During periods of poor economic performance, real GDP
A) declines and unemployment rises.
B) declines and unemployment declines.
C) declines but unemployment typically does not change.
D) is unchanged but unemployment rises sharply.
Figure 4.6
Figure 4.6 illustrates a set of supply and demand curves for a product. Suppose that the
market is currently in point A. If the price of the input of the product decreases, the
market will move to point:
A) A.
B) B.
C) C.
D) D.
Which of the following creates difficulties in making comparisons of real GDP across
nations?
A) Each nation has a different population.
B) Nations produce different goods and services.
C) Relative prices differ sharply across countries.
D) Nations often have different languages.
Figure 9.2 Refer to Figure 9.2. A movement from point to point a could be caused by
a(n)
A) increase in government spending.
B) decrease in the price of oil.
C) increase in taxes.
D) a massive crop failure.
When a country is experiencing persistent deflation, then:
A) real GDP is greater than nominal GDP before the base year.
B) real GDP is greater than nominal GDP after the base year.
C) real GDP is less than nominal GDP before the base year.
D) both B and C are correct.
It is difficult to determine expected real rates of interest because
A) we cannot measure the inflation rate.
B) we cannot measure the nominal interest rate.
C) the inflation rate is a subjective measurement.
D) we never know exactly what inflation rates people anticipate.
In the United States, the debt burden tends to rise during ________ and fall during
________.
A) peacetime; wartime
B) wartime; peacetime
C) peacetime; wartime, but only if the war lasts several years.
D) wartime, but only if the war is of short duration; peacetime
Economists consider an economy to be at “full employment” when
A) the unemployment rate equals the natural rate of unemployment.
B) there is only a small amount of cyclical unemployment.
C) there is no frictional unemployment.
D) there is no structural unemployment.
Assume that last year’s inflation rate is the same as the expectation of inflation for the
next year. According to the expectations Phillips curve, if the inflation rate decreases
relative to the expected rate, the unemployment rate
A) decreases.
B) increases.
C) may increase or decrease.
D) does not change.
The tax surcharge enacted during the early years of the Vietnam War failed to decrease
consumer spending because:
A) the tax surcharge was not large enough.
B) the Federal Reserve System simultaneously lowered interest rates.
C) the tax surcharge increased household saving instead.
D) the tax surcharge was only temporary.
Recall the Application about Jasper Johns and house painting to answer the
following question(s). In this Application, it is assumed that Johns can earn $5,000
per day by painting works of art, and therefore should hire a house painter who
charges $150 per day, and takes 10 days, to paint his house. This Application
addresses the economic concept of
A) the marginal principle.
B) diminishing returns.
C) specialization and exchange.
D) real versus nominal costs.
Let C = 800 + 0.6y and I = 100. Assume no government or foreign sectors. If
investment decreases by 40, then the value of the multiplier is
A) -2.5.
B) -1.67.
C) 1.67.
D) 2.5.
The formula to calculate the present value of a future payment is:
A) PV = K/(K-t)i.
B) PV = K/(1+i)t.
C) PV = K/(K-i)t.
D) PV = K/(1+i)k.
In 2010, China’s share of investment spending as a percentage of GDP was ________
Germany’s share.
A) less than half of
B) slightly less than
C) more than twice as much as
D) roughly equal to