Econ 102 - Principles of Macroeconomics » Spring 2020 » iVAT Chapter 6

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Question #1
Which of the following could be considered a short-run issue in economics:
A.   Unemployment
B.   Secular growth trends
C.   Increasing the overall productive capacity of the economy
D.   Creating incentive plans to increase the size of the labor force
Question #2
Which of the following, according to Classical economists, could be a reason for the Great Depression:
A.   A decrease in the productive capacity of the economy.
B.   An increase in the rates of return on investments.
C.   Decreased confidence by firms due to excessively low wages.
D.   Unions, which cause wages to be higher than the market equilibrium wages.
Question #3
What do Keynesian economists mean when they say "prices or wages are sticky"?
A.   Firms are likely to reduce prices if there is an oversupply of goods.
B.   Workers are likely to resist cuts in their nominal wages.
C.   Firms can reduce prices to reach a market equilibrium.
D.   Workers are likely to accept cuts in their nominal wages in order to reduce unemployment.
Question #4
What is the term "stagflation" referring to?
A.   It is referring to a period in an economy where inflation is high and the economy is simultaneously in a recession.
B.   It is referring to a period in an economy where inflation is low and the economy is simultaneously in a recession.
C.   It is referring to a period in an economy where unemployment is high and the economy is simultaneously in a recession.
D.   It is referring to a period in an economy where inflation is high and the economy is simultaneously simultaneously growing rapidly.
Question #5
Which of the following do Keynesian economists focus on?
A.   Creating incentives for businesses to increase rates of investment.
B.   Sustaining adequate aggregate demand to prevent high rates of unemployment.
C.   Increasing business confidence, so that businesses create jobs.
D.   Creating incentives for for workers to enter the labor force.
Question #6
When economists discuss economic growth they are referring to:
A.   The productive capacity of the economy, which is measured by total investment.
B.   Savings per capita, which is savings divided by the population.
C.   Per capita output, which is output divided by the population.
D.   The long-term secular growth trend, as opposed to cyclical growth trends.
Question #7
Suppose two countries both had $30,000 in per capita output starting in 2000.  In 2020, one country has $60,000 in per capita output, while the other has $40,000. What is a contributing factor to this disparity in per capita output between the two countries?
A.   The differences in amount of exports that both countries produce.  Exports can have a large determining impact on overall living standards.
B.   Compound growth and its tendency to create very small differences in living standards.
C.   The differences in savings rates between the two countries caused this disparity.  The long-term growth of an economy is dependent on savings from its citizens.
D.   The difference in the consumption patterns between the two nations.
E.   The differences in growth rates in the economy, and the large impact that compound growth can have over long time periods.
Question #8
Which country has had the highest average economic growth rates since the 1980s?
A.   India
B.   China
C.   The United States
D.   Germany
Question #9
An economy will enter an expansionary phase of the business cycle once the economy:
A.   Hits the peak of the business cycle.
B.   Before it hits the trough or bottom of the business cycle.
C.   Is in between the recessionary expansions.
D.   Moves past the trough and moves in an upward trajectory.
E.   Hits an equilibrium point.
Question #10
If a downturn in economic activity is the result of a long-run reduction in the growth trend, rather than just a short-run fluctuation around the growth trend, the economy is experiencing:
A.   Keynesianism
B.   A recession
C.   A structural stagnation
D.   Equilibrium
E.   A business cycle
Question #11
What is a possible contributing factor to the decrease in the severity of downturns in the business cycle after World War II?
A.   Keynesian fiscal and monetary policies, where overall demand in the economy is managed.
B.   Classical fiscal policies where laissez-faire policies are implemented.  This can lead to business cycles being dampened and smoothed.
C.   The fact that the economy has hit a long-term equilibrium point.
D.   Increased trade between Europe and the United States after World War II.
E.   The fact that secular growth trends have generally increased since World War II.
Question #12
Joline has lost her job because sales at her company have rapidly declined because of macroeconomic conditions. What type of unemployment describes Joline's situation?
A.   Fortified unemployment
B.   Structural unemployment
C.   Cyclical Unemployment
D.   Full employment
E.   Frictional unemployment
Question #13
The unemployment rate is:
A.   the percentage of people in the economy who are not working.
B.   the percentage of the employed people in the economy that become unemployed each month.
C.   The dynamic rate of decline
D.   the percentage of people in the economy who are willing and able to work but cannot find jobs.
E.   the percentage of people in the economy who are willing and able to work full-time but cannot find full-time jobs.
Question #14
When the labor market is doing very well and jobs are easy to get, we would expect:
A.   The labor force to increase because the overall population of the country should shrink.
B.   The labor force to stay the same because the labor market is in equilibrium at that point.
C.   The labor force to increase as previously discouraged workers re-entered the labor force.
D.   The labor force to decrease as previously discouraged workers choose to remain unemployed.
E.   The labor force to increase because the overall population of the country should increase because of immigration.

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