Question 1

Which type of unemployment is most likely to increase during a recession?

Accepted Answer

Cyclical unemployment

Question 2

Suppose the Consumer Price Index (CPI) in year 4 is set as the base year at 100. If the price per unit in year 3 is $$3 and in year 4 is 5$$, what is the CPI for year 3?

Accepted Answer

$$60$$

Question 3

Which of the following is a measure used to track inflation in the United States?

Accepted Answer

CPI (Consumer Price Index)

Question 4

The Phillips curve is consistent with a model of ______ nominal wages in which aggregate supply is ______.

Accepted Answer

sticky, upward sloping in the short run and vertical in the long run

Question 5

Suppose the economy's production function is $$Y = A K$$^{0.3}$$ N$$^{0.7}$$, with A$$ \u003e 0$$ and 0$$ \u003c 	ext{exponents} \u003c 1$$. If K = 9$, N = 15$, and Y = 15$, what is Y$ if K = 3$ and N = 2$?

Accepted Answer

$$Y is $$less than $$5$$

Question 6

In the short run, an increase in aggregate demand while aggregate supply remains constant is likely to result in:

Accepted Answer

Inflation

Question 7

If the government launches a new infrastructure program, spending $$100$$ billion, and this leads to an increase in overall GDP by $$300$$ billion, what is the Keynesian expenditure multiplier?

Accepted Answer

$$3.0$$

Question 8

If the marginal propensity to consume (MPC) is $$0.75$$, what is the value of the Keynesian expenditure multiplier?

Accepted Answer

$$4.0$$

Question 9

Which economist is known for his theory that population growth tends to outstrip the growth of resources, leading to recurring cycles of economic hardship and poverty?

Accepted Answer

Thomas Malthus

Question 10

Which of the following combinations of factors would unambiguously result in an increase in real GDP per capita growth, assuming all other factors remain constant?

Accepted Answer

A decrease in inflation and a decrease in population growth

Question 11

In 1914, Henry Ford paid workers $$5$$ per day for an $$8-$$hour shift. If the CPI in 1914 was $$10.0$$ and the current CPI is $$300$$, what is the hourly wage today that would be the inflation-adjusted equivalent of that $$8-$$hour, $$5-$$day?

Accepted Answer

An hourly wage of $$18.75$$ would be approximately equivalent

Question 12

Suppose the government gave everyone one million dollars. In the AS-AD model, this would cause:

Accepted Answer

A rightward shift of the AD curve, temporarily boosting production along the SAS curve, and opening a large inflationary gap

Question 13

Students who leave school in the spring and look for work are one source of ______.

Accepted Answer

Frictional unemployment

Question 14

When cyclical unemployment increases and other things remain the same, ______.

Accepted Answer

The natural unemployment rate does not change

Question 15

If the CPI rises from $$120 to$$ $$126$$, then ______.

Accepted Answer

On average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by $$5$$ percent

Question 16

The reference base period for the CPI is $$1982$$-$$1984. In $$June $$2017$$, the CPI was $$245.0. $$What does this tell us about the prices paid by urban consumers for a fixed basket of consumer goods and services?

Accepted Answer

Average; $$145.0$$ percent higher in June $$2017$$ than the average of $$1982$$-$$1984$$

Question 17

What does the Phillips curve primarily describe in economics?

Accepted Answer

The relationship between inflation and unemployment

Question 18

According to the Phillips curve, what is the typical trade-off between inflation and unemployment?

Accepted Answer

There is a negative relationship; as inflation rises, unemployment falls

Macroeconomics Study Guide: Unemployment, Inflation, GDP, and Economic Growth

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