Which of the following statements is true when total spending equals total output?
a. Saving plus taxes equals investment plus government purchases.
b. Output equals investment plus government purchases plus saving plus taxes.
c. Output equals consumption spending plus investment plus government purchases
plus saving plus taxes.
d. Output equals consumption plus investment plus taxes.
e. Saving plus investment equals taxes plus government purchases.
Which of the following people would be considered frictionally unemployed?
a. The President of the United States
b. An elementary school student
c. A lifeguard unemployed during the winter
d. A high school graduate entering the labor market for the first time
e. A person laid off from his job
Providing training to unemployed individuals will help to alleviate
a. frictional unemployment
b. seasonal unemployment
c. structural unemployment
d. cyclical unemployment
e. short-term unemployment
Suppose a major computer virus struck the nation’s computers and all hard drives were
erased. What would happen in the labor market?
a. The real wage would increase and so would employment.
b. The real wage would not change, but employment would decrease.
c. The real wage would increase and employment would decrease.
d. The real wage would decrease and so would employment.
e. The real wage would decrease and employment would increase.
If the price of bonds falls, the
a. demand for bonds will rise
b. supply of bonds will fall
c. supply of bonds will rise
d. interest rate will rise
e. interest rate will fall
Refer to Figure 5-2 above. When moving from point B to C on the graph, the economy
is going through a(n)
a. peak
b. trough
c. expansion
d. downturn
e. recession
In an expansion,
a. federal budget deficits tend to rise
b. federal budget deficits tend to fall
c. the federal debt tends to rise faster than in a recession
d. federal government tax receipts tend to fall
e. there is pressure on the Fed to monetize the debt
For the Fed, price stability means stable prices.
Suppose that the government reduces income taxes. Which of the following is the most
likely result?
a. An increase in human capital investment
b. A decrease in consumption
c. An increase in government spending
d. A decrease in government spending
e. A decrease in human capital investment.
The AD curve shifts to the right when
a. the Fed alters its fiscal policy rules
b. any economic shock disrupts the economy
c. the AS curve does not shift
d. new trade legislation is passed
e. positive demand shocks occur
A decrease in both equilibrium price and quantity could be produced by a(n)
a. decrease in supply, with demand constant
b. increase in supply, with demand constant
c. decrease in demand, with supply constant
d. increase in demand, with supply constant
e. improvement in technology
Individuals must make choices because
a. resources are scarce and wants are limited
b. resources and wants are unlimited
c. assets and wealth are distributed unevenly
d. resources are scarce and wants are unlimited
e. inflation usually outpaces income growth
The formula for determining a real variable is real variable =
a. (nominal variable / 100) x CPI
b. (nominal variable x CPI) / 100
c. (nominal variable / price index) x 100
d. (nominal variable / price index) + 100
e. (nominal variable / price index) / 100