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 increases
relative to the expected rate, the unemployment rate
A) decreases.
B) increases.
C) may increase or decrease.
D) does not change.
The Phillips curve shows the ________ relationship between inflation and ________.
A) inverse; unemployment
B) positive; real GDP
C) positive; interest rates
D) negative; interest rates
Which of the following factors is likely to increase the amount of available labor and
decrease the real wages of workers?
A) consumers demanding more goods
B) a large number of factory closings
C) a high influx of immigration
D) in increase in the supply of capital stock
If the number of people employed is 150,000 and the labor force is 160,000, the
unemployment rate is:
A) 6.25%.
B) 10.25%.
C) 2.5%.
D) 6.67%.
Hector voluntarily left his job to search for a job in accounting, the field in which he
has his bachelor’s degree. Hector is considered
A) structurally unemployed.
B) cyclically unemployed.
C) frictionally unemployed.
D) not to be unemployed.
Which of the following were policies implemented by Paul Volcker in response to
inflationary pressure in the 1980s?
A) Increase the money supply and interest rates.
B) Tighten money supply to raise interest rates.
C) Increase government spending to lower the unemployment rates.
D) Increase tax rates to slow down the economy.
Recall the Application about the decrease in price of illegal drugs in the United
States to answer the following question(s). Recall the Application. If the decrease in
price of illegal drugs is primarily due to a change in supply, the equilibrium quantity of
drugs
A) will increase.
B) will decrease.
C) will not change.
D) may or may not change.
Recall the Application about the possibilities of transformative economic growth in
authoritarian and participatory political institutions to answer the following
question(s).According to this Application, ________ regimes have difficulty coping
with the changes arising from sustained technological progress.
A) authoritarian
B) participatory
C) democratic
D) all political
If Sam does not have a job and is not currently looking for work but has looked in the
past, he is considered
A) unemployed and in the labor force.
B) unemployed and not in the labor force.
C) not in the labor force.
D) unemployed.
Recall Application 2, “Would a Policy Rule Have Prevented the Housing Boom?” to
answer the following questions:
According to the application, which of the following European countries deviated the
most from the “Taylor rule” and suffered the worst boom and bust in housing?
A) Spain
B) France
C) Germany
D) the United Kingdom
The following table lists the basket of goods in the
Consumer Price Index for the nation of Astro (Assume 2010 is the base year.)
Table 6.2
Using the information in Table 6.2, the inflation rate from 2010 to 2011 is about
A) 26 percent.
B) 38 percent.
C) 42 percent.
D) 49 percent.
When Bob receives a 5 percent nominal wage increase in a period where inflation is
also 5 percent, then we say that he experiences no money illusion when:
A) he believes that his real wage increased.
B) he believes that his real wage did not change.
C) he believes that his real wage decreased.
D) All of the above are correct.
Suppose that the price of fertilizer, an input in the production of corn, rises. We would
predict that the equilibrium quantity of corn will ________ and the equilibrium price of
corn will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Which of the following is included in M2, but not included in M1?
A) currency held by the public
B) travelers checks
C) checkable deposits
D) money market accounts