ECON Questions

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

b. U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP.

A change in the expected price level is likely to cause which of the following?

b. a shift in the short run aggregate supply curve

If an unemployed person quits looking for work, then, eventually the unemployment rate

b. and the labor-force participation rate both decrease.

When the price level increases, the real value of people's money holdings

b. falls, so they buy less.

If aggregate demand shifts right then in the short run

b. firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

because unemployment is high, wages will be bid down and short-run aggregate supply will shift right.

Indexation

using a law or contract to automatically correct a dollar amount for the effects of inflation.

Unions

Raise wages in unionized industries. Lowers employment when introduces to an industry. Contribute to structural unemployment.

Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called

Structural unemployment.

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is

a. cyclical unemployment amounting to 0.5 percent of the labor force.

When the money supply increases

a. interest rates fall and so aggregate demand shifts right.

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

a. the price level is higher than expected making production more profitable.

The labor-force participation rate measures the percentage of the

a. total adult population that is in the labor force.

Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes

c. both the number of people unemployed and the labor force fall.

The effect of an increase in the price level on the aggregate-demand curve is represented by a

c. movement to the left along a given aggregate-demand curve.

The effects of a higher than expected price level are shown by

c. moving to the right along a given aggregate supply curve.

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

c. nominal GDP but not real GDP.

Stagflation exists when prices

c. rise and unemployment rises.

The producer price index measures the cost of a basket of goods and services

d. bought by firms.

The invention of the telegraph led to the loss of jobs for those who had delivered mail by horse but created jobs for telegraph operators and delivery persons. This is an example of

d. frictional unemployment created by sectoral shifts.

As the price level rises, the exchange rate

d. rises, so exports fall and imports rise.

Minimum wages create unemployment in markets where they create a

surplus of labor. Unemployment of this type is called structural.