Structural unemployment is likely to be affected by A) the reservation wage curves of people. B) minimum wage laws and other “rigidities” in the economy. C) recessions and expansions. D) the amount of the money supply. ANSWER B
Holding money as a store of value instead of other assets is A) the capital demand for money. B) the asset demand for money. C) the precautionary demand for money. D) the transactions demand for money. ANSWER B
The phenomenon of equipment or structure going through “wear and tear” and eventually becoming obsolete is referred to as: A) depreciation. B) capital tear. C) intertemporal loss. D) creative destruction. ANSWER A
An increase in the public debt would most likely indicate that A) national saving has increased. B) the budget deficit has increased. C) the budget deficit has decreased. D) the trade deficit has decreased. ANSWER B
If the real interest rate is greater than the equilibrium real interest rate: A) interest rates tend to rise further. B) the quantity of credit supplied falls short of the quantity of credit demanded. C) the quantity of credit demanded falls short of the quantity of credit supplied. D) the quantity of credit demanded equals […]
Quantitative easing is likely to lead to a(n) ________. A) increase in unemployment rate B) decrease in the price level C) increase in the federal funds rate D) decrease in the federal funds rate ANSWER D
Which of the following is an example of a physical capital? A) A factory B) A worker C) A stock D) A bond ANSWER A
An economy experiences real growth over time with stable aggregate demand. This would likely result in A) decreasing prices. B) increased unemployment. C) increasing prices. D) secular inflation. ANSWER A
The part of consumption that is independent of disposable income is called A) autonomous consumption. B) fixed consumption. C) automatic consumption. D) personal consumption. ANSWER A
Which of the following is the rate of unemployment that occurs after all adjustments in the labor market have occurred? A) the structural rate of unemployment B) the cyclical rate of unemployment C) the natural rate of unemployment D) the frictional rate of unemployment ANSWER C