Question
click below
click below
Question
Normal Size Small Size show me how
Macro Exam 3
Question | Answer |
---|---|
Unemployment correlated with the ups and downs of the business cycle is called | Cyclical and this is because 1. Real shocks 2. Deficiencies in aggregate demand. |
Which of the following does NOT contribute directly to the persistence of structural unemployment? | Work Test |
What are the three parts to Structural Unemployment? | 1. Unemployment Benefits (The amount and duration) 2. Minimum Wage 3. Employment Protection Laws |
What are unemployment benefits? | As the Unemployed rates increase, more employed workers are incited to remain unemployed. |
What is Minimum Wage? | Finding the Unemployment Rate QS-QD/QS |
What are the protection laws? | The EMPLOYEE-AT-WIll-DOCTRINE An employee may quit and an employer may fire an employee at any time for any reason. |
How can you reduce "Structural Unemployment'? | 1. Job retraining 2. Job Search Assistance 3. Work Test 4. Early Unemployment Bonus. |
Which of the following would be considered unemployed? | Janice, a senior in college, started job hunting early in the hope that she would have secured a job by the time she graduates in May. |
Which of the following individuals can be counted as unemployed | ean, who left her job to search for a higher-paying position |
he presence of discouraged workers causes the measured unemployment rate to be? | understated. |
Discouraged workers are workers who have | given up looking for work but would still like a job |
The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called | frictional unemployment. |
Oil shocks, the shift from manufacturing to service jobs, and the use of new technologies are reasons for _____ unemployment | structural |
A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now | structurally unemployed. |
Which of the following does NOT contribute directly to the persistence of structural unemployment? | work tests |
Active labor market policies: | focus on getting unemployed workers back to work |
If a national government improves its unemployment benefits, its unemployment rate will most likely | increase |
Unemployment correlated with the ups and downs of the business cycle is called | cyclical unemployment. |
If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be | 8.33% |
The consumer price index measures the prices of: | a basket of goods bought by a typical American consumer |
If the velocity of money and real GDP are fixed, then the quantity theory of money implies that the price level will: | increase at the same rate as the growth in the money supply |
Nobel Prize–winning economist Milton Friedman says, “Inflation is always and everywhere a _____.” | monetary phenomenon |
With respect to real output, in the long run, money is: | neutral |
The primary reason we think of inflation as bad even when wages rise with it is that it | distorts the information delivered by prices. |
Jordan loaned Taylor $1,200 on March 15, 2009. Taylor returned $1,260 on March 14, 2010. Inflation was 2% over the 1-year period. What is the real interest rate that Taylor paid? | 3% |
Which of the following correctly represents unexpected disinflation? | Eπ > π |
Debt monetization means that a government pays off its debt by: | increasing the money supply |
The term “business fluctuations” refers to: | movement in real GDP around its long-term trend. |
If spending in an economy increases by 3% and real GDP increases by 1%, the result will be | inflation |
If spending growth is 6% and inflation is also 6%, this means that: | real GDP did not increase |
Which of the following combinations would be on an aggregate demand curve with a spending growth rate of 6%? | inflation rate of 8%, real growth rate of –2% |
For an aggregate demand curve with = 10% and = 0%, if inflation is 6%, then real growth is: | 4% |
According to the quantity theory of money, if both the growth rate of the money supply and the velocity of money are fixed, then a higher inflation rate means: | a lower real growth rate. |
If the growth rate of the money supply in an economy is 5%, the growth rate of output is 2%, and the velocity of money is constant, what will the inflation rate in this economy be? | 3% |
The primary purpose of the AD-AS model is to explain: | business fluctuations |
An increase in inflation will cause the long-run aggregate supply curve to | not shift at all. |
In the basic model with an AD and LRAS curve only, if spending growth is 10% and the Solow growth rate falls from 5% to 3%, then inflation will: | increase from 5% to 7% |
During the Internet revolution in the late 1990s, a positive real shock shifted the long-run aggregate supply curve to the right, which led to: | an increase in real growth rate and decrease in the inflation rate |
Wages are sticky when | labor unions set wage contracts for a certain period of time. |
An increase in _____ will shift the SRAS curve. | expected inflation, but not actual inflation |
The cost a business faces when changing prices in response to an economic shock is called | a menu cost |
In the AD-AS model with a long-run potential growth rate of 2%, a 6 percentage point increase in the money supply growth rate will cause the economy's growth rate to be _____ in the long run. | 2% |
If the actual rate of inflation turns out to be higher than the expected rate of inflation, what happens to the growth rate of output before expectations are updated? | The growth rate is higher than the Solow growth rate. |
The short-run aggregate supply curve shows the _____ relationship between the inflation rate and real growth during the period when prices and wages are _____. | positive; sticky |
Nominal wage confusion occurs when | workers respond to their nominal wage instead of to their real wage |
If stock prices go up and people feel richer, aggregate demand will: | increase |
An increase in consumer pessimism will lead to increased inflation in | neither the short run nor the long run |
Which of the following is a negative real shock that occurred during the Great Depression? | Widespread bank failures led to a reduction in the productivity of financial intermediation |
Which of the following best describes the conditions during the Great Depression? | Both real GDP growth and inflation were negative. |
Which of the following is part of the labor force? | a person who was laid off and is now looking for work |
An unemployed person is one who: | does not have a job but is actively looking for one |
What is the term for workers who have given up looking for a job but would still like one? | discouraged workers |
When workers lose their jobs and become officially unemployed, the unemployment rate | increases |
The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called: | frictional unemployment. |
Which of the following individuals can be counted as part of the labor force? | someone who is collecting unemployment benefits |
The shift toward more of a service economy and less of a manufacturing economy in the United States has caused an increase in: | structural unemployment |
Long-lasting unemployment benefits tend to: | increase the rate of structural unemployment. |
What allows an employee to quit at any time and an employer to fire at any time for any reason? | employment-at-will |
During recessions the unemployment rate: | . increases |
How can people who are laid off from work due to a recession eventually turn into structurally unemployed people? | by staying unemployed for so long that their skills become outdates |
Suppose that Congress decided to exempt seniors from paying income tax on labor income. What would happen to the labor force participation rate for seniors? | It would increase. |
The invention of birth control in pill form substantially labor force participation. | increased female |
Inflation is: | an increase in the average level of prices |
The consumer price index measures the prices of: | a basket of goods bought by the typical American consumer |
In a small economy, the money supply is $600,000, and the velocity of money is 2. The current average price level in the economy is 3. What is the level of nominal GDP in this economy? | $1.2 million |
Current forecasts say that mild inflation is expected next year. If, however, deflation occurs instead: | lenders on existing fixed rate loans will gain while borrowers will lose |
What is the Fisher effect? | the tendency of nominal interest rates to rise with higher expected inflation rates |
Suppose the nominal interest rate is 4% and the inflation rate is 5%. The real interest rate is: | -1% |
Business fluctuations are fluctuations in the: | growth rate of real GDP around its trend growth rate |
Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to: | shift outward |
The aggregate demand curve shows all the combinations of and that are consistent with a specified rate of . | inflation; real GDP growth; spending growth |
The position of the long-run aggregate supply curve shows the economy’s: | potential growth rate given by the real factors of production |
The long-run aggregate supply curve shows that long-run economic growth: | does not depend on the rate of inflation |
As a result of an increase in expected inflation, the | SRAS curve shifts up and to the left |
An unexpected increase in export growth is a: | positive AD shock |
. If π > πe | firms’ profits will increase |
What are Unemployed Workers? | Adults who do not have a job but who are looking for one. |
what is Unemployment Rate? | Percentage of the labor force without a job. |
What is a Labor Force? | Percentage of adults in the labor force. |
What is Unemployment Rate | Unemployed divided by unemployed + employed * 100 |
What are Discourage Workers,? | Workers who have given up looking for work but would still like a job |
What happens to the unemployment rate when discouraged workers are involved? | The unemployment rate goes down |
Does unemployment excludes discouraged workers. | yes |
What is Underemployment rate | includes part time workers who would rather have a full time position and people who would like to work but given up looking for jobs. |
Underemployment Rate includes | (Employed persons) incudes both part and full time workers |
What is the Velocity of money? | Average of times a dollar is spent on final goods and services during a year |
What is structural unemployment higher in Europe instead of the United States | Unemployment Benefits (Amount and Duration, Minimum Wages and Unions as well as Employment Protection Laws. |