UNL Econ 211 SB6

Which of the following explain why flexible-income receivers may be unaffected or benefit by unanticipated inflation?

1. Their incomes may automatically increase when the CPI increases. 2. Business owner's profits may rise if product prices rise faster than resource prices. 3. They receive COLAs. 4. Demand-pull inflation may cause some nominal incomes to increase faster than inflation and lead to real income increases.

Economists distinguish between which types of inflation?

1. cost-push inflation 2. demand-pull inflation

Which of the following groups are hurt by unanticipated inflation?

1. savers 2. creditors 3. fixed -income recipients

If real economic growth is 3%, the inflation rate is 5%, and the nominal interest rate is 7%, then the real rate of interest is:

2%

Economies are exposed to what two types of shocks?

Demand and supply

______ consumer goods are affected more by the business cycle than ______ consumer goods.

Durable, nondurable

True or false: A shock to demand only refers to situations when demand turns out to be lower than expected.

False

True or false: Full employment is something less than 100 percent employment of the labor force.

True

The difference between actual and potential GDP is called:

a GDP gap

Inflation occurs when there is:

a rise in the aggregate price level

A key issue in macroeconomics is why the economy sees:

business cycle fluctuations rather than slow, smooth growth

The U.S. government uses the _____ to report inflation rates each month and each year.

consumer price index

The index most widely used by the government and the private sector to measure changes in the cost of living is the:

consumer price index

The two types of inflation include ________ push and _________ pull inflation.

cost; demand

Economies are exposed to _________ shocks and _________ shocks.

demand; supply

Automobiles and refrigerators are examples of ______ goods, while food and clothes are examples of ______ goods

durable; nondurable

The labor force is the sum of the ______ and ______.

employed; unemployed

The long-run trend of the U.S. economy is:

expansion and growth

Workers that are unemployed because they are "between jobs" are:

frictionally unemployed

The long-run trend of real GDP in the U.S. is __________.

growth

Unanticipated inflation ______ fixed- income recipients, savers and creditors.

hurts

When __________ (one word) occurs it leads to the redistribution of total real income in an economy.

inflation

Real interest rates are the:

interest rates quoted in the market minus the expected inflation rate.

Full employment is ______ 100 percent employment of the labor force.

less than

Why the economy sees business cycle fluctuations rather than slow, smooth growth is a central issue of:

macroeconomics

During the Great Recession many countries forced nominal interest rates to become __________.

negative

To stimulate their economies, some nations forced what interest rates negative?

nominal interest rates on short-term loans

The basic economic cost of unemployment is forgone ______.

output

A _________ _________ shock refers to a situation in which demand turns out to be higher than expected.

positive demand

Inflation exists when there is an increase in ______ over a sustained period of time.

prices

Inflation redistributes:

real income

Economic theories are founded on the idea that economic fluctuations are driven by:

shocks

Unexpected events that drive economic cycles and fluctuations are called economic _________.

shocks

Nominal income is:

the number of dollars received as wages, rent, interest or profits in current dollars

The labor force is:

the sum of the employed and unemployed

People with flexible incomes may be:

unaffected or benefit by unanticipated inflation

Forgone output is a basic economic cost of ______.

unemployment