rate of unemployment. True False
false
What lowers frictional unemployment?
job training, job matching
discouraged workers
marginally attached workers who have given a job-market related reason for not currently looking for a job
What are the 3 functions of money?
medium of exchange, unit of account, store of value
commodity money
money that takes the form of a commodity with intrinsic value
fiat money
money without intrinsic value that is used as money by government decree
marginally attached workers
people who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past
unemployment rate does what?
shows people who are out of a job in the moment while looking for a new one
liquidity
the ease with which an asset can be converted into the economy's medium of exchange
natural rate of unemployment
the normal rate of unemployment around which the unemployment rate fluctuates
natural unemployment rate
the unemployment rate when the economy is at full employment
unit of account
the yardstick people use to post prices and record debts
persons employed part-time for economic reasons
those who want and are available for full-time work but have had to settle for a part-time schedule
Sectoral shifts are changes in the demand for workers across industries or regions. True False
true
When a union raises the wage above the equilibrium level, it raises the quantity of labor supplied and reduces the quantity of labor demanded, resulting in higher unemployment. True False
true
What increases frictional unemployment?
unemployment insurance
frictional unemployment
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
structural unemployment
unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
cyclical unemployment
unemployment that rises during economic downturns and falls when the economy improves
intrinsic value
when an item would have value even if it was not used for money (gold)
