Econ125-hk2 when the us treasury sells bonds to the public


ECONOMICS FOR MANAGERS ASSESSMENT: EXAM
Question 1
U.S. workers have

neither substantial geographic nor occupational mobility
both substantial geographic and occupational mobility
substantial geographic mobility but not occupational mobility
substantial occupational mobility but not geographic mobility

Question 2
Many economists believe that increases in the minimum wage tend to create a labor surplus.

True
False

Question 3
The rate of unemployment that can be expected from normal frictional unemployment in an otherwise fully employed labor force is known as the

natural rate of unemployment
full-employment unemployment rate
structural unemployment rate
Humphrey-Hawkins unemployment rate

Question 4
If workers are changing jobs voluntarily and it takes a while for them to find new jobs, they are an example of

structural unemployment
frictional unemployment
technological unemployment
none of the above

Question 5
Underemployment includes employed workers not performing at full capacity.

True
False

Question 6
The Humphrey-Hawkins Act's target rates for unemployment and inflation were reached by their target date of 1983.

True
False

Question 7
Which type of unemployment is the most difficult to cure?

functional
seasonal
cyclical
structural

Question 8
The idea of the natural rate of unemployment is that

frictional and structural causes prevent employment in the economy from ever becoming 100 percent of the labor force
each industry has its average turnover rate, and this rate determines its natural rate of unemployment
the market system requires that a pool of unemployed people be available to limit the power of workers
none of the above

Question 9
The total U.S. labor force excludes members of the armed services stationed outside the United States.

True
False

Question 10
The Full Employment and Balanced Growth Act set a 1983 U.S. inflation rate target of

1 percent
2 percent
3 percent
4 percent

Question 11
The total labor force includes all persons in the noninstitutional population who are either working or seeking work.

True
False

Question 12
The natural rate of unemployment is usually

equal to the full-employment rate of unemployment
higher than the full-employment rate of unemployment
lower than the full-employment rate of unemployment
double the full-employment rate of unemployment

Question 13
If the percentage of the population that is below the poverty line has decreased, then the number of

poor must have increased
poor must have decreased
poor may have increased
people above the poverty line must have increased

Question 14
If a Lorenz curve were constructed for the distribution of wealth, the curve would

indicate greater inequality for wealth than income
indicate less inequality for wealth than income
be identical to the Lorenz curve for income
be a straight line from the origin

Question 15
The total number of people in poverty has changed little since the late 1960s.

True
False

Question 16
The poverty rate for blacks is almost three times that for whites.

True
False

Question 17
If everyone had the same income, the Lorenz curve would become the line of income equality.

True
False

Question 18
The official poverty threshold line is adjusted annually for

income taxes
inflation
average household size
average family size

Question 19
In 2004, households with incomes less than $22,629 received

3.4 percent of aggregate income
5.7 percent of aggregate income
8.2 percent of aggregate income
10 percent of aggregate income

Question 20
Nonfamily households earn less than 50 percent of the income earned by family households.

True
False

Question 21
The Lorenz curve shows the

percent of families on the vertical axis and percent of income on the horizontal axis
percent of families on the horizontal axis and the cumulative percent of income on the vertical axis
cumulative percent of income on the vertical axis and the cumulative percent of families on the horizontal axis
cumulative percent of families on the vertical axis and the cumulative percent of income on the horizontal axis

Question 22
A minimum wage rate job raises a family out of poverty.

True
False

Question 23
In discussing the distribution of income among families, the term "lowest fifth" indicates

the poorest five percent of families
the poorest twenty percent of families
the smallest twenty percent of families
the percentage of families receiving one-fifth of the income

Question 24
If income were distributed solely according to productivity, some individuals would not receive any income.

True
False

Question 25
Cost-push inflation is characterized by

the wage-price spiral
administered pricing
stagflation
the multiplier

Question 26
Inflation and unemployment can never exist at the same time.

True
False

Question 27
To most effectively combat inflation by raising taxes, the government should

target funds that would otherwise be held idle
also increase government spending
target households with low marginal propensities to consume
target funds that would otherwise be spent on consumption or investment

Question 28
During an inflationary period, the Fed is inclined to purchase government securities to combat inflation.

True
False

Question 29
In the 1970s, the war in Vietnam caused a fiscal drag on the economy.

True
False

Question 30
Government policies designed to lower aggregate demand in order to combat inflation are known as

expansionary policies
contractionary policies
anti-growth policies
recession policies

Question 31
During the 1990-1991 recession, the U.S. government's large budget deficits and budget reduction commitments limited its ability to use fiscal policy to stimulate the economy.

True
False

Question 32
When the U.S. Treasury sells bonds to the public to finance government spending and then the Fed buys the bonds through open-market purchases, the Fed is

monetizing the debt
decreasing the money supply
decreasing bank reserves
increasing the difficulty of raising funds for government spending

Question 33
Fiscal policy deals with

interest rates
the money supply
the government budget
bank credit

Question 34
In the late 1960s, a 10 percent surcharge on U.S. personal and corporate income taxes was imposed as an expansionary measure.

True
False

Question 35
If the government finances increased spending strictly through higher taxes, this action

increases the multiplier effect
has no impact on the multiplier effect
decreases the multiplier to a value greater than one
decreases the multiplier to one

Question 36
The Economic Recovery Tax Act of 1981 reduced personal income taxes by 25 percent over a three-year period.

True
False

Question 37
Jawboning by the Carter Administration proved to be an unsuccessful contractionary policy.

True
False

Question 38
The U.S. economy has experienced no minor cycles since World War II.

True
False

Question 39
Agricultural explanations of the business cycle are not as important today as they were 50 to 75 years ago, because today

agricultural production is more mechanized
agricultural production is a smaller portion of the total economy
agricultural production is greater
we eat less

Question 40
The underconsumption theory is classified as a real or physical cause of the business cycle.

True
False

Question 41
During the expansion phase of the business cycle, profit margins increase due to a widening cost-price relationship.

True
False

Question 42
Which of the following is the most valid expression of a theory of underconsumption as a cause of business cycles?

capital goods production encroaches on consumer goods production
income equals production, but not all income is used for current purchasing power
people want more goods than the economy is capable of producing; therefore, they must cut their consumption expectations
the economy provides insufficient purchasing power to buy back the goods it produces

Question 43
A recession occurs whenever there's a decline in real GDP for two or more successive quarters.

True
False

Question 44
Involuntary inventory accumulation may occur during the contracting phase of the business cycle.

True
False

Question 45
A hurricane is considered an external force in business cycle analysis.

True
False

Question 46
During the contraction phase of the business cycle,

prices fall relative to costs, reducing profit margins
costs fall relative to prices, reducing profit margins
prices fall relative to costs, increasing profit margins
costs fall relative to prices, increasing profit margins

Question 47
An example of an external force in business fluctuations is

falling interest rates due to lagging demand in a contraction
a devaluation in the nation's currency
variations in inventories
the lag between price changes and cost changes

Question 48
Economists use the phrase "business cycle" when discussing

movements in interest rates
changes in economic productivity
fluctuations in employment
fluctuations in total output around the trend

Question 49
The underinvestment theory is classified as a monetary cause of the business cycle.

True
False

Question 50
As the economy moves into the trough of the business cycle, there is a sizable reduction in the output of capital goods.

True
False

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