When GDP is rising, the economy is experiencing
a. a contraction
b. a recession
c. a financial crisis
d. an expansion
e. equilibrium
The index used to translate nominal GDP into real GDP is the
a. Consumer Price Index
b. Wholesale Price Index
c. GDP Price Index
d. Producer Price Index
e. Manufacturer’s Input Price Index
A labor union anticipates a 7 percent inflation rate in each of the next three years. It
wants to obtain a 3 percent increase in real wages in each of those three years. To obtain
this goal, the requisite nominal wage hike it should negotiate is
a. 7 percent each year
b. 3 percent each year
c. 10 percent each year
d. 10 percent the first year and 3 percent each year thereafter
e. 21 percent the first year and 3 percent each year thereafter
What does the demand curve for British pounds tell us?
a. The quantity of pounds people will want to sell at each different exchange rate
b. The quantity of pounds people will want to buy at each level of output
c. The quantity of pounds people will want to buy at each different exchange rate
d. The quantity of pounds people will want to sell in each different time period
e. The quantity of pounds people will want to buy at each different interest rate.
The Fed can determine how the money demand curve has shifted by
a. studying interest rate changes
b. looking at the number of new loans
c. studying unemployment compensation claims
d. experimenting with changes in credit conditions
e. checking the size of the federal budget deficit
Inflation and unemployment are examples of macroeconomic topics.
Which of the following is an advantage of open market operations over other Federal
Reserve policy tools?
a. Use of the other tools must be approved by the President.
b. Use of the other tools must be approved by Congress.
c. Open market operations are more precise.
d. Open market operations do not change interest rates.
e. The U.S. Treasury and the Fed work together to undertake open market operations.
In the classical model, government purchases or tax cuts are appropriate policies to
raise GDP.
Every economic system requires a means for determining resource allocation.
If you borrow money at a 9% nominal rate and the inflation rate is 2%, what is the real
interest rate on the loan?
a. 9.0%
b. 11.0%
c. 7.0%
d. 2.0%
e. 4.5%
Which of the following best defines quantity supplied?
a. the amount of a good sellers would choose to produce, in a given set of
circumstances
b. the amount of a good sellers will be able to sell, in a given set of circumstances
c. the various amounts of a good sellers would like to sell over various sets of
circumstances
d. the amount of a good sellers would like to sell if they could choose the price for
which it sold
e. the amount of a good that sellers would be able to sell if they could choose the price
for which it sold
Suppose that the current overall unemployment rate is 7.5%. If structural
unemployment is 1.5%, frictional unemployment is 3%, and cyclical unemployment is
2%, what is the unemployment rate that is due to seasonal factors?
a. 14.0%
b. 5.5%
c. 4.5%
d. 6.0%
e. 1.0%
In Figure 3-11, suppose that initially the market is in equilibrium as defined by the
demand and supply curves D1 and S1. Which price/quantity combination could result
from an increase in consumers’ incomes coupled with an improvement in technology?
a. $100 and 75,000
b. $100 and 100,000
c. $100 and 50,000
d. $120 and 75,000
e. $120 and 100,000