Macro Midterm

Inflation is a rise in: Select one: a. The general level of prices over time b. The standard of living over time c. Industrial production over time d. Real GDP over time

A

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the: Select one: a. Level of total spending b. Rate of unemployment c. Rate of inflation d. Stock market price indexes

A

Okun's law indicates that for: Select one: a. Every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, a 2 percent GDP gap is generated b. Every 1 percent that the actual unemployment rate exceeds the natural unemployment rate, a 5 percent GDP gap is generated c. A 5 percent GDP gap, a 1 percent increase in the natural unemployment rate is generated d. A 2 percent GDP gap, a 2 percent increase in the actual unemployment rate is generated

A

Deflation is when the inflation rate turns negative. Select one: True False

True

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are: Select one: a. Excluded from the labor force b. Included as part of the unemployed c. Treated the same as part-time workers d. Used to determine the size of the labor force

A

In what circumstances would lenders most benefit? Select one: a. When there is an unanticipated decrease in inflation b. When there is an anticipated increase in inflation c. When there is an unanticipated increase in inflation d. When there is an anticipated decrease in inflation

A

Inflation caused by a rise in the prices of inputs is referred to as: Select one: a. Cost-push inflation b. Demand-pull inflation c. Unanticipated inflation d. Hyperinflation

A

Unanticipated inflation tends to penalize: Select one: a. People who save money in financial institutions b. Individuals who borrow money from financial institutions c. Businesses which borrow money from financial institutions d. Governments which have a progressive personal income tax

A

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are: Select one: a. Lower, because skilled workers tend to be employed in less cyclically vulnerable industries, such as the services and nondurable goods industries b. Higher, because skilled workers tend to be employed in more cyclically vulnerable industries, such as the durable goods industry c. Higher, because businesses are less likely to retain the more costly skilled workers no matter what type of industry d. Lower, because skilled workers tend to be primarily employed by government at the local, state, and Federal levels

A

Which measure of inflation would include consumer goods and capital goods? Select one: a. The GDP price index b. The Consumer Price Index c. The Retail Trade Survey d. The Survey of Manufactures

A

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment? Select one: a. Structural b. Cyclical c. Frictional d. Natural

B

A trough in the business cycle occurs when: Select one: a. Cyclical unemployment is at a minimum point b. Employment and output reach their lowest levels c. The natural rate of unemployment is at a minimum point d. The inflation rate is at its lowest level

B

Core inflation refers to the inflation picture after stripping away the: Select one: a. Capital goods prices b. Food and energy prices c. Government-regulated prices d. Service-sector prices

B

In calculating the unemployment rate, part-time workers are: Select one: a. Counted as unemployed because they are not working full-time b. Counted as employed because they are receiving payment for work c. Used to determine the size of the labor force, but not the unemployment rate d. Treated the same as "discouraged" workers who are not actively seeking employment

B

Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is: Select one: a. Anticipated inflation b. Demand-pull inflation c. Cost-push inflation d. Unanticipated inflation

B

The amount by which actual GDP falls short of potential GDP is one measure of the: Select one: a. Natural rate of unemployment b. Macroeconomic cost of unemployment c. Difference between real and nominal GDP d. Potential to produce outside the nation's PPC

B

The rate of unemployment when the economy is at its potential output is called the: Select one: a. Full-employment rate of unemployment b. Natural rate of unemployment c. Structural rate of unemployment d. Frictional rate of unemployment

B

What are the primary effects of cost-push inflation? Select one: a. It raises real output, and redistributes an increased level of real income b. It reduces real output and redistributes a decreased level of real income c. It raises real output, but redistributes a decreased level of real income d. It reduces real output, but redistributes an increased level of real income

B

Which of the following is the correct way to calculate the unemployment rate? Select one: a. [(unemployed)/(population)] x 100 b. [(unemployed)/(labor force)] x 100 c. [(labor force)/(population)] x 100 d. [(labor force)/(unemployed)] x 100

B

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers? Select one: a. The GDP price index b. The Consumer Price Index c. The Retail Trade survey d. The Survey of Manufactures

B

Which phase of the business cycle would be most closely associated with an economic contraction? Select one: a. Peak b. Recession c. Trough d. Recovery

B

In which industry or sector of the economy is output least likely to be affected by the business cycle? Select one: a. Housing construction b. Automobile production c. Agricultural commodities d. Capital goods production

C

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is: Select one: a. Cyclical b. Frictional c. Structural d. Natural

C

The best example of a "frictionally unemployed" worker is one who: Select one: a. Reduces productivity by causing frictions in a business b. Is laid off during a recessionary period in the economy c. Is in the process of voluntarily switching jobs d. Is discouraged and not actively seeking work

C

When oil and energy prices rise, the economy tends to experience: Select one: a. Natural inflation b. Demand-pull inflation c. Cost-push inflation d. Unanticipated inflation

C

"Full employment" refers to the situation when there is: Select one: a. 100% employment of the labor force b. 0% unemployment rate c. No frictional or structural unemployment d. No cyclical unemployment

D

A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment? Select one: a. Wait b. Cyclical c. Frictional d. Structural

D

Cost-push inflation tends to be characterized by all of the following, except: Select one: a. Rising general price level b. Falling real output c. Automatically self-limiting d. Falling unemployment

D

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must: Select one: a. Rise if the price index falls b. Stay the same as the price index rises c. Fall if the price index rises d. Rise as fast as the price index

D

Official unemployment rate statistics may: Select one: a. Overstate the amount of unemployment by including part-time workers in the calculations b. Understate the amount of unemployment by excluding part-time workers in the calculations c. Overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment d. Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment

D

When inflation occurs: Select one: a. All prices are rising b. Each dollar of income will buy more output than before c. The purchasing power of money increases d. The purchasing power of money decreases

D

Anyone who is not employed is classified as unemployed in the Bureau of Labor Statistics data on the labor force. Select one: True False

False

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment. Select one: True False

False