Question 1 2 points Save

Question 1 2 points Save
Debtors tend to benefit more from inflation than creditors do.
True
False

Question 2 2 points Save
If the U.S. government increases spending, the U.S. Treasury
has the legal right to issue currency to pay for the spending
does not have the legal right to issue currency to pay for the spending
usually pays for the spending by selling bonds directly to the Fed
seldom pays for the spending by selling bonds to the public

Question 3 2 points Save
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 4 2 points Save
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 5 2 points Save
During an inflationary period, the Fed is inclined to purchase government securities to combat inflation.
True
False

Question 6 2 points Save
During an inflationary period, the Federal Reserve is most likely to
lower the discount rate
buy government securities
lower reserve requirements
raise the discount rate

Question 7 2 points Save
If the government must borrow during an inflationary period, it is less inflationary to borrow idle funds rather than funds that would otherwise be spent.
True
False

Question 8 2 points Save
During the 1990–1991 recession, the U.S. government’s large budget deficits and budget reduction commitments limited its ability to use fiscal policy to stimulate the economy.
True
False

Question 9 2 points Save
A cost associated with an economic depression
is the loss of goods and services that are not produced
the loss of individual income to unemployed workers
a possible deterioration of working skills of unemployed workers
all of the above

Question 10 2 points Save
Deflation and disinflation are synonymous terms.
True
False

Question 11 2 points Save
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 12 2 points Save
A balanced budget always has a neutral effect on the economy.
True
False

Question 13 2 points Save
If the government finances increased spending strictly through higher taxes, this action
increases the multiplier effect
has no impact on the multiplier effect
decreases the multiplier to a value greater than one
decreases the multiplier to one

Question 14 2 points Save
Which of the following categories of business cycle theories includes the theory of “real business cycles?”
physical
monetary
psychological
spending and saving

Question 15 2 points Save
A hurricane is considered an external force in business cycle analysis.
True
False

Question 16 2 points Save
The statistical indicators of business cycle changes contain
leading indicators
lagging indicators
roughly coincident indicators
all of the above

Question 17 2 points Save
Minor cycles have fluctuations which are noticeable and severe.
True
False

Question 18 2 points Save
Which of the following is not a phase of the business cycle?
peak
trough
compression
expansion

Question 19 2 points Save
During a contraction in the business cycle, the multiplier effect leads to cumulative declines in output, employment, and income.
True
False

Question 20 2 points Save
The measurement of a business cycle is obtained by adjusting the real GDP for seasonal variation, the trend, and random fluctuations.
True
False

Question 21 2 points Save
Recurring fluctuations in business activity over the course of one year are known as
seasonal variations
random fluctuations
the trend
the business cycle

Question 22 2 points Save
A recession is defined as a period in which real GDP is negative for two consecutive quarters.
True
False

Question 23 2 points Save
The level of business activity at any time is affected by the trend, seasonal variations, random fluctuations, and cyclical fluctuations.
True
False

Question 24 2 points Save
An example of an external force in business fluctuations is
falling interest rates due to lagging demand in a contraction
a devaluation in the nation’s currency
variations in inventories
the lag between price changes and cost changes

Question 25 2 points Save
A noticeable drop in the level of business activity is known as a
recession
collapse
lagging indicator
contraction

Question 26 2 points Save
Economic indexes whose upward and downward turning points generally precede the peaks and troughs of general business activity are known as
causal indicators
leading indicators
roughly preceding indicators
primary indicators

Question 27 2 points Save
Maximum employment was not defined in the Employment Act of 1946.
True
False

Question 28 2 points Save
Most of the unemployment experienced during the Great Depression was
cyclical
structural
seasonal
functional

Question 29 2 points Save
The full-employment unemployment rate is identical to the inflation threshold rate of unemployment.
True
False

Question 30 2 points Save
The idea of the natural rate of unemployment is that
frictional and structural causes prevent employment in the economy from ever becoming 100 percent of the labor force
each industry has its average turnover rate, and this rate determines its natural rate of unemployment
the market system requires that a pool of unemployed people be available to limit the power of workers
none of the above

Question 31 2 points Save
U.S. workers have
neither substantial geographic nor occupational mobility
both substantial geographic and occupational mobility
substantial geographic mobility but not occupational mobility
substantial occupational mobility but not geographic mobility

Question 32 2 points Save
The organization that develops and recommends to the U.S. President national economic policies to foster maximum employment, production, and purchasing power is the
Joint Economic Committee
Bureau of Labor Statistics
Council of Economic Advisers
Full-Employment Council

Question 33 2 points Save
The Full Employment and Balanced Growth Act of 1978 is also known as the Deficit Reduction Act.
True
False

Question 34 2 points Save
The Employment Act of 1946 does not require that the administration in office should endeavor to
maximize production
maximize employment
maximize purchasing power
stabilize prices

Question 35 2 points Save
The U.S. civilian labor force does not include
the self-employed
members of Congress
members of the armed services
lawyers and doctors

Question 36 2 points Save
The natural rate of unemployment is sometimes called the inflation threshold rate of unemployment.
True
False

Question 37 2 points Save
U.S. workers tend to be both geographically and occupationally immobile.
True
False

Question 38 2 points Save
If workers are changing jobs voluntarily and it takes a while for them to find new jobs, they are an example of
structural unemployment
frictional unemployment
technological unemployment
none of the above

Question 39 2 points Save
The New Economy is one of
durable goods
services
information
manufacturing

Question 40 2 points Save
The Lorenz curve measures the per capita annual income of individuals.
True
False

Question 41 2 points Save
Which of the following statements is not true?
growing employment in retailing and restaurants contributes to the wage decline of high school graduates
the decline in union membership has contributed to income inequality
the increased use of technology in manufacturing has increased income inequality
since service industries are less likely to use technology, they are more likely to be unionized

Question 42 2 points Save
The percentage of the population classified as poor in 2004 was approximately
7 percent
12 percent
21 percent
25 percent

Question 43 2 points Save
Labor market discrimination on the basis of sex or race is usually person-specific rather than a general labor practice.
True
False

Question 44 2 points Save
If a single household received all income, the Gini coefficient would
have a value of zero
be identical to the Lorenz distribution
have a value of 1
have a value of infinity

Question 45 2 points Save
For many welfare recipients, taking a job reduces income.
True
False

Question 46 2 points Save
If everyone had the same income, the Lorenz curve would become the line of income equality.
True
False

Question 47 2 points Save
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 48 2 points Save
One of the problems with official poverty statistics is that they
do not account for inflation
are not adjusted annually
omit in-kind transfers, such as food stamps
omit Medicare payments

Question 49 2 points Save
Which of the following contributes to income inequality?
unequal abilities
unequal ownership of property
discrimination
all of the above

Question 50 2 points Save
According to the U.S. Department of Commerce, a group of two or more persons living together who are related by birth, marriage, or adoption is known as a
household
family
Lorenz unit
quintile