C. An increase in the labor force with no change in the number of employed workers
D. An increase in the number of employed workers with no change in the number of unemployed workers
9. Which of the following is not a decision made by a competitive firm? A. The number of employees to hire B. How much to invest in machines C. What price to ask for its product D. How much to produce
14. Which of the following is not a characteristic of the Cobb-Douglas production function? A. Capital and labor receive equal fractions of income. B. Economic profit is zero. C. Factor payments are a constant fraction of income. D. Constant returns to scale.
19. Which of the following operations is not considered investment? A. A family builds a house in which it plans to live. B. A car dealer stores some of this year's models for next year. C. An individual purchases several pieces of antique furniture. D. A firm buys a computer for word processing.
1. Which of the following is not a function of money? A. It is a means of production. B. It is a unit of account. C. It is a store of value. D. It is a medium of exchange.
6. Which of the following is a type of open-market operation? A. The government sells Treasury bills to the public. B. The government prints money and uses it to buy army C. The Fed sells Treasury bills to the public. D. The Fed buys foreign currency in the exchange market.
13. Which component of the quantity equation is assumed constant by the quantity theory of money? A. The money supply B. The velocity of money C.The level of income D. The price level
18. Which of the following statements is false? A. If inflation is higher than the real interest rate, then the nominal interest rate must be negative. B. If inflation is higher than the nominal interest rate, then the real interest rate must be negative. C. If the nominal interest rate is higher than the real interest rate, then inflation must be positive. D. If the nominal interest rate is higher than inflation, then the real interest rate must be positive.
12 Which of the following characterizes the U.S. economy since 2001? A. Government budget deficit and negative net capital outflow B. Government budget deficit and positive net capital outflow C. Government budget surplus and negative net capital outflow D. Government budget surplus and positive net capital outflow
13 Which of the following did not contribute to an increase in government saving in the 1990's? A. Tax increases under presidents Bush and Clinton. B. Congressional restraint in increasing government spending. C. A shrinking trade deficit. D. Rapid productivity growth
23. When the government raises revenue by printing money, it imposes an "inflation tax" because the A. real value of money holdings falls. B. interest rate falls. C. difference between nominal and real interest rates becomes smaller. D. nominal value of money holdings falls.
25 Which of the following causes a decrease in the real exchange rate? A. An exogenous increase in foreign demand for domestic goods B. An exogenous decrease in investment C. An increase in government purchases D. A decrease in taxes
30. Which of the following is not a social cost of inflation? A. The money that people hold loses value due to the inflation tax. B. People hold smaller real balances and so have to make more frequent trips to the bank. C. Firms have to spend money to change prices more frequently. D. Inflation leads to greater variability in the relative prices charged by firms.
8. Which of the following policies would reduce the amount of frictional unemployment? A. A reduction in corporate taxes B. An increase in unemployment insurance C. An increase in the minimum wage D. Public retraining programs
10. When the real wage is above the level that equilibrates supply and demand, then the quantity of labor supplied A. depends on the nominal wage. B. is smaller than the quantity of labor demanded. C. is equal to the quantity of labor demanded. D. is greater than the quantity of labor demanded.
15. Which of the following is not a cause for real wage rigidity? A. Minimum-wage laws B. Unemployment insurance C. Union power D. Efficiency wages
20. Which of the following statements about unemployment is true? A. Most spells of unemployment are long. B. Most unemployment is accounted for by the long-term unemployed. C. The long-term unemployed make up only a small fraction of the unemployed. D. Most people who become unemployed remain unemployed for a long time.
3. When the nominal wage is stuck, a higher price level will cause the real wage to A. fall. B. stay the same. C. rise. D. rise and then fall.
2. Which of the following is not assumed by the Solow growth model? A. Constant returns to scale in production B. Output depends only on capital, labor, and technology C. Diminishing marginal products of labor and capital D. Output is constant
2. Which of the following is NOT exogenous in the IS-LM model? A. The interest rate B. Taxes C. The price level D. Government expenditure
16. Which of the following is an example of discretionary policy? A. A balanced-budget amendment B. A law specifying that the money supply grow at 3% every year C. A law specifying that the money supply grow at 3% + (unemployment rate - 6%) every year D. A capital gains tax cut during a recession
17. Which of the following patterns of economic activity is most likely to occur when there is a political business cycle? A. High output growth after an election B. High inflation after an election C. High unemployment before an election D. High output growth before an election
13. Which of the following would have the strongest A. History of consistent low-inflation policies B. Law prescribing a low-inflation policy C. Constitutional amendment dictating a low-inflation policy D. Change in administration