Econ

Which of the following periods in U.S. economic history had the slowest growth rate, as measured by the average annual increase in real GDP per hour worked?

1974-1995

When the economy was expanding in early 2007, fewer than _______ percent of the unemployed had been jobless for more than 6 months.

20

If workers ignore inflation in forming their expectations of the real wage rate, what is the effect of an expansionary monetary policy?

A move up along the short-run Phillips curve.

Which of the following is true about the consumption component of U.S. GDP?

Consumer spending on services is greater than the sum of spending on durable and nondurable goods.

Which of the following is not a reason why purchasing power parity fails to provide a complete explanation of exchange rates?

Countries have different wage rates.

True or false. Most economists agree that the above-market wage paid in unionized industries significantly increases the unemployment rate in the United States.

False. Most economists agree that the above-market wage paid in unionized industries does not significantly increases the unemployment rate in the United States, in part because only about nine percent of workers outside the government sector are unionized.

True or false. To avoid the cost of the purchasing power of paper money decreasing with inflation, workers and firms will try to hold as much paper money as possible.

False. To avoid the cost of the purchasing power of paper money decreasing with inflation, workers and firms will try to hold as little paper money as possible.

How does the additional policy channel available in an open economy affect monetary policy?

It increases the ability of an expansionary monetary policy to affect aggregate demand.

Which of the following statements concerning the Phillips curve is correct?

Many economists and policymakers in the 1960s viewed the Phillips curve as a structural relationship.

Which one of the following statements regarding real and potential GDP is true?

Potential GDP increases every year.

Which of the following is true about the government purchases component of U.S. GDP?

Purchases by state and local governments are greater than purchases by the federal government.

Which of the following statements is true about the Fed under the leadership of Chairman Alan Greenspan between 1987 and 2006?

The Fed attempted to enhance its credibility by announcing its monetary policy action at the conclusion of each FOMC meeting.

Which of the following decisions does the textbook discuss as an action by the Fed during Chairman Alan Greenspan's term that possibly contributed to the financial crisis of 2007-2009?

The Fed's decision to keep the target for the federal funds rate at 1 percent for more than 18 months after the end of the 2001 recession.

Relative to the household survey, which of the following is a strength of the establishment survey?

The establishment survey is determined by actual payrolls, rather than by the unverified answers of the household survey.

Currently, the Bureau of Labor Statistics does not include homemakers in its employment and labor force totals. What would happen to the unemployment rate and the labor force participation rate if homemakers were included in these numbers?

The unemployment rate would decrease and the labor force participation rate would increase.

A country experiences twin deficits when a government budget deficit causes

a current account deficit.

The "Volcker disinflation" was

a significant reduction in the inflation rate between 1979 and 1989, under the leadership of Fed Chairman Paul Volcker. The unemployment rate rose from 6-10% during this period.

Which of the following causes saving to increase?

an increase in the interest rate

When Burns refers to "the current environment," he means the 1970s, a period in which

both inflation and unemployment worsened.

During the 1980s and 1990s, the relationship between growth in M2 and inflation

broke down, and the Fed announced that it would no longer set targets for M2.

If the long-run aggregate supply curve is vertical, then the Phillips curve

cannot be downward sloping in the long run.

The part of the balance of payments that records transactions such as migrants' transfers and sales and purchases of nonproduced, nonfinancial assets is the

capital account.

Which of the following do we subtract from GDP to obtain national income?

depreciation

There is a different short-run Phillips curve for every level of the ___________ inflation rate. The inflation rate at which the short-run Phillips curve intersects the long-run Phillips curve equals the ___________ inflation rate.

expected, expected

When the economy is at full employment, which types of unemployment remain?

frictional and structural

The unemployment rate that includes discouraged workers and people working part-time who would prefer full-time jobs

higher than the official unemployment rate, and the difference between the two grows larger in recessions.

In the circular-flow diagram, who supplies factors of production in exchange for income?

households

Evaluate the following statement: "Saving money is not lending. How can it be? When I save my money, I put it in a bank. I don't loan it out to someone else." The statement is

incorrect. The supply of loanable funds is determined by household saving.

Increases in the minimum wage will

increase unemployment among teenagers.

If prices rise over time, then real GDP will be

larger than nominal GDP in years before the base year.

According to the paradox of thrift, a simultaneous increase in saving without any change in income leads to

lower real GDP in the short run but higher real GDP in the long run.

U.S. real net exports are typically

negative, and usually rise in recessions and fall in expansions

When a foreign investor buys a bond either a U.S. firm or the federal government issues, or when a foreign firm builds a factory in the United States, the transaction is recorded in the balance of payments as

only a capital inflow.

Over time, prices may change relative to each other. To take this change into account, the Bureau of Economic Analysis calculates

real GDP using chain weights

In calculating GDP, which levels of government spending are included in government purchases?

spending by federal, state, and local governments

Marginal Benefit is

the additional benefit from consumer one more unit

In the balance of payments, the difference between the value of the goods a country exports and the value of the goods a country imports is called

the balance of trade.

Purchases of assets a country has made abroad and foreign purchases of assets in the country are recorded in

the financial account.

Which of the following is included in the economist's definition of investment?

the purchase of new machines, factories, or houses

Computation of the CPI assumes that households buy the same market basket of products each month. For this reason, which one of the following factors is not relevant in calculating the CPI?

the quantities of the products households purchase in the current year

Which two factors do economists combine to establish the real exchange rate between two countries?

the relative price levels in the two countries and the nominal exchange rate between the two countries' currencies

The difference between the price the firm sells a good for and the price the firm paid other firms for intermediate goods is called

value added.

During the 1970's there was/wasn't a tradeoff between unemployment and inflation

wasn't

An important conclusion from the circular flow diagram

we can measure GDP by calculating the total value of expenditures on final goods and services, or we can measure GDP by calculating the value of total income.

The extent of job creation and job destruction is

what we would expect in a vibrant market system.

When are additions to knowledge capital subject to diminishing returns?

when we look only at their effect on an individual firm