Question 1

A worker that quits her job

Accepted Answer

A)  is always counted among the unemployed. 
B)  is never counted among the unemployed. 
C)  will be counted among the structurally unemployed. 
D)  may or may not be counted among the unemployed. 
A)  is always counted among the unemployed. 
B)  is never counted among the unemployed. 
C)  will be counted among the structurally unemployed. 
D)  may or may not be counted among the unemployed.

Question 2

Suppose the private sector wishes to hold a constant level of real high-powered money. This means that with an ongoing inflation of p percent, each year the government treasury can obtain goods from the private sector in exchange for ________ p times the existing high-powered money, a government revenue source called ________.

Accepted Answer

A)  creating, seignorage 
B)  creating, transfer payments 
C)  collecting, seignorage 
D)  collecting, transfer payments 
A)  creating, seignorage 
B)  creating, transfer payments 
C)  collecting, seignorage 
D)  collecting, transfer payments

Question 3

It is estimated that a 10 percent inflation in the United States would bear a shoe-leather cost of approximately ________ percent of GDP.

Accepted Answer

A)  15 
B)  6 
C)  2 
D)  0.25 
A)  15 
B)  6 
C)  2 
D)  0.25

Question 4

Indexation is designed to

Accepted Answer

A)  moderate the costs of inflation, not inflation itself. 
B)  rapidly reduce inflation. 
C)  reduce the natural rate of unemployment. 
D)  rapidly reduce inflationary expectations. 
A)  moderate the costs of inflation, not inflation itself. 
B)  rapidly reduce inflation. 
C)  reduce the natural rate of unemployment. 
D)  rapidly reduce inflationary expectations.

Question 5

Government deficit financing is made easier by a p-percentage-point rise in inflation if it raises the nominal interest rate by ________ than p percentage points, and the private sector wishes to hold ________ quantity of real government bonds.

Accepted Answer

A)  less, a lower 
B)  less, the same 
C)  more, a lower 
D)  more, the same 
A)  less, a lower 
B)  less, the same 
C)  more, a lower 
D)  more, the same

Question 6

If an increase in expected inflation equally raises the nominal interest rate, the expected real interest rate ________ and thus investment demand ________.

Accepted Answer

A)  rises, increases 
B)  rises, decreases 
C)  is unchanged, is unchanged 
D)  falls, increases 
E)  falls, decreases 
A)  rises, increases 
B)  rises, decreases 
C)  is unchanged, is unchanged 
D)  falls, increases 
E)  falls, decreases

Question 7

Unemployment due to the normal processes of quitting and searching for jobs is called ________ unemployment.

Accepted Answer

A)  turnover 
B)  mismatch 
C)  cyclical 
D)  natural 
A)  turnover 
B)  mismatch 
C)  cyclical 
D)  natural

Question 8

The payment of subsidies to firms who locate in high unemployment, depressed regions

Accepted Answer

A)  is an example of a program to cure job discrimination. 
B)  is an example of a program to cure "mismatch unemployment." 
C)  has been universally successful in curing unemployment. 
D)  is "bribery" and against the law. 
A)  is an example of a program to cure job discrimination. 
B)  is an example of a program to cure "mismatch unemployment." 
C)  has been universally successful in curing unemployment. 
D)  is "bribery" and against the law.

Question 9

"Shoe-leather costs" refer to

Accepted Answer

A)  a cobbler's payment for leather. 
B)  "rubber costs: on today's shoes. 
C)  the inconvenience imposed by higher interest rates. 
D)  financial deregulation of retail business firms. 
A)  a cobbler's payment for leather. 
B)  "rubber costs: on today's shoes. 
C)  the inconvenience imposed by higher interest rates. 
D)  financial deregulation of retail business firms.

Question 10

The "excess" growth rate of the money supply is the growth rate of money

Accepted Answer

A)  plus the long-run growth rate of velocity. 
B)  minus the long-run growth rate of velocity. 
C)  plus the long-run growth rate of real GDP. 
D)  minus the long-run growth rate of real GDP. 
A)  plus the long-run growth rate of velocity. 
B)  minus the long-run growth rate of velocity. 
C)  plus the long-run growth rate of real GDP. 
D)  minus the long-run growth rate of real GDP.

Question 11

In the early 1980s the government's primary method of combating inflation was

Accepted Answer

A)  price and wage controls. 
B)  undoing the "self-inflicted" wounds. 
C)  restrictive monetary policy. 
D)  indexing bonds to protect savers. 
A)  price and wage controls. 
B)  undoing the "self-inflicted" wounds. 
C)  restrictive monetary policy. 
D)  indexing bonds to protect savers.

Question 12

The "expected real" interest rate is the

Accepted Answer

A)  rate actually quoted in financial markets. 
B)  rate actually quoted in financial markets minus the expected inflation rate. 
C)  rate actually quoted in financial markets plus the expected inflation rate. 
D)  rate actually quoted in financial markets divided by the expected inflation rate. 
A)  rate actually quoted in financial markets. 
B)  rate actually quoted in financial markets minus the expected inflation rate. 
C)  rate actually quoted in financial markets plus the expected inflation rate. 
D)  rate actually quoted in financial markets divided by the expected inflation rate.

Question 13

The payment of unemployment compensation tends to induce business firms to

Accepted Answer

A)  layoff workers as opposed to lowering sales. 
B)  search for new workers for shorter periods of time. 
C)  layoff workers as opposed to increasing inventories and/or reducing hours worked for all employees. 
D)  recall previously laid off workers more rapidly. 
A)  layoff workers as opposed to lowering sales. 
B)  search for new workers for shorter periods of time. 
C)  layoff workers as opposed to increasing inventories and/or reducing hours worked for all employees. 
D)  recall previously laid off workers more rapidly.

Question 14

The layoff of workers in virtually all industries during the 1982 recession is an example of the classification of workers as

Accepted Answer

A)  voluntarily unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed. 
A)  voluntarily unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed.

Question 15

Periods of low or negative inflation are generally ________ to farmers, who are ________ as a group.

Accepted Answer

A)  advantageous, creditors 
B)  advantageous, debtors 
C)  harmful, creditors 
D)  harmful, debtors 
A)  advantageous, creditors 
B)  advantageous, debtors 
C)  harmful, creditors 
D)  harmful, debtors

Question 16

The "key ingredient" in ending a hyperinflation is to

Accepted Answer

A)  allow the money supply to grow more rapidly. 
B)  reduce the enormous budget deficit. 
C)  require wage contracts to be indexed more frequently. 
D)  devalue the nation's currency in the foreign exchange market. 
A)  allow the money supply to grow more rapidly. 
B)  reduce the enormous budget deficit. 
C)  require wage contracts to be indexed more frequently. 
D)  devalue the nation's currency in the foreign exchange market.

Question 17

The "benefits" from government programs to reduce mismatch unemployment include reduction in

Accepted Answer

A)  private costs such as lost income and erosion of job skills. 
B)  private costs such as lost leisure and lower alcohol consumption. 
C)  social costs such as lower unemployment compensation and welfare payments. 
D)  A and C. 
A)  private costs such as lost income and erosion of job skills. 
B)  private costs such as lost leisure and lower alcohol consumption. 
C)  social costs such as lower unemployment compensation and welfare payments. 
D)  A and C.

Question 18

Real income is redistributed from ________ in the case of ________ inflation.

Accepted Answer

A)  creditors to debtors, anticipated 
B)  creditors to debtors, unanticipated 
C)  debtors to creditors, anticipated 
D)  debtors to creditors, unanticipated 
A)  creditors to debtors, anticipated 
B)  creditors to debtors, unanticipated 
C)  debtors to creditors, anticipated 
D)  debtors to creditors, unanticipated

Question 19

The short-run simulative effect of a government budget deficit on real GDP is stronger with ________ financing, since this ________ the crowding out effect of the deficit.

Accepted Answer

A)  bond, enhances 
B)  bond, eliminates 
C)  money, enhances 
D)  money, eliminates 
A)  bond, enhances 
B)  bond, eliminates 
C)  money, enhances 
D)  money, eliminates

Question 20

The costs of inflation depend upon

Accepted Answer

A)  whether it is anticipated or unanticipated. 
B)  who pays it and who receives it. 
C)  the future savings rate. 
D)  none of the above. 
A)  whether it is anticipated or unanticipated. 
B)  who pays it and who receives it. 
C)  the future savings rate. 
D)  none of the above.

A worker that quits her job

It is estimated that a 10 percent inflation in the United States would bear a shoe-leather cost of approximately ________ percent of GDP.

Indexation is designed to

Government deficit financing is made easier by a p-percentage-point rise in inflation if it raises the nominal interest rate by than p percentage points, and the private sector wishes to hold quantity of real government bonds.

If an increase in expected inflation equally raises the nominal interest rate, the expected real interest rate and thus investment demand .

Unemployment due to the normal processes of quitting and searching for jobs is called ________ unemployment.

The payment of subsidies to firms who locate in high unemployment, depressed regions

"Shoe-leather costs" refer to

The "excess" growth rate of the money supply is the growth rate of money

In the early 1980s the government's primary method of combating inflation was

The "expected real" interest rate is the

The payment of unemployment compensation tends to induce business firms to

The layoff of workers in virtually all industries during the 1982 recession is an example of the classification of workers as

Periods of low or negative inflation are generally to farmers, who are as a group.

The "key ingredient" in ending a hyperinflation is to

The "benefits" from government programs to reduce mismatch unemployment include reduction in

Real income is redistributed from in the case of inflation.

The short-run simulative effect of a government budget deficit on real GDP is stronger with financing, since this the crowding out effect of the deficit.

The costs of inflation depend upon

What Is Macroeconomics

The Measurement of Income, Prices, and Unemployment

Spending, Income, and Interest Rates

Monetary and Fiscal Policy in the Is-Lm Model

The Government Budget, Foreign Borrowing, and the Twin Deficits

International Trade, Exchange Rates, and Macroeconomic Policy

Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

The Government Budget, the Public Debt, and Social Security

Money and Financial Markets

Stabilization Policy in the Closed and Open Economy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro Confronts New Keynesian Macro

Conclusion: Where We Stand

Filters

Exam 9: The Goals of Stabilization Policy: Low Inflation and Low Unemployment

A worker that quits her job

It is estimated that a 10 percent inflation in the United States would bear a shoe-leather cost of approximately ________ percent of GDP.

Indexation is designed to

Government deficit financing is made easier by a p-percentage-point rise in inflation if it raises the nominal interest rate by ________ than p percentage points, and the private sector wishes to hold ________ quantity of real government bonds.

If an increase in expected inflation equally raises the nominal interest rate, the expected real interest rate ________ and thus investment demand ________.

Unemployment due to the normal processes of quitting and searching for jobs is called ________ unemployment.

The payment of subsidies to firms who locate in high unemployment, depressed regions

"Shoe-leather costs" refer to

The "excess" growth rate of the money supply is the growth rate of money

In the early 1980s the government's primary method of combating inflation was

The "expected real" interest rate is the

The payment of unemployment compensation tends to induce business firms to

The layoff of workers in virtually all industries during the 1982 recession is an example of the classification of workers as

Periods of low or negative inflation are generally ________ to farmers, who are ________ as a group.

The "key ingredient" in ending a hyperinflation is to

The "benefits" from government programs to reduce mismatch unemployment include reduction in

Real income is redistributed from ________ in the case of ________ inflation.

The short-run simulative effect of a government budget deficit on real GDP is stronger with ________ financing, since this ________ the crowding out effect of the deficit.

The costs of inflation depend upon

What Is Macroeconomics

The Measurement of Income, Prices, and Unemployment

Spending, Income, and Interest Rates

Monetary and Fiscal Policy in the Is-Lm Model

The Government Budget, Foreign Borrowing, and the Twin Deficits

International Trade, Exchange Rates, and Macroeconomic Policy

Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy

Inflation: Its Causes and Cures

The Theory of Economic Growth

The Big Questions of Economic Growth

The Government Budget, the Public Debt, and Social Security

Money and Financial Markets

Stabilization Policy in the Closed and Open Economy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro Confronts New Keynesian Macro

Conclusion: Where We Stand

Filters

Government deficit financing is made easier by a p-percentage-point rise in inflation if it raises the nominal interest rate by than p percentage points, and the private sector wishes to hold quantity of real government bonds.

If an increase in expected inflation equally raises the nominal interest rate, the expected real interest rate and thus investment demand .

Periods of low or negative inflation are generally to farmers, who are as a group.

Real income is redistributed from in the case of inflation.

The short-run simulative effect of a government budget deficit on real GDP is stronger with financing, since this the crowding out effect of the deficit.