Macroeconomics Questions

The natural unemployment rate includes1)neither frictional nor structural unemployment.2)frictional, but not structural unemployment.3)structural, but not frictional unemployment.4)both frictional and structural unemployment.

the interest-rate effect1)depends on the idea that increases in interest rates increase the quantity of goods and services supplied.2)is responsible for the downward slope of the money-demand curve.3)is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.4)depends on the idea that increases in interest rates decrease the quantity of goods and services demanded.

Refer to the figure. In the Figure shown (the market for loanable funds), if the real interest rate is 6 percent, there will be pressure for1)the supply for loanable funds curve to shift right.2)the real interest rate to fall.3)the demand for loanable funds curve to shift left.4)All of the above are correct.

Refer to the figure. If the economy starts at C, a decrease in taxes moves the economy1)to B in the long run.2)to A in the long run.3)back to C in the long run.4)to D in the long run.

Refer to the figure. If the current interest rate is 2 percent,1)the interest rate will rise.2)the money demand curve will shift right.3)there is an excess supply of money.4)All of the above are correct.

Which of the following describes the effect of the business cycle on the inflation rate and the unemployment​ rate?A.The unemployment rate increases and the inflation rate falls during recessions.B.The unemployment rate falls and the inflation rate falls during recessions.C.The unemployment rate increases and the inflation rate increases during expansions.D.The unemployment rate increases and the inflation rate falls during expansions.

Chevron's sales of advanced plastics to be used in automobile manufacturing. Production of this good is likely to fluctuate _______ fluctuations of real GDP during the business cycle.

Boeing passenger aircraft. Production of this good is likely to fluctuate _______ fluctuations of real GDP during the business cycle.

Evaluate the following​ statement:​"Saving money is not lending. How can it​ be? When I save my​ money, I put it in a bank. I​ don't loan it out to someone​ else."The statement isA.correct. Depositing money in a bank is​ borrowing, not saving.B.incorrect. The supply of loanable funds is determined by household saving.C.incorrect. The supply of loanable funds is determined by​ firms' willingness to borrow.D.correct. Depositing money in a bank is neither saving nor borrowing.

Huggies diapers. Production of this good is likely to fluctuate ______ fluctuations of real GDP during the business cycle.

The financial system of a country is important for​ long-run economic growth becauseA.people can increase their wealth very quickly under a healthy financial system.B.firms need the financial system to acquire funds from households.C.most firms rely on their own retained earnings and do not use the financial system.D.firms that use the financial system predominantly are being reckless.

In a column on​ bloomberg.com, Noah Smith notes that people who work at a computer have many ways to slack off or waste time—posting to​ Facebook, Twitter, or​ Instagram; watching YouTube​ videos; or playing video games—that ​weren't available to workers in previous decades. He calculates​ that:​"The average working American spends about 34.4 hours on the job. If we assume​ that's five days a​ week, it means that one hour of slacking per day means that true work hours are really only 85.5 percent of the official​ number."​Source: Noah​ Smith, "Goofing Off at Work Masks Rising​ Productivity," bloomberg.com, May​ 10, 2017.If​ Smith's estimates are​ correct, is the rate of growth of labor productivity as measured by government statistics overstated or​ understated? Briefly explain.A.​Overstated, because regardless of the amount of output produced per​ hour, workers are not producing efficiently.B.​Understated, assuming that workers are producing the output in fewer hours than the official work hours.C.​Understated, because the amount of physical capital is not increasing at a fast enough pace to keep workers busy.D.​Overstated, because workers could be using that hour of slacking each day to engage in some other activity.

Robert​ Samuelson, a columnist for the Washington Post argues that the Great Moderation actually caused the Great Recession. During the Great​ Moderation, "consumers could assume more debt—and lenders could lend more​ freely."​Source: Robert J.​ Samuelson, "Is the Economy Experiencing another Great​ Moderation?" Washington Post​, June​ 4, 2014.These actions might have made the severe recession of​ 2007-2009 more likely becauseA.regulators could not determine who owned the loans and who should be paid.B.once incomes began to​ fall, people could not pay their​ debt, and banks suffered losses as repayments fell.C.bankers continued to​ lend, even though they had​ losses, and many banks collapsed.D.consumers continued to​ spend, propping up the​ economy, even though their debt expanded.

What is the general relationship between the business cycle and unemployment and​ inflation?A.During a​ recession, unemployment and inflation decrease.B.During an​ expansion, unemployment and inflation increase.C.During a​ recession, unemployment and inflation increase.D.During an​ expansion, unemployment falls and inflation increases.

Consider the following data for a closed​ economy:Y​ = ​$12 trillionC​ = ​$8 trillionG​ = ​$2 trillionSpublic​ = ​$−0.50 trillionT​ = ​$2 trillionNow suppose that government purchases increase from ​$2 trillion to ​$2.75 trillion but the values of Y and C are unchanged.What must happen to the values of S and​ I?A.S increases by ​$0.75 trillion and I drops by ​$0.75 trillion.B.S drops by ​$0.75 trillion and I increases by ​$0.75 trillion.C.S and I drop by ​$0.75 trillion.D.S and I increase by ​$0.75 trillion.

What are the implications of your answer above for using increases in real GDP per​ capita, as calculated by the​ BEA, to measure increases in​ well-being? Is​ well-being overstated or​ understated?A.​Understated, because workers are working fewer hours and consuming more leisure.B.​Overstated, because the time required to engage in these activities could be used for some other activity.C.​Overstated, because workers are not being as productive as they could be.D.​Neither, since real GDP per capita cannot be used to indicate levels of​ well-being.

The National Bureau of Economic Research​ (NBER), a private​ group, is responsible for declaring when recessions begin and endLOADING....The Bureau of Economic Analysis​ (BEA), part of the federal​ government, might not want to take on this responsibility. Which one of the following is the most appropriate reason for the​ BEA's refusal?A.Congress has established that its committees should be responsible for dating recessions.B.The BEA does not have as much data as the NBER.C.Because it is part of the​ government, the BEA could be pulled into politics with the dating of recessions.D.More economists work for the NBER than do for the BEA.

An increase in the real interest rate results in little increase in private saving by households. (which graph)

McDonald's Big Macs. Production of this good is likely to fluctuate ________ fluctuations of real GDP during the business cycle.

For a given positive inflation​ rate,A.the real interest rate is always higher than the nominal interest​ rate, and the real interest rate may be positive or negative.B.the nominal interest rate is always higher than the real interest​ rate, and the real interest rate may be positive or negative.C.the nominal interest rate can be lower than the real interest​ rate, but the nominal interest rate cannot be negative.D.the nominal interest rate can be lower than the real interest​ rate, and the real interest rate may be positive or negative.