Assignment
Question 1
If government spending is used to bolster the level of economic activity, the type of financing available to the U.S. government that would increase aggregate spending the most is
taxation
borrowing from the public
borrowing from banks
printing money
Question 2
The Kennedy administration's guidepost for wage increases was related to
money supply
price increases
productivity increases
interest rates
Question 3
Fiscal policy deals with
interest rates
the money supply
the government budget
bank credit
Question 4
Cost-push inflation is characterized by
the wage-price spiral
administered pricing
stagflation
the multiplier
Question 5
The most effective means of stimulating the economy during a recession is for the federal government to
increase spending and hold taxes
hold government spending and decrease taxes
decrease government spending and hold taxes
decrease government spending and raise taxes
Question 6
The most effective way for the government to develop a surplus as a contractionary measure is to increase taxes and hold or decrease spending.
True
False
Question 7
Stagflation is a mixture of
low inflation and low unemployment
high inflation and low unemployment
low inflation and high unemployment
high inflation and high unemployment
Question 8
Fiscal policy is likely to be more effective than monetary policy when used to increase aggregate demand during periods of serious unemployment.
True
False
Question 9
Deflation and disinflation are synonymous terms.
True
False
Question 10
The policies of the New Deal in the 1930s, in an effort to alleviate unemployment, paralleled those of
Keynesian analysis
supply-side economics
Say's Law
the classical theory
Question 11
If business leaders thought an existing tax credit provision on new investment might be suspended because of inflation, this would cause
investment spending to slacken
investment spending to accelerate
no effect on investment plans
interest rates to decline
Question 12
A disadvantage of using public works to reduce unemployment is that
it is very difficult to end a government spending program once it develops a political constituency
large public works may require years to plan and get under way
increased government spending may not be appropriate by the time the public works project beings
all of the above
Question 13
Changing the discount rate is a tool of fiscal policy.
True
False
Question 14
The roughly coincident indicators have their upward and downward turning points prior to the upward and downward turning points of real GDP.
True
False
Question 15
A noticeable drop in the level of business activity is known as a
recession
collapse
lagging indicator
contraction
Question 16
During the expansion phase of the business cycle, profit margins increase due to a widening cost-price relationship.
True
False
Question 17
Prior to 2006, the most severe trough in a U.S. business cycle since the Great Depression occurred in 1982.
True
False
Question 18
Schumpeter's theory that business cycles are caused by breakthroughs in the form of new products, new machines, or new production techniques is known as the
real business cycle theory
innovative theory
overinvestment theory
technology theory
Question 19
The measurement of a business cycle is obtained by adjusting the real GDP for seasonal variation, the trend, and random fluctuations.
True
False
Question 20
According to the rational expectations theory,
the expected results of government anticyclical measures are intensified by the actions of businesses and individuals
the easy expansion of the money supply by banks eventually leads to excess productive capacity
the expected results of government anticyclical measures are offset by the actions of businesses and individuals
the limited expansion of the money supply by banks eventually leads to excess productive capacity
Question 21
The theory of rational expectations is classified as a psychological cause of the business cycle.
True
False
Question 22
In the pattern of the business cycle, generally
costs and prices move inversely
costs and prices move simultaneously
costs lead prices
costs lag behind prices
Question 23
A recession occurs whenever there's a decline in real GDP for two or more successive quarters.
True
False
Question 24
Recurring fluctuations in business activity over the course of one year are known as
seasonal variations
random fluctuations
the trend
the business cycle
Question 25
During the expansion phase of the business cycle, we would normally expect to see real income ________, price level ________, and unemployment rate_______.
increasing; increasing; increasing
increasing; decreasing; decreasing
increasing; increasing; decreasing
falling; increasing; increasing
Question 26
Which of the following is not a phase of the business cycle?
peak
trough
compression
expansion
Question 27
Employment discrimination refers to
differing economic opportunities offered to persons according to their productivity
wage differentials based on productivity differences
differing economic opportunities based on personal characteristics
wage differentials based on seniority and human capital
Question 28
Poverty is a condition that randomly strikes all members of the population equally.
True
False
Question 29
Household wealth is defined as income minus liabilities.
True
False
Question 30
In 2004, the top 5 percent of households earned approximately
5 percent of aggregate income
10 percent of aggregate income
15 percent of aggregate income
50 percent of aggregate income
Question 31
If new highly progressive tax laws are enacted, the resulting Lorenz curve will move to the right-hand corner of the graph.
True
False
Question 32
According to the Department of Commerce, a person living alone constitutes a single-person family.
True
False
Question 33
A country with an equal distribution of income will have a higher standard of living than a country with a more unequal distribution of income.
True
False
Question 34
The total number of people in poverty has changed little since the late 1960s.
True
False
Question 35
An income distribution in which all households receive exactly the same income is referred to as a(n)
just distribution of income
proportional distribution of income
equal distribution of income
equitable distribution of income
Question 36
The New Economy is one of
durable goods
services
information
manufacturing
Question 37
The poverty rate for female householders without a husband present exceeds the poverty rate for blacks and Hispanics.
True
False
Question 38
Geographically, a higher percentage of the poor live in the
Northeast
South
Midwest
West
Question 39
A sizable part of increases in the U.S. labor force in the past few decades has been due to the influx of women.
True
False
Question 40
Since 1970, U.S. union membership has
increased as a percentage of the labor force
declined as a percentage of the labor force
remained stable as a percentage of the labor force
become more restrictive
Question 41
The amount of unemployment that arises because workers are temporarily between jobs or new entrants to the labor force is known as
structural unemployment
cyclical unemployment
frictional unemployment
induced unemployment
Question 42
The total U.S. labor force excludes members of the armed services stationed outside the United States.
True
False
Question 43
The Employment Act of 1946 set a specific annual inflation rate target of 3 percent.
True
False
Question 44
The natural rate of unemployment is the rate of unemployment we would expect to find
when frictional and structural unemployment are equal
when all unemployment is structural or frictional
when there is no inflation in the economy
when structural unemployment has been eliminated
Question 45
Persons who do not work because of bad weather or vacation are part of
the unemployed labor force
the employed labor force
frictional unemployment
cyclical unemployment
Question 46
The official rate of unemployment is based on a(n)
door-to-door survey
telephone survey
employer survey
payroll survey
Question 47
In recent years, the U.S. labor force has experienced
an increase in the percentage of manufacturing workers
an increase in the percentage of older workers
an increase in the percentage of females
an increase in the percentage of unskilled workers
Question 48
Which of the following has not been outsourced from the U.S.?
customer service centers
data processing
residential construction
computer programming
Question 49
The Full Employment and Balanced Growth Act of 1978 is also known as the Deficit Reduction Act.
True
False
Question 50
In order to be effective, the minimum wage must be
increased every 3 years
above the market wage
below the market wage.