question
cyclical unemployment
answer
Unemployment caused by a recession
question
Inflationary expectations are important because widespread changes in inflationary expectations affect:
answer
actual inflation. If people expect more inflation, they will bargain people for higher wages and prices, which will just generate more inflation
question
Structural Unemployment
answer
unemployment caused by economic restructuring (technology) that makes some skills obsolete
question
According to the Quantity Theory
answer
inflation is everywhere and always a monetary phenomenon; directly relates money and inflation
question
If there is inflation
answer
the unit of account function of money is undermined; prices provide a unit of account-a way of comparing prices across goods. Inflation makes this more difficult.
question
Assuming velocity is constant, the rate of inflation equals the difference between the rate of:
answer
growth in the money supply and the rate of growth in Real GDP; follows directly with quantity theory of money
question
Policy makers:
answer
likes inflation because it allows people to maintain illusion. Inflation makes people feel good about their nominal prices rising, even though their real prices remain unchanged or have fallen. Suppliers are tricked into feeling better.
question
The Quantity Theory of Money implies:
answer
increases the price level and leaves the real GDP unchanged.
question
The higher the rate of inflation, the lower the:
answer
real interest rate can fall; real interest rates=nominal interest rates less inflation, when inflation is greater the lower the real interest rates go
question
Institutionally focused economists argue:
answer
the equation of exchange should be read from right to left; economists see price changes causing money and velocity changes , MV=PQ
question
Using Okun's rule of thumb, if trend growth is 3 percent and the unemployment rate rises by 0.5 percent, output would be expected to have:
answer
risen by 2% points; Okun's rule of thumb states that a 1% rise in unemployment corresponds with a 2% fall in output and vice versa.
question
A reason that the quantity theory of money has lost favor is that:
answer
money growth and inflation are no longer closely related; the quantity theory of money is meant to predict inflation
question
Why would students be prevented from joining the minimum jobs program?
answer
they would overwhelm the system looking for summer work; allowing students in the program would make it extremely costly and hard to administer.
question
Cyclical Unemployment:
answer
fluctuations in economic activity
question
A decline in the number of immigrants into the United States would most likely reduce:
answer
the target of unemployment
question
Mexico can produce vine-ripened tomatoes at a lower opportunity cost than firms in the United States. Through trade negotiations, the United States lifted quotas limiting the import of tomatoes from Mexico. Some firms in Florida, in the face of this new competition, had to close their farms and let go their workers. Many of the workers could not find new jobs right away. What type of unemployment describes the workers' situation?
answer
structural unemployment
question
Which of the following has been an effect of globalization and a large trade deficit?
answer
decreased employment in the tradable sector; globalization with a large trade deficit tends to decrease employment in the tradable sector
question
The target rate of unemployment
answer
can change over time; this rate of unemployment varies as demographics , society's social and institutional structure changes as the relationship between inflation and unemployment changes.
question
The fact that more women have entered the labor force has:
answer
raise the target rate of unemployment; households are more likely to be able to allow a family member who becomes unemployed to take longer to accept a new job.
question
The quantity theory of money:
answer
is relevant in some cases but not others; Changes in the money supply don't explain the much lower rates of inflation observed in most developed countries.
question
Hyperinflation
answer
A situation in which the price level increases at an extremely high rate is called:
question
Which of the following groups tends to have the highest unemployment rates?
answer
blacks
question
Structural Unemployment:
answer
cannot be reduced with demand side policies; only cyclical unemployment can be reduced by demand side policies.
question
The quantity theory of money:
answer
explains high inflation rates well but does not explain low inflation rates well
question
A central policy concern about inflation is to see that it
answer
does not become built into expectations
question
What will likely lower cyclical unemployment?
answer
the economy expands;
question
A reservation wage that is higher than the equilibrium wage creates:
answer
structural unemployment; a high reservation wage creates unemployment that is structural because it cannot be addressed with demand policies.
question
With respect to the unemployment problem, social responsibility framework economists generally take the position that:
answer
each person should have a job commensurate with their training or past job experience
question
Over the past several years, the target rate of unemployment has risen. Which of the following would not be used to explain this?
answer
Congress passed a bill that requires the target rate to rise along with rising government deficits; it has risen because older people are leaving the workforce; more women are entering the workforce; and income support programs have grown.
question
Which of the following types of unemployment is considered to be the most controllable through demand-side macroeconomic policy?
answer
Cyclical unemployment; governments believe they can offset cyclical unemployment and achieve full employment by seeing to it that there is sufficient aggregate demand.
question
Why doesn't the minimum job proposal offer jobs commensurate with people's skills and education?
answer
These people are holding out for a job in the marketplace. Providing them with jobs wouldn't be offering a minimum job, which is the program's objective.
question
Unemployment will be at its target rate when actual inflation is
answer
equal to expected inflation
question
If actual inflation is correctly expected and built into people's wage and price setting decisions, the Phillips curve:
answer
becomes a vertical line; when people expect inflation exactly, their real behavior will not change, and thus, the unemployment rate will not change when inflation changes.
question
According to the quantity theory of money, inflation is attributable to increases in:
answer
the money supply in excess of increases in real GDP; since velocity is assumed constant, nominal GDP must grow at the same rate as the money supply. Because the rate of growth in nominal GDP equals the rate of growth in real GDP plus inflation, any growth in the money supply that exceeds growth in real GDP must be translated into inflation.
question
Inflation
answer
has costs and benefits
question
In the U. S. potential output in the long run tends to:
answer
rise at a trend rate of 2.5 to 3.5 percent per year.
question
Inflation can:
answer
obscure relative prices; inflation distorts the information value of prices by making it more difficult to identify relative price changes.
question
The equation of exchange is:
answer
MV=PQ
MV= quantity of money spent in a year
PQ= value of goods sold in that year
MV= quantity of money spent in a year
PQ= value of goods sold in that year
question
Workers at a car-manufacturing plant are let go because automated machinery has been installed that requires fewer employees to operate. What type of unemployment describes the workers' situation?
answer
structural unemployment
question
Inflation is undesirable because it:
answer
distorts the information value of prices.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
