Macroeconomics Quiz # 3

Which of the following refers to the situation that occurs when a currency is "pegged"?

A flat tax is imposed on imported goods

A contract exists that allows households to exchange currency for a fixed amount of gold from the central bank

The central banks keeps the exchange rate between its currency and another currency fixed

The central bank allows the value of its currency to be determined by supply and demand

A period of ____ economic expansion

Long

Prolonged

Short

Medium

Short-term fluctuations in the economy relative to the long-term trend in output is called

Market cycles

Business cycles

Proper cycles

Unemployment cycle

A measure of the cost of a market basket that represents the consumption of a typical household is called consumer price index

True

False

When the economy is slowing down—measured from the peak to the trough is called

Extraction

Contraction

Relaxation

Loss

Unemployment due to short-term cyclical fluctuations in the economy is cyclical unemployment

True

False

A decrease in the overall price level, which increases the purchasing power of money is called

Deflation

Depression

Disappointment

Destruction

A severe recession or contraction in output is called

Deflation

Depression

Disappointment

Destruction

An individual who has left the labor force because he or she could not find a job is known as

Courged worker

Discouraged worker

Extraordinary worker

Weak labour

Efficiency wage model is theory stating that ____ wages lead to greater productivity

Lower

Higher

Equal

Zero

When output (real GDP) is rising significantly—the period between the trough of a recession and the next peak is called

Contraction

Expansion

Extraction

Distraction

The unemployment that results from workers searching for suitable jobs and firms looking for suitable workers is frictional unemployment

True

False

GDP deflator is a price index that helps measure the ____ price level of all final consumer goods and services produced

Higher

Lower

Average

Half

Extremely high rates of inflation for sustained periods of time is called

Hyperinflation

Hypoinflation

Average inflation

None of these

The percentage change in the price level from one year to the next is called inflation rate

True

False

A person who quits his or her job is job leaver

True

False

An individual who has been temporarily laid off or fired is job loser

True

False

The number of people age ___ and over who are available for employment is labour force

18

16

20

22

The percentage of the working-age population in the labor force is called labour force participation rate

True

False

Leading economic indicators are factors that economists at the Department of Commerce have found typically change before changes in economic activity

True

False

The costs imposed on a firm from changing listed prices is called

Menu costs

Sale costs

High costs

All of these

An hourly wage floor set above the equilibrium wage is minimum wage rate

True

False

The median, or “typical,” unemployment rate, equal to the sum of frictional and structural unemployment when they are at a maximum is natural rate of unemployment

True

False

An individual who has not held a job before but is now seeking employment is ___ entrant

Old

New

Loser

All of these

The reported interest rate that is not adjusted for inflation is called nominal interest rate

True

False

The point in time when expansion comes to an end, that is, when output is at the highest point in the cycle is called

Peak

Slope

Graph

None of these

The amount of real output the economy would produce if its labor and other resources were fully employed, that is, at the natural rate of unemployment is called potential output

True

False

A measure of the trend in prices paid for a certain bundle of goods and services over a given period is called

Price review

Price index

Price value

All of these

The ____ level of prices in the economy is price level

High

Low

Average

Constant

Producer price index is a measure of the cost of goods and services bought by firms

True

False