Question 1

Which of the following statements is true?

Accepted Answer

A)  Inflation means that prices are increasing. 
B)  Inflation hurts those on fixed incomes without cost-of-living adjustments. 
C)  During inflation the wealthy may become wealthier as the value of their assets increases. 
D)  All of the above. 
A)  Inflation means that prices are increasing. 
B)  Inflation hurts those on fixed incomes without cost-of-living adjustments. 
C)  During inflation the wealthy may become wealthier as the value of their assets increases. 
D)  All of the above.

Question 2

The price index number for year 1 is 160. The price index number for year 2 is 168. What is the percentage change in prices from year 1 to year 2?

Accepted Answer

A)  1.6%. 
B)  5.0%. 
C)  8.0%. 
D)  105.0% 
A)  1.6%. 
B)  5.0%. 
C)  8.0%. 
D)  105.0%

Question 3

If an economy were to pursue a policy of maintaining full employment, it would likely have to forgo:

Accepted Answer

A)  price stability. 
B)  full production. 
C)  economic growth. 
D)  maximum current output. 
A)  price stability. 
B)  full production. 
C)  economic growth. 
D)  maximum current output.

Question 4

-Money GDP is less than real GDP in:

Accepted Answer

A)  year 1. 
B)  year 2. 
C)  year 1 and year 2. 
D)  year 3 and year 4. 
A)  year 1. 
B)  year 2. 
C)  year 1 and year 2. 
D)  year 3 and year 4.

Question 5

Over time, it would NOT be desirable for an economy to:

Accepted Answer

A)  produce on its production possibilities curve. 
B)  have its production possibilities curve shift to the right. 
C)  require more resources than previously to produce a particular combination of goods. 
D)  produce the same amount of one good while giving up less of another good than previously. 
A)  produce on its production possibilities curve. 
B)  have its production possibilities curve shift to the right. 
C)  require more resources than previously to produce a particular combination of goods. 
D)  produce the same amount of one good while giving up less of another good than previously.

Question 6

Involuntary unemployment caused by a decrease in the overall level of economic activity is:

Accepted Answer

A)  cyclical unemployment. 
B)  seasonal unemployment. 
C)  frictional unemployment. 
D)  structural unemployment. 
A)  cyclical unemployment. 
B)  seasonal unemployment. 
C)  frictional unemployment. 
D)  structural unemployment.

Question 7

If the GDP price index number for a particular year has a value of less than 100.00, then in that year real GDP will:

Accepted Answer

A)  equal money GDP. 
B)  exceed money GDP. 
C)  be less than money GDP. 
D)  be greater than $100 trillion. 
A)  equal money GDP. 
B)  exceed money GDP. 
C)  be less than money GDP. 
D)  be greater than $100 trillion.

Question 8

The price index that measures changes in the prices of goods and services that households typically purchase is the:

Accepted Answer

A)  producer price index. 
B)  consumer price index. 
C)  shopping cost index. 
D)  living standard index. 
A)  producer price index. 
B)  consumer price index. 
C)  shopping cost index. 
D)  living standard index.

Question 9

Application 4.3, "A Tale of Two Families,"points out how:

Accepted Answer

A)  GDP may not be a good measure of the quality of life. 
B)  inflation makes it difficult for people to buy their first home. 
C)  voluntary unemployment may turn into involuntary unemployment. 
D)  productivity is higher in family-owned businesses than in large corporations. 
A)  GDP may not be a good measure of the quality of life. 
B)  inflation makes it difficult for people to buy their first home. 
C)  voluntary unemployment may turn into involuntary unemployment. 
D)  productivity is higher in family-owned businesses than in large corporations.

Question 10

In an economy with a population of 100, 6 people are unemployed and 54 people are employed. The unemployment rate is ________ and labor force participation rate is ________.

Accepted Answer

A)  6%; 60% 
B)  10%; 60% 
C)  6%; 94% 
D)  11.1%; 54% 
A)  6%; 60% 
B)  10%; 60% 
C)  6%; 94% 
D)  11.1%; 54%

Question 11

It is possible that an economy may not be able to operate with both full employment and stable prices.

Accepted Answer

A) True 
 B)False

Question 12

If the stated rate of interest on a security is 9 percent and the rate of inflation is 7 percent, the real rate of interest is:

Accepted Answer

A)  2 percent. 
B)  8 percent. 
C)  16 percent. 
D)  -2 percent. 
A)  2 percent. 
B)  8 percent. 
C)  16 percent. 
D)  -2 percent.

Question 13

Unemployment causes a loss for society because:

Accepted Answer

A)  businesses raise their prices to make up for lower sales. 
B)  individuals consume more because they spend fewer hours at work. 
C)  some goods that could have satisfied society's wants go unproduced. 
D)  all of the above. 
A)  businesses raise their prices to make up for lower sales. 
B)  individuals consume more because they spend fewer hours at work. 
C)  some goods that could have satisfied society's wants go unproduced. 
D)  all of the above.

Question 14

Economic growth is an increase in:

Accepted Answer

A)  total output over time. 
B)  full employment output over time. 
C)  the output of capital goods over time. 
D)  the output of consumer goods over time. 
A)  total output over time. 
B)  full employment output over time. 
C)  the output of capital goods over time. 
D)  the output of consumer goods over time.

Question 15

Generally, you would expect inflation to hurt:

Accepted Answer

A)  home buyers and help sellers of homes. 
B)  lenders with interest rates below the inflation rate. 
C)  people on fixed incomes more than people whose incomes increase over time. 
D)  all of the above. 
A)  home buyers and help sellers of homes. 
B)  lenders with interest rates below the inflation rate. 
C)  people on fixed incomes more than people whose incomes increase over time. 
D)  all of the above.

Question 16

Macroeconomics examines:

Accepted Answer

A)  employment, output, and inflation. 
B)  pricing, profit maximization, and utility maximization. 
C)  the behavior of individual households, businesses, and government units. 
D)  all of the above. 
A)  employment, output, and inflation. 
B)  pricing, profit maximization, and utility maximization. 
C)  the behavior of individual households, businesses, and government units. 
D)  all of the above.

Question 17

Deflation refers to:

Accepted Answer

A)  a decrease in output per worker. 
B)  a decrease in the rate of inflation. 
C)  a sustained decrease in the general level of prices. 
D)  a sustained decrease in the level of an economy's output. 
A)  a decrease in output per worker. 
B)  a decrease in the rate of inflation. 
C)  a sustained decrease in the general level of prices. 
D)  a sustained decrease in the level of an economy's output.

Question 18

If money GDP was $6.0 trillion in a particular year, and the GDP price index number for that year was 75.0, real GDP would be:

Accepted Answer

A)  $4.5 trillion. 
B)  $5.25 trillion. 
C)  $6.75 trillion. 
D)  $8.00 trillion. 
A)  $4.5 trillion. 
B)  $5.25 trillion. 
C)  $6.75 trillion. 
D)  $8.00 trillion.

Question 19

Possibly, the economy may have to trade off:

Accepted Answer

A)  full employment and price stability for full production. 
B)  full employment and full production for price stability. 
C)  full production and price stability for full employment. 
D)  full production and full employment for economic growth. 
A)  full employment and price stability for full production. 
B)  full employment and full production for price stability. 
C)  full production and price stability for full employment. 
D)  full production and full employment for economic growth.

Question 20

Which of the following is NOT a direct consequence of unemployment?

Accepted Answer

A)  higher inflation rates. 
B)  individual hardship for the unemployed. 
C)  lost output and production for society. 
D)  all of the above are consequences of unemployment. 
A)  higher inflation rates. 
B)  individual hardship for the unemployed. 
C)  lost output and production for society. 
D)  all of the above are consequences of unemployment.

Which of the following statements is true?

The price index number for year 1 is 160. The price index number for year 2 is 168. What is the percentage change in prices from year 1 to year 2?

If an economy were to pursue a policy of maintaining full employment, it would likely have to forgo:

-Money GDP is less than real GDP in:

Over time, it would NOT be desirable for an economy to:

Involuntary unemployment caused by a decrease in the overall level of economic activity is:

If the GDP price index number for a particular year has a value of less than 100.00, then in that year real GDP will:

The price index that measures changes in the prices of goods and services that households typically purchase is the:

Application 4.3, "A Tale of Two Families,"points out how:

In an economy with a population of 100, 6 people are unemployed and 54 people are employed. The unemployment rate is and labor force participation rate is .

It is possible that an economy may not be able to operate with both full employment and stable prices.

If the stated rate of interest on a security is 9 percent and the rate of inflation is 7 percent, the real rate of interest is:

Unemployment causes a loss for society because:

Economic growth is an increase in:

Generally, you would expect inflation to hurt:

Macroeconomics examines:

Deflation refers to:

If money GDP was $6.0 trillion in a particular year, and the GDP price index number for that year was 75.0, real GDP would be:

Possibly, the economy may have to trade off:

Which of the following is NOT a direct consequence of unemployment?

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Foundations of the Macroeconomy

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Macroeconomic Viewpoints and Models

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

Filters

Exam 4: Goals and Problems of the Macroeconomy: Employment, Prices and Production

Which of the following statements is true?

The price index number for year 1 is 160. The price index number for year 2 is 168. What is the percentage change in prices from year 1 to year 2?

If an economy were to pursue a policy of maintaining full employment, it would likely have to forgo:

-Money GDP is less than real GDP in:

Over time, it would NOT be desirable for an economy to:

Involuntary unemployment caused by a decrease in the overall level of economic activity is:

If the GDP price index number for a particular year has a value of less than 100.00, then in that year real GDP will:

The price index that measures changes in the prices of goods and services that households typically purchase is the:

Application 4.3, "A Tale of Two Families,"points out how:

In an economy with a population of 100, 6 people are unemployed and 54 people are employed. The unemployment rate is ________ and labor force participation rate is ________.

It is possible that an economy may not be able to operate with both full employment and stable prices.

If the stated rate of interest on a security is 9 percent and the rate of inflation is 7 percent, the real rate of interest is:

Unemployment causes a loss for society because:

Economic growth is an increase in:

Generally, you would expect inflation to hurt:

Macroeconomics examines:

Deflation refers to:

If money GDP was $6.0 trillion in a particular year, and the GDP price index number for that year was 75.0, real GDP would be:

Possibly, the economy may have to trade off:

Which of the following is NOT a direct consequence of unemployment?

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Foundations of the Macroeconomy

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Macroeconomic Viewpoints and Models

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

Filters

In an economy with a population of 100, 6 people are unemployed and 54 people are employed. The unemployment rate is and labor force participation rate is .