Recurring upswings and downswings in an economy’s real GDP over time are called:
In the United States, business cycles have occurred against a backdrop of a long-run trend of:
rising real GDP.
Most economists agree that the immediate determinant of the volume of output and employment is the:
level of total spending.
As it relates to economic growth, the term long-run trend refers to:
the long-term expansion or contraction of business activity that occurs over 50 or 100 years.
In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?
The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:
capital goods and durable consumer goods.
During a severe recession, we would expect output to fall the most in:
the construction industry.
The phase of the business cycle in which real GDP declines is called:
The phase of the business cycle in which real GDP is at a minimum is called:
The production of durable goods varies more than the production of nondurable goods because:
durables purchases are postponable.
A recession is defined as a period in which:
real domestic output falls.
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
Which of the following statements is true about causes of business cycle fluctuations?
There are a wide range of theories as to the underlying causes of business cycle movements.
Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?
All of these are identified as causes of business cycle changes.
. Most economists agree that the immediate cause of most business cycle variation is:
an unexpected change in the level of total spending.
An unexpected increase in total spending will cause an increase in GDP:
. if prices are sticky.
What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
Prices are sticky in the short run.
. Innovations such as the microchip and the Internet lead to business cycle variations because:
significant innovations occur irregularly and unexpectedly.
Which of the following would most likely move the economy into a recession in the short term?
The central bank printing less money than was anticipated.
Refer to the above information. The labor force in Scoob is:
Refer to the above information. The unemployment rate in Scoob is:
Refer to the above information. If the natural rate of unemployment in Scoob is 5 percent, then:
cyclical unemployment is about 2 percent.
The United States’ economy is considered to be at full employment when:
about 4-5 percent of the labor force is unemployed.
In the United States, the rate of unemployment is highest for:
Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kara presently is:
According to the Bureau of Labor Statistics, to be officially unemployed a person must:
be in the labor force.
The natural rate of unemployment is:
that rate of unemployment occurring when the economy is at its potential output.
The labor force includes:
employed workers and persons who are officially unemployed.
The unemployment rate of:
teenagers is much higher than that of adults.
Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is:
not in the labor force
If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the:
cyclical unemployment rate is 4 percent.
Official unemployment statistics:
understate unemployment because discouraged workers are not counted as unemployed
The presence of discouraged workers:
may cause the official unemployment rate to understate the true amount of unemployment.
Part-time workers are counted as:
D. fully employed and therefore the official unemployment rate may understate the level of unemployment.
Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:
The natural rate of unemployment is the:
. full-employment unemployment rate.
Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B. Kyle will be considered as:
The unemployment rate is the:
percentage of the labor force that is unemployed.
Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, all else equal, the official unemployment rate would:
Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon where she anticipates that a new job will be available. We can say that Susie is faced with:
Cyclical unemployment results from:
a deficiency of spending on goods and services.
Which of the following is correct?
The unemployment rates of men and women workers are roughly the same.
A college graduate using the summer following graduation to search for a job would best be classified as:
a part of frictional unemployment
Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:
may involve a locational mismatch between unemployed workers and job openings.
Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially counted as:
Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?
Structural and frictional unemployment.
. Wait unemployment and search unemployment are both types of:
The type of unemployment associated with recessions is called:
Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result:
the official unemployment rate will remain unchanged.
. To say money is socially defined means that:
whatever performs the functions of money extremely well is considered to be money.
Money functions as:
all of these.
If you are estimating your total expenses for school next semester, you are using money primarily as:
a unit of account.
If you place a part of your summer earnings in a savings account, you are using money primarily as a:
unit of account.
If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
a medium of exchange.
A $70 price tag on a sweater in a department store window is an example of money functioning as a:
unit of account.
Stock market price quotations best exemplify money serving as a(n):
unit of account.
Purchasing common stock by writing a check best exemplifies money serving as a(n):
medium of exchange.
When economists say that money serves as a medium of exchange, they mean that it is:
a means of payment.
When economists say that money serves as a unit of account, they mean that it is:
a monetary unit for measuring and comparing the relative values of goods.
When economists say that money serves as a store of value, they mean that it is:
a way to keep wealth in a readily spendable form for future use.
The paper money used in the United States is:
Federal Reserve Notes.
In the United States, the money supply (M1) is comprised of:
coins, paper currency, and checkable deposits.
Currency held in the vault of First National Bank is:
not counted as part of the money supply.
Checkable deposits are classified as money because:
they can be readily used in purchasing goods and paying debts.
Which of the following is not part of the M2 money supply?
The M2 money supply includes:
individual shares in money market mutual funds.
A checking account entry is money because it:
performs the functions of money.
Currency in circulation is part of:
both M1 and M2.
. The amount of money reported as M2:
is larger than the amount reported as M1.
Paper money (currency) in the United States is issued by the:
Federal Reserve Banks.
A $20 bill is a:
Federal Reserve Note.
The difference between M1 and M2 is that:
the latter includes small-denominated time deposits, non-checkable savings accounts, money market deposit accounts, and money market mutual fund balances.
Refer to the above information. Money supply M1 for this economy is:
Refer to the above information. Money supply M2 for this economy is:
Refer to the above information. The value of the “near-monies” that are part of M2 is:
The money supply is backed:
by the government’s ability to control the supply of money and therefore to keep its value relatively stable.
Other things equal, an excessive increase in the money supply will:
decrease the purchasing power of each dollar.
Refer to the above table. The value of the dollar in year 2 is:
Refer to the above table. The value of the dollar in year 3 is:
The basic policy-making body in the U.S. banking system is the:
Board of Governors of the Federal Reserve.
The Federal Reserve System was created in:
In the U.S. economy the money supply is controlled by the:
Federal Reserve System.
As it relates to Federal Reserve activities, the acronym FOMC describes the:
Federal Open Market Committee.
The Federal Open Market Committee (FOMC) is made up of:
the seven member of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis.
The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:
Federal Open Market Committee (FOMC).
An important routine function of the Federal Reserve Bank is to:
provide facilities by which commercial banks and thrift institutions may collect checks.
Which of the following statements best describes the twelve Federal Reserve Banks?
They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare.
The seven members of the Board of Governors of the Federal Reserve System are:
appointed by the President with the confirmation of the Senate.
To say that the Federal Reserve Banks are quasi-public banks means that:
they are privately owned, but managed in the public interest.
Which of the following is the basic economic policy function of the Federal Reserve Banks?
controlling the supply of money
The Federal Reserve System:
is basically an independent agency.
. “Subprime mortgage loans” refer to:
high-interest rate loans to home buyers with above average credit risk.
What are “mortgage-backed securities?”
Bonds backed by mortgage payments.
When banks bundled mortgage loans and sold the resulting mortgage-backed securities:
. they reduced their direct exposure to mortgage default risk, but were still exposed through loans to investors in mortgage-backed securities.
Banks lost money during the mortgage default crisis because:
of all of these reasons.
What does it mean when economists say that home buyers are “underwater” on their mortgages?
Buyers owe more on their mortgage than the properties are worth.
The “shadow banking system” refers to:
. the process by which securities exchanges provide credit for personal and business needs apart from traditional bank lending.
. Some economists are concerned that the financial rescue provided by the TARP will encourage financial investors and firms to take on greater risks in the future. This is an example of:
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