ECOMOMICS

Economics

Economics

Jamal (now age 54) lost his job as a shipbuilder during 1995. His plant never reopened, and he has very specialized skills that are no longer in demand. Jamal's unemployment is best classified as:

cyclical

structural

seasonal

frictional

voluntary

Which of the three tools of monetary policy is typically not used by the Federal Reserve?

open market operations

changes in the discount rate

changes in the money supply

changes in the reserve requirement

Inflation can be caused by

increases in aggregate demand only

increases in aggregate supply only

decreases in aggregate supply only

increases in aggregate supply or decreases in aggregate demand

increases in aggregate demand or decreases in aggregate supply

Demand-pull inflation is typically caused by rapidly rising costs of production.

True

False

If the effective or nominal rate of interest is 6 percent for a U.S. Government Bond and the inflation rate is 4 percent,

the real rate of interest is 10 percent

the real rate of interest is 2 percent

the real rate of interest is -2 percent

the real rate of interest is -10 percent

there is insufficient information to determine the real rate of interest

The simple consumption function relates consumption spending to

the price level

interest rates

disposable income

expectations about the price level

household wealth

If a household's income rises from $16,000 to $16,700 and its consumption spending rises from $15,800 to $16,400, then its

marginal propensity to consume is 0.86

marginal propensity to consume is 0.99

marginal propensity to consume is 0.98

marginal propensity to save is 0.01

marginal propensity to save is 0.86

A grocery store manager must decide whether to buy four rug cleaners to rent to customers. The manager estimates that the first would yield $200 a year, the second $150, the third $75, and the fourth $20. If the interest rate is 12 percent and each rug cleaner costs $500, how many should the manager buy?

none

one

two

three

four

Which of the following best describes the components of aggregate demand?

C + I + G + (X - M)

C + S + G + (X - M)

C + I + G + (X + M)

C + I + T + (X - M)

C + I + T + (X + M)

A decrease in the level of investment will

shift the aggregate demand function upward

shift the aggregate demand function downward

result in an upward movement along the aggregate demand function

result in a downward movement along the aggregate demand function

have no economic effect because an increase in investment can only come from an increase in savings which implies a decrease in consumption

The larger the MPC, the smaller the multiplier effect.

True

False

If the marginal propensity to consume equals 0.9, the simple spending multiplier is

1

2

5

10

12

Which of the following is true of the short-run aggregate supply curve?

It shows the relationship between the price level and the potential amount of output that could be produced.

It shows the relation between the price of labor and the aggregate quantity of labor workers supply, other things constant.

It shows the relation between the interest rate and the quantity of capital goods firms supply, other things constant.

It shows the relation between the price level and the quantity of aggregate output firms supply, other things constant.

It displays an inverse relationship between the price level and real ...