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| 1 | |
In macroeconomics, the long-run framework focuses on |
| | A) | demand and the issues of inflation and unemployment. |
| | B) | supply and the issues of inflation and unemployment. |
| | C) | supply and the issue of growth. |
| | D) | demand and the issue of growth. |
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| 2 | |
In the United States, the secular growth trend is about |
| | A) | 1.0 – 1.5 percent per year. |
| | B) | 2.5 – 3.5 percent per year. |
| | C) | 6.0 – 8.5 percent per year. |
| | D) | the decline in church attendance. |
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| 3 | |
Classical economists believe |
| | A) | that the business cycle does not exist. |
| | B) | in activist policies. |
| | C) | in laissez faire policies. |
| | D) | that economic downturns will last forever unless the government fixes them. |
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| 4 | |
A correct sequence for the four phases of the business cycle is |
| | A) | peak, downturn, trough, upturn. |
| | B) | peak, trough, upturn, downturn. |
| | C) | inflation, unemployment, growth, collapse. |
| | D) | inflation, collapse, recovery, unemployment. |
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| 5 | |
An economic downturn is generally associated with |
| | A) | falling output and falling unemployment. |
| | B) | falling output and rising inflation. |
| | C) | falling output and rising unemployment. |
| | D) | falling unemployment and rising output. |
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| 6 | |
Karen is a high school dropout, but for 15 years she had a good job making blue jeans at a plant in her hometown. Recently, Karen lost her job when the plant closed down and the company moved the production process to Mexico. Karen is still out of work and looking for a job. Economists would describe her as |
| | A) | cyclically unemployed. |
| | B) | frictionally unemployed. |
| | C) | seasonally unemployed. |
| | D) | structurally unemployed. |
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| 7 | |
Bill quit his job so he could stay home and take care of his two small children. His wife has a good job and he likes what he is doing so he is currently not looking for work. Bill is |
| | A) | cyclically unemployed. |
| | B) | frictionally unemployed. |
| | C) | structurally unemployed. |
| | D) | not unemployed. |
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| 8 | |
Potential output |
| | A) | is the level of output the country would have if unemployment rate was zero. |
| | B) | increases when the target rate of unemployment decreases. |
| | C) | decreases when the target rate of unemployment decreases. |
| | D) | increases when inflation increases. |
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| 9 | |
Real output is |
| | A) | the total amount of goods and services produced, adjusted for inflation. |
| | B) | the total amount of goods produced, excluding services. |
| | C) | the total amount of goods and services produced measured in current prices. |
| | D) | the nominal output times the price index. |
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| 10 | |
Inflation |
| | A) | is a one-time increase in the price level. |
| | B) | causes the price of all goods to increase. |
| | C) | makes everybody in society poorer. |
| | D) | is a continual increase in the price level. |
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