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32 Cards in this Set
- Front
- Back
Between 1979 and 2000, what fraction of thhe US population saw their share of national income fall?
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the lowest 40%
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The share of income going to the top 1 percent of households in 2007 was about the same as in 1928.
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TRUE
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A family income of $210,000 indicates that family is
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in the top 5% of the US income distribution.
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According to the World Bank and OECD study reported in the Reader, if the level of income inequality becomes too great, it has a negativeeffect on the rate of productivity growth in industrialzed countries.
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TRUE
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If the demand for a country A's products or financial assets increases relative to thsoe of country B
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country A's currency will appreciate and country B's currency will depreciate.
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If the price of a shrit is $27 in Canada and $20 in the US, and the time involed inthe community stores are the same, if the exchange rate is $1 US =$1,.2876 CAD, you should buy the shirt in
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the US.
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If the value of the dollar is depreciating relative to other currencies,
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we would expect an increase in exports and a decrease in imports.
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A recession is defined as
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a decline in real GDP for at least two successive quarters.
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A recession could be represented by a point
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inside the production-possibilities curve.
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A recession bar
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is a graphical technique used to show the time from the peak of the previous cycle to the trough of the recession.
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To be officially counted as 'unemployed,' one must
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have applied for a job during the past four weeks and currently not be working.
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Given the following information, calculate the unemployment rate:
the total population = 309 million the population over age of 16 = 230 million the number of employed = 135 million the number of unemployed = 12 million Therefore the unemployment rate is |
8.2 percent.
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If a person is unemployed for a long period of time while searching for a new job because her old job was moved off-shore, this person would be considered
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structurally unemployed.
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In addition to the income lost by individuals who become unemployed, the micro costs of unemployment include the deaths of many people as the result of the increase in domestic violence, murders, heart attacks and suicides.
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TRUE
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The unemployment rate underestimates the actual under-utilization of labor resources because
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it ignores discouraged workers and those who involuntarily work part-time.
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One definition of the full-employment unemployment rate is the unemployment that is voluntarily chosen or that actually helps make the economy more effective. Using this definition, full-employment unemployment would be
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seasonal, frictional and 'good' structural unemployment.
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Friedman's theory of the 'natural rate' of unemployment, or the NAIRU, argues
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that if the unemployment rate falls too low, the rate of inflation will increase.
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According to Marx, if the unemployment rate falls too low, the bargaining power of labor increases and wages will rise. In response each individual capitalist will try to replace labor with machines. The result of this process is to maintain what Marx called
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the reserve army of labor.
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The macro costs of unemployment are the loss of GDP that results from being inside the production possibilities frontier.
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TRUE
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One of the possible benefits of an increase in unemployment rates discussed in class was
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workers would be more passive and easier to manage.
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Inflation is defined as
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an increase in the average level of prices.
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A statement that claims that everyone is worse off during inflation is wrong because
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inflation redistributes real income and wealth, making some people better off and other people worse off.
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If the price of the products you sell goes up faster than the average rate of inflation, you are relatively better off as a result of the
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income effect.
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Financial institutions are most strongly opposed to policies that might cause inflation because
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inflation tends to redistribute wealth from creditors to debtors.
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Deflation is more costly and dangerous because, while inflation can reduce incomes, deflation can cause waves of bankruptcies.
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TRUE
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Different theories blame different groups for causing recessions. Which of the following pairs is incorrect?
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a. Jevons blamed nature.
b. Malthus blamed workers. c. Marx blamed capitalists. d. Keynes blamed the government. Answer is D |
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Marx predicted all of the following except:
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a. business cycles would concentrate the ownership of capital in fewer and fewer companies
b. as business became larger, business cycles would get deeper and last longer c. as capitalism develops, an ever larger fraction of the population would become dependent on wage labor as their primary source of income. d. as businesses became larger, business cycle would become less severe because large firms can engage in planning activities that small firms can't. The answer is D. |
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According to the theory of Keynes, some of household consumption autonomous and the rest is primarily determined by
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the level of income.
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According to the theory of Keynes, the primary determinate of investment spending is
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the level of expected sales.
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The spending multiplier is
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a process of re-spending , over a period of time, of an injection into the spending stream
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The size of the spending multiplier effect is always determined by
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the marginal propensity to leak from the spending stream.
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The spending multiplier process ends
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when the initial injection has leaked out of the spending stream.
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