Which one of the following statements is true of the Consumer Price Index? It do

Question

Which one of the following statements is true of the Consumer Price Index?

It does not take into account the price of used goods.

It measures changes in prices in a fixed basket of goods.

It does not take account of the price of imported goods and services.

It understates the true rate of inflation.

2 points   

QUESTION 2

As the price level ________, the purchasing power of money ________.

increases; decreases

decreases; decreases

increases; increases

decreases; stays the same

2 points   

QUESTION 3

Which of the following is not used as an indicator of the state of the economy?

The price of an individual good.

Manufacturing levels.

Housing starts.

Consumer spending.

2 points   

QUESTION 4

Gross domestic product calculations count only final goods and services because:

these are the only goods and services that are purchased in an economy.

it is difficult to measure the prices of intermediate goods produced.

one cannot calculate the quantities of intermediate goods produced.

counting all goods and services would lead to double-counting of many activities.

2 points   

QUESTION 5

Sustained increases in the overall price level of goods and services is called

deflation

recession

inflation

peak

2 points   

QUESTION 6

The unemployment rate is the number of unemployed people:

divided by the total number of people in the work force.

and the number of people working fewer than their desired number of hours, divided by the number of people who are working or looking for work.

divided by the total working-age population.

divided by the number of people who are working.

2 points   

QUESTION 7

The date at which an economy begins to decline and a recession starts is called a:

depression

plateau

trough

peak

2 points   

QUESTION 8

A nation's net exports consist of:

its exports plus its imports.

its exports minus its imports.

its imports plus all other nation's exports.

its exports plus all other nation's imports.

2 points   

QUESTION 9

The relationship between the level of prices and total quantity of goods and services producers are willing to supply is called the:

sticky price curve.

aggregate supply curve.

aggregate demand curve.

GDP multiplier.

2 points   

QUESTION 10

What is the total demand for goods and services in an entire economy called?

consumer demand

supply and demand

GDP demand

aggregate demand

2 points   

QUESTION 11

Which of the following is a consequence of running deficits year after year:

drive up interest rates

retard investment

compete with private borrowers for limted savings

all of the above

2 points   

QUESTION 12

Which of the following would be included in U.S. GDP?

a computer manufactured in Mexico and sold in the United States

a used computer manufactured in the United States and sold in Mexico

a computer manufactured in Mexico by a U.S. firm and sold in the United States

a computer manufactured in the United States and sold in Mexico

2 points   

QUESTION 13

The "expansion" of an economy occurs after:

people spend more money.

a trough.

firms produce more goods.

an inflationary period.

2 points   

QUESTION 14

Which of the following is not a component of gross domestic product?

purchases by consumers of finished goods

government purchases

net exports

purchases by consumers of used goods

1 points   

QUESTION 15

A rancher raises sheep. Once a year he shears them and sells the raw wool to a processor who cleans it and spins it into yarn. The yarn is then sold to a knitting mill, which produces and sells sweaters. In calculating GDP we would count:

only the yarn and the sweaters.

only the sweaters.

only the raw wool and the yarn.

the raw wool, the yarn and the sweaters.

1 points   

QUESTION 16

If money is used as a mechanism to hold purchasing power for a period of time it is functioning as a:

unit of account.

medium of exchange.

standard of value.

store of value.

1 points   

QUESTION 17

Economists consider an economy to be at "full employment" when:

there is no structural unemployment.

there is only a small amount of cyclical unemployment.

there is no frictional unemployment.

the unemployment rate equals the natural rate of unemployment.

1 points   

QUESTION 18

When real GDP falls for two consecutive quarters the economy is in a:

recession

peak

depression

trough

1 points   

QUESTION 19

During periods of poor economic performance, real GDP:

declines but unemployment typically does not change.

declines and unemployment rises.

is unchanged but unemployment rises sharply.

declines and unemployment declines.

1 points   

QUESTION 20

Mary does not have a job because she is a full-time student. Mary is considered

not in the labor force.

unemployed.

unemployed and in the labor force.

unemployed and not in the labor force.

1 points   

QUESTION 21

Macroeconomics differs from microeconomics in that:

microeconomics is the study of individual markets, while macroeconomics deals with the nation's economy as a whole.

macroeconomics is the study of individual markets, while microeconomics deals with the nation's economy as a whole.

macroeconomics focuses principally on social and political issues, while microeconomics involves the study of a nation's monetary system.

microeconomics focuses principally on social and political issues, while macroeconomics involves the study of a nation's monetary system.

1 points   

QUESTION 22

The real value of money ________ as the price level falls

remains the same

increases

decreases

none of the above

1 points   

QUESTION 23

The largest component of GDP is:

private investment expenditures.

consumption (household) expenditures.

government spending.

net exports.

1 points   

QUESTION 24

When interest rates are lower, consumers and companies are able to borrow money cheaply in order to make major purchases. As a result, the demand for goods in an economy will generally:

decrease.

be minimally affected.

remain the same.

increase.

1 points   

QUESTION 25

Reoccurrent swings in real GDP is called

inflation

business cycle

peaks

recession

1 points   

QUESTION 26

The GDP equation is:

Y = C + I + G + X.

C + I = Y + G + X.

C + I = G + X.

Y = C - I - G - X.

1 points   

QUESTION 27

Which of the follow is NOT one of the three major economic goals?

Increase in the value of stocks

Stable prices

Low Unemployment

High and sustained economic growth

1 points   

QUESTION 28

Cyclical unemployment occurs:

with economic fluctuations; it increases during bad times and decreases during good times.

naturally during the normal workings of an economy, as people change jobs, move across the country, etc.

because of a mismatch between the jobs that are available in the economy and the skills of workers seeking jobs.

because the government labels some people who aren't really in the labor force as unemployed.

1 points   

QUESTION 29

When money is accepted as payment for a good or service, it is being used as a:

store of value.

medium of exchange.

unit of account.

a mechanism for transforming current purchases into future purchases.

1 points   

QUESTION 30

At full employment the unemployment rate equals the:

cyclical unemployment rate.

structural unemployment rate plus the frictional unemployment rate.

structural unemployment rate plus the cyclical unemployment rate.

structural unemployment rate.

1 points   

QUESTION 31

The value of all final goods and services produced during a given time period measures a nation's:

consumer price index.

gross domestic product.

net exports.

net national product.

1 points   

QUESTION 32

When GDP is measured in "current prices" it is known as the:

real GNP.

real GDP.

nominal or actual GDP.

nominal GNP.

1 points   

QUESTION 33

The money you have in your piggy bank is included in:

M1 only.

M2 only.

neither M1 nor M2.

both M1 and M2.

1 points   

QUESTION 34

The decrease in private expenditures that occurs as a consequence of increased governement expenditures or of the financing needs of the deficit is called

lags

economic growth

recession

crowding out

1 points   

QUESTION 35

The unemployment rate:

rises during recessions and falls during booms.

rises during times of rapid economic growth and falls during times of slow economic growth.

tends to remain the same in booms and recessions.

rises during booms and falls during recessions.

1 points   

QUESTION 36

When there are sustained increases in real GDP over time, we say that the economy is undergoing:

economic stagnation.

massive changes in productive capacity.

a recession.

economic growth.

1 points   

QUESTION 37

Economists define the unemployed as individuals who are:

not currently working but are actively looking for work.

working but looking for a different job.

not currently working.

working less than their desired amount of time.

1 points   

QUESTION 38

Which is not a reason why foreign countries prefer to hold U.S. dollars rather than other currencies.

safety

the exchange rate of U.S. dollars doesn't fluctuate

easy to convert into other currencies

backed by a strong stable country

1 points   

QUESTION 39

Which of the following would cause an increase in aggregate demand in the short run?

an increase in taxes

a decrease in price level

an increase in the supply of money

an increase in the supply of money & a decrease in price level

1 points   

QUESTION 40

Money is:

anything the government declares to have value.

anything that is regularly used and generally accepted in economic transactions or exchanges.

facilitates specialization in production.

necessary to conduct economic transactions.

1 points   

QUESTION 41

Exports ________ GDP and imports ________ GDP.

increase; decrease

decrease; decrease

decrease; increase

increase; increase

1 points   

QUESTION 42

If Jane quits her job voluntarily and actively searches for other work, then she is considered:

structurally unemployed.

not to be unemployed.

frictionally unemployed.

cyclically unemployed.

1 points   

QUESTION 43

Telephone operators who have lost their jobs as a result of computerized switchboards are an example of:

frictional unemployment.

voluntary unemployment.

cyclical unemployment.

structural unemployment.

1 points   

QUESTION 44

Auto workers laid off from Hot-Rod Autoworks as the result of a recession are considered:

cyclically unemployed.

frictionally unemployed.

structurally unemployed.

seasonally unemployed.

1 points   

QUESTION 45

Economic expansions might lead to inflation because an expansion leads to:

a decrease in the unemployment rate, which increases wages.

an increase in the unemployment rate, which increases wages.

an increase in the unemployment rate, which decreases wages.

a decrease in the unemployment rate, which decreases wages.

1 points   

QUESTION 46

If your income doesn't rise at the same rate of inflation, your standard of living declines.

True

False

1 points   

QUESTION 47

Inflation is more likely to rise if people expect it to.

True

False

1 points   

QUESTION 48

Economic growth is defined as increases in real GDP.

True

False

1 points   

QUESTION 49

The workforce includes individuals under the age of 16 years.

True

False

1 points   

QUESTION 50

Unemployment occurs even during periods when the economy is growing.

True

False

1 points   

QUESTION 51

Economic crises are easy to predict and can be prevented.

True

False

1 points   

QUESTION 52

Inflation occurs when the % change in the overall level of prices is greater than 0.

True

False

1 points   

QUESTION 53

In the short-run the number of jobs rises and falls with the business cycle.

True

False

1 points   

QUESTION 54

"Real GDP" is a measure of GDP that adjusts for price changes.

True

False

1 points   

QUESTION 55

Actual unemployment can exceed the natural rate of unemployment.

True

False

1 points   

QUESTION 56

M1 money represents money that is the most liquid in that it is the easiest form to convert or exchange for goods and services.

True

False

1 points   

QUESTION 57

The natural rate of unemployment is zero.

True

False

1 points   

QUESTION 58

When the demand for U.S. dollars increase, the exchange rate decreases.

True

False

1 points   

QUESTION 59

A decrease in the supply of dollars increases the value of the dollar.

True

False

1 points   

QUESTION 60

Deflation is not as bad for an economy as inflaton.

True

False

A.

It does not take into account the price of used goods.

B.

It measures changes in prices in a fixed basket of goods.

C.

It does not take account of the price of imported goods and services.

D.

It understates the true rate of inflation.

Explanation / Answer

(Question 1) Option (B)

CPI measures change in price of a gixed basket of goods and services consumed by typical household over different periods.

(Question 2) Option (A)

The higher (lower) the price level, the lower (higher) the purchasing power of money.

(Question 3) Option (A)

(Question 4) Option (D)

(Question 5) Option (C)

(Question 6) Option (A)

Unemployment rate = Number unemployed / Labor force

(Question 7) Option (D)

When the peak is reached, econom starts slowing down and enters recession.

(Question 8) Option (B)

Net exports = Value of exports - Value of imports

(Question 9) Option (B)

In the Keynesian (Classical) range, aggregate supply curve is horizontal (vertical) and in intermediate range, it is upward rising.

(Question 10) Option (D)

Aggregate demand curve is downward sloping, reflecting inverse relationship between price level and output demanded.

NOTE: As per Chegg answering policy, first 10 questions are answered.

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