In periods of high inflation,
A) people want to hold as much money as possible
B) the purchasing power of money is decreasing
C) nobody wants to work and earn income
D) low nominal interest rates are likely to result
E) nobody wants to buy goods and services
2.
Which of the following is not an effect of hyperinflation?
A) Price differences among sellers of the same product become larger.
B) People hold on to currency only for very short periods of time.
C) People tend to exchange the currency that is subject to high inflation for a more stable currency.
D) More resources are used efficiently to overcome inflation's effects on transactions costs.
E) Inflation-induced activity that is rational for individuals often has a detrimental effect on the economy as a whole.
3.
Construction workers at times face high rates of unemployment because their work is both seasonal and subject to wide swings over the business cycle.
A) True
B) False
4.
The view that union wage demands may be a source of inflation would be best associated with the
A) supply shock view of inflation
B) demand pull view of inflation
C) cost push view of inflation
D) demand push view of inflation
E) monetary view of inflation
5.
Unemployment rates __________ during contractions and __________ during expansions.
A) rise, fall
B) fall, fall
C) rise, stay the same
D) stay the same, fall
E) fall, rise
6.
The metropolitan with the lowest unemployment rate is
A) Detroit
B) Atlanta
C) San Diego
D) Honolulu
E) Portland
7.
Uncertainty about inflation
A) shifts the attention of business managers away from exchange rate movements and toward concerns about productivity
B) reduces the difficulty of making international business decisions
C) creates uncertainty about the value of the dollar relative to foreign currencies
D) enhances money's importance as a link between the present and the future
E) makes contracts easier to negotiate
8.
Which of the following is not consistent with full employment?
A) an unemployment rate of 5 percent or 6 percent
B) seasonal unemployment
C) structural unemployment
D) cyclical unemployment
E) frictional unemployment
9.
Which of the following groups has historically had the highest unemployment rate?
A) professional workers
B) white teenagers
C) black teenagers
D) black adults
E) white adults
10.
An increase in a person's real wage necessarily means
A) greater purchasing power
B) a lower nominal wage
C) a lower nominal wage after payment of taxes
D) a higher nominal wage
E) a higher nominal wage after payment of taxes
11.
A decrease in the interest rate, other things constant, will
A) shift the supply of loanable funds curve to the left
B) shift the supply of loanable funds curve to the right
C) decrease the quantity of loanable funds demanded
D) decrease the quantity of loanable funds supplied
E) shift the demand for loanable funds curve to the right
12.
Inflation is defined as a sustained increase in the price level.
A) True
B) False
13.
The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are
A) on unemployment compensation
B) not working
C) working part-time but prefer full-time work
D) voluntarily retired
E) unemployed and looking for work
