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Which of the following is a period of decreasing output that is severe and long lasting?
a. business cycle
b. expansion
c. peak
d. recession
e. depression
Why would workers and retirees want to have their wages and benefits indexed to the
Consumer Price Index (CPI)?
a. To lower their purchasing power during years of rising prices
b. To maintain their purchasing power during years of rising output
c. To maintain their purchasing power during years of declining output
d. To increase their purchasing power during years of negative inflation
e. To maintain their purchasing power during years of rising prices
According to economists, changes in the quality of goods
a. leads to overestimates of the measured value of GDP because these goods last for
shorter amounts of time
b. leads to underestimates of the measured value of GDP because these goods last for
shorter amounts of time
c. leads to overestimates of the measured value of GDP because these goods last for
longer amounts of time
d. have no effect on the measured value of GDP
e. leads to underestimates of the measured value of GDP because these goods last for
longer amounts of time
Why do financial intermediaries aid in the efficient operation of the economy?
a. Without them it would be difficult for small savers to lend to large borrowers.
b. They lend funds to businesses at a zero interest rate.
c. They print currency.
d. They regulate the money supply.
e. They engage in open market operations.
Suppose GDP for 2009 was $1,500, wages and salaries were $800, rent payments were
$200, consumption was $1000, and interest payments were $200. What must the value
of profits have been?
a. $200
b. $500
c. $0
d. $100
e. $300
In the short-run macro model, what is the relationship between income and investment
spending?
a. It is positive and stable.
b. It is positive but unstable.
c. It is negative and stable.
d. It is negative but unstable.
e. There is no relationship between the two variables.
An example of a frictionally unemployed individual is
a. Sylvia, who quit her job to spend more time with her children
b. Rod, the lifeguard, who cannot find a job because the temperature is too low in
October
c. Ileana, a college student who quits her job to return to school
d. Steve, an individual does not have skills to keep his job as an aerospace engineer
e. Samantha, who quits her job to look for better one
How is the typical market basket determined for the Consumer Price Index (CPI)?
a. By the President
b. By the U.S. Congress
c. By a survey of the spending patterns of thousands of businesses
d. By a survey of the spending patterns of thousands of government agencies
e. By a survey of the spending patterns of thousands of households
The cost of cyclical unemployment is
a. spread broadly among the U.S. population
b. the inflationary impact of increased federal expenditures on the unemployed
c. growing as the U.S. population ages
d. especially felt by recent college graduates
e. the lost output that results
Figure 4-4 depicts a market in which the government has imposed a price floor of
$5.00 per unit. To maintain the price floor, the government should
a. buy 200 units of the good
b. sell 200 units of the good
c. buy 700 units of the good
d. sell 700 units of the good
e. buy 500 units of the good
The formula for labor productivity is given by
a. employment / output.
b. output / population.
c. output / employment.
d. population / output.
e. output / number of firms.
