ECON CH 13-16
Question 1 2 points Save
The Lorenz curve of perfect equality is a
vertical line
upward sloping line from the origin
U-shaped line
horizontal line
Question 2 2 points Save
The federal government employs an absolute rather than a relative measure to determine poverty.
True
Question 3 2 points Save
The federal government began to measure poverty in the
1960s
1970s
1980s
1990s
Question 4 2 points Save
Household wealth is defined as income minus liabilities.
True
False
Question 5 2 points Save
Labor market discrimination on the basis of sex or race is usually person-specific rather than a general labor practice.
False
Question 6 2 points Save
In 2004, the top 5 percent of households earned approximately
50 percent of aggregate income
Question 7 2 points Save
The curve that indicates how far actual income distribution differs from a perfectly equal income distribution is called the
Lorenz curve
Garibaldi curve
GDP
Herfindahl Index curve
Question 8 2 points Save
Which of the following is a disincentive to leave welfare?
decrease in real income
lower taxes
higher incomes
all of the above
Question 9 2 points Save
Unemployment insurance is a form of in-kind transfer payment to reduce poverty.
True
Question 10 2 points Save
A minimum wage rate job raises a family out of poverty.
True
False
Question 11 2 points Save
If everyone had the same income, the Lorenz curve would become the line of income equality.
True
Question 12 2 points Save
The New Economy is one of
durable goods
services
information
manufacturing
Question 13 2 points Save
The term “recession” refers to a
period of decline in real GDP over two consecutive quarters
fall in the general level of real wages over two consecutive quarters
fall in the CPI over two consecutive quarters
fall in the rate of increase of real per capita GDP
Question 14 2 points Save
Interest rates usually rise during the contraction phase of the business cycle.
True
False
Question 15 2 points Save
Through 2005, the most serious U.S. trough since the Great Depression was the one that occurred in
2001
Question 16 2 points Save
The statistical indicators of business cycle changes contain
all of the above
Question 17 2 points Save
During a trough in the business cycle, the economy eventually reaches the bottleneck stage.
False
Question 18 2 points Save
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 19 2 points Save
Which of the following would not be considered an internal force that helps move the economy out of a trough?
costs falling lower than prices
Question 20 2 points Save
The impact of hurricanes on the level of business activity in North Carolina is an example of
random fluctuation
Question 21 2 points Save
During the expansion phase of the business cycle, profit margins increase due to a widening cost-price relationship.
True
Question 22 2 points Save
According to monetary theories of the business cycle, fluctuations are
less prevalent in those countries with modern banking systems
c 13) Monetary theorists maintain that to eliminate the business cycle, it is necessary to eliminate
*c. bank creation of checkable deposits
Question 23 2 points Save
In an expanding economy,
costs rise faster than prices
Question 24 2 points Save
As the economy approaches the peak phase of the cycle, profits will tend to
increase because of higher sales and higher prices
Question 25 2 points Save
Involuntary inventory accumulation may occur during the contracting phase of the business cycle.
True
Question 26 2 points Save
Because of increases in the minimum wage, new entrants into the labor force find it easier to find employment.
True
False
Question 27 2 points Save
The natural rate of unemployment never changes.
True
False
Question 28 2 points Save
Which type of unemployment is most likely to fall as a result of government policies that stimulate aggregate demand?
cyclical unemployment
Question 29 2 points Save
The Council of Economic Advisors is directly responsible to the
Congress
U.S. President
Secretary of the Treasury
Federal Reserve Board of Governors
Question 30 2 points Save
Much of the unemployment associated with recessions is cyclical in nature.
True
False
Question 31 2 points Save
The Employment Act of 1946 makes the government responsible for maintaining maximum employment, production, and purchasing power.
False
Question 32 2 points Save
The rate of unemployment that can be expected from normal frictional unemployment in an otherwise fully employed labor force is known as the
full-employment unemployment rate
Question 33 2 points Save
The full-employment unemployment rate is identical to the inflation threshold rate of unemployment.
True
Question 34 2 points Save
Increases in the federal minimum wage directly affect only a small percentage of U.S. workers.
True
Question 35 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
Question 36 2 points Save
The official rate of unemployment is based on a(n)
door-to-door survey
Question 37 2 points Save
The demand for unskilled workers has been growing as a percent of total U.S. labor force in recent years.
True
False
Question 38 2 points Save
If the federal government is seeking to reduce large budget deficits, the flexibility of fiscal policy is
limited when trying to combat unemployment
Question 39 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 40 2 points Save
Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
expansionary policies
Question 41 2 points Save
A major force leading the U.S. economy to full employment after the Great Depression was
higher interest rates
higher reserve requirements
government spending for World War II
automobile production
Question 42 2 points Save
Wage and price controls were imposed on the U.S. economy to suppress inflation in 1972.
True
Question 43 2 points Save
Changing the discount rate is a tool of fiscal policy.
True
False
Question 44 2 points Save
Which of the following statements is correct?
demand-pull inflation generally occurs in an economy with less than full employment
Question 45 2 points Save
The only way the government can engage in deficit spending is by increasing spending while holding or decreasing taxes.
True
Question 46 2 points Save
Unemployment compensation is an example of an automatic economy stabilizer.
True
Question 47 2 points Save
Investment tax credits are a monetary policy device.
True
False
Question 48 2 points Save
Forces within the economy that naturally tend to counteract recessions and inflation are known as
automatic stabilizers
Question 49 2 points Save
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 50 2 points Save
.
True
False
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