Test 3

The government wants to encourage consumer spending through cutting income taxes, this is an example of

Fiscal policy

The unemployment rate equals

(labor force - employed)/labor force

Aggregate behavior is

The behavior of all households and firms together

A dividend is:

a portion of a company's earnings that the firm pays out to its shareholders

If 20 milliom workers are unemployed and 180 million workers are employed, the the employment rate is

10%

If the labor force is 500, and employment is 450, then the unemployment rate is

10%

If the labor force is 50 million and 48 million are employed then the unemployment rate is

4%

A transfer payment is

A cash payment made by the government to people who do not supply goods, services or labor in exchange for the payment

Which of the following is studied in macro

Aggregate behavior of households and industries

A period when the economy shrinks is known as

All of the above

A capital gain is

An increase in the value of an asset over the price initially paid for

Unemployment means that

At the going wage rate, there are people who wants to work but cannot find work

Which of the following statement is false

Business cycles are always symmetric, the length of an expansion is the same length of a contraction

Government policies regarding taxes and expenditures are called

Fiscal policy

An increase in the value of an asset over a price intially paid for it is called a

Capital gain

The diagram that shows the income recieved and payments made by each sector of the economy is the

Circular flow diagram

The concept of "market clearing" is adopted and defended by

Classical economist

A promissary note issued by a corporation when it borrows money is a

Corporate bond

If congress increases government spending, it is using

Fiscal policy

To get the economy out of a slump, Keynes believed that the government should

Decrease taxes and/or decrease government spending

In circular flow diagram, firms ____ labor and households ___ goods and services

Demanded ;demanded

A prolonged and deep recession is called a

Depression

The portion of a corporation's profit that a firm pays out each period to its shareholders is a

Dividend

A period during which aggregate output rises is known as

Expansion

Between a trough and a peak, the economy goes through a

Expansion

If output is rising and unemployment is falling, the economy MUST be in a(n)

Expansion

In a business cycle a peak represents the end of a

Expansion

In a business cycle, a peak represent the end of a ______ and a trough represent the end of a ____

Expansion; recession

In the circular flow diagram, households demand ____ and supply ____

Good and services; labor

Which of the following is studied in Macroeconomics

Gross domestic product

The demanders on the goods and service market are

Households, the government, business firms, and the rest of the world

A period of very rapid increase in the overall price level is known as

Hyperinflation

Inflation is

Increase in overall price level

Suppose the economy suffers a high rate of unemployment. According to Keynesian economist , the govenrment should increase employment by

Increasing government spending

An increase in the overall price level is known as

Inflation

According to the classical economist, the economy

Is self correcting

Policies designed to affect the quantity of money

Monetary policies

If the central bank decreases the money supply, it is conducting

Monetary policy

The federal reserve affecting the supply of money is known as

Monetary policy

In the good and service market , households

Only demand

According to classical models, the level of employment is determined primarily by

Price and wages

A period in the business cycle from a peak to a trough is a

Recession

Between a peak and trough, the economy goes through a

Recession

In a business cycle a trough represents the end of a

Recession

Unemployment generally ________ during recessions and ________ during expansions

Rises;falls

A household that spends less than it recieves in income during a given period is

Saving

Which of the following is a correct statement

Shareholders earn dividends, but bondholders dont

According to the classical economist , if the quantity of labor demanded exceeds the quantity supplied, there is a

Shortage of labor and wages will rise

An example of a transfer payment is

Social security retirement benefit

Rapid increases in the price level during period recession or high unemployment are known as

Stagflation

The demand for corn had increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of

Sticky price

The demand for message therapist declined in the spring of 2007, but the starting wages paid to massage therapists was still the same at the end of 2007. This is an example of a

Sticky price

Prices that do not always adjust rapidly to maintain equaloty between quantity supplied and quantity demanded are

Sticky prices

The government implements fiscal policy when it changes

Taxes and/or spending

Deflation occurs when

The average price level declines

In which basic market would dvds be traded

The goods and service market

Macroeconomic policies became more influenced by Keyne's theories starting with

The great depression

According to Keyne's the level of employment is determined by

The level of aggregate demand for goods and service

The trend of the economy is

The long-run growth path of the economy

In which of the following markets are funds demanded and supplied

The money markets

Which of the following is not a topic studied in macroeconomics ?

The price of IBM computers

The term business cycle refers to

The short term ups and down in the level of economic activity

Stagflation occurs when the economy's inflation rate is high and

The unemployment rate is high

Unemployment implies that in the labor market

There is an excess supply of labor

The major lesson of the circular flow diagram is that

Total income in the economy must always equal total spending

Promissary notes issued by the federal government when it borrows money are called

Treasury bonds

It has become conventional to classify an economic downturn as a recession when aggregate output declines for

Two consecutive quarters

Which of the following is a assumption used by classical economists

Wages adjust both upward and downward

In the circular flow diagram, the different payments made by firms to household include

Wages and profits

Dividends are

corporate profits distributed among shareholders

According to the classical model , unemployment

could not persist because wages would fall to eliminate the excess supply of labor

The ____ can change the quantity of money within the economy

federal reserve