ECON 4a

 Question 1

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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.

  Question 9

Deflation and disinflation are synonymous terms.

  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.

  Question 14

The roughly coincident indicators have their upward and downward turning points prior to the upward and downward turning points of real GDP.

  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.

  Question 17

Prior to 2006, the most severe trough in a U.S. business cycle since the Great Depression occurred in 1982.

  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.

  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.

  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.

  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.

  Question 29

Household wealth is defined as income minus liabilities.

  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.

  Question 32

According to the Department of Commerce, a person living alone constitutes a single-person family.

  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.

  Question 34

The total number of people in poverty has changed little since the late 1960s.

  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.

  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.

  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.

  Question 43

The Employment Act of 1946 set a specific annual inflation rate target of 3 percent.

  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.

  Question 50

In order to be effective, the minimum wage must be

increased every 3 years

above the market wage

below the market wage