Question

The number of unemployed is calculated by:

a large monthly survey of households conducted for the Bureau of Labor Statistics.

counting the people currently collecting unemployment benefits.

A large quarterly survey of businesses conducted for the Labor Department.

counting the people either currently or recently collecting unemployment benefits.

Stagflation is when the economy has:

high unemployment coupled with low inflation at the same time.

low unemployment and inflation at the same time.

low unemployment coupled with high inflation at the same time.

high unemployment and inflation at the same time.

A “core” inflation rate:

does not include food and energy prices.

tracks prices on the wholesale level..

is the rate of inflation at the natural rate of output.

tracks the inflation of labor costs.

A traditional expansionary gap is created when the aggregate demand curve moves to the:

A. right of the natural rate of output; inflation rises and unemployment falls.

B. left of the natural rate of output; inflation falls and unemployment rises.

C. right of the natural rate of output; inflation falls and unemployment rises.

D. left of the natural rate of output; inflation rises and unemployment falls.

5) Autonomous consumption is

A. that part of consumption that rises or falls with changes in disposable income.
B. the minimum that people will spend even if disposable income is zero.
C. the amount people will spend when the C line crosses the 45-degree line.
D. the amount people will spend when income is equal to consumption.

       6) If AD rises in the short run:

A. it pushes up the price level.

B. it decreases national output.

C. it increases full employment.

D. all of the above.

7) We cut down trees and sell the timber for $8000. The timber is sawn up into lumber that sells for $18,000. The lumber is used to build furniture that sells to consumers for $30,000.

A. $30,000 goes into GDP.

B. $4000 goes into GDP.

C. $56,000 goes into GDP.

D. $22,000 goes into GDP.

     8) The long run annual growth rate of the U.S. economy tends to be about:

A. 1% or less.

B. 2%

C. 5%

D. 10% or more.

Answer 1

1) The number of unemployed is calculated by a large monthly survey of households conducted for the Bureau of Labor Statistics. The name of the survey is current population survey and is conducted by BLS every month, it also collects the data related to other variables as well.

2) Stagflation is when the economy has high unemployment and inflation at the same time. This occurs when the rate of inflation and rate of unemployment both move in same upward direction and output growth becomes stagnant.

3) A “core” inflation rate does not include food and energy prices. This is basically done to reduce impact of fluctuations in the price levels of energy and food. These two categories experience large fluctuations in their prices and trouble inflation rate.

4) A traditional expansionary gap is created when the aggregate demand curve moves to the right of the natural rate of output; inflation rises and unemployment falls. When AD shifts to the right, there is an upward pressure on the price level and so inflation is incraesed and so rate of unemployment falls. Option A is true.

5) Autonomous consumption is the minimum that people will spend even if disposable income is zero. Option B is correct

6) If AD rises in the short run it pushes up the price level Option A is correct

7) We cut down trees and sell the timber for $8000. The value added is $8000. The timber is sawn up into lumber that sells for $18,000. Here value added is $10000. The lumber is used to build furniture that sells to consumers for $30,000. Here the value added is $12000. Hence a total of $30000 is a part of GDP. Option A is correct

8) The long run annual growth rate of the U.S. economy tends to be about 2%. Option B is correct.