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60 Cards in this Set
- Front
- Back
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The inflation rate is the ....
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percent increase in the general price level during a period of time.
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Inflation tends to have an adverse effect on ....
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people who hold money and people with fixed incomes.
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Inflation that is not anticipated tends to redistribute income and wealth in favor of those who ....
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owe money and own durable goods.
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Inflation that is not anticipated tends to redistribute income and wealth in favor of those who ....
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owe money
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Which individuals would not suffer a decrease in real buyint power during a period of inflation?
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a worker whose percentage increase in nominal wages is equal to the inflation rate.
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If a worker receives a 10% increase in wages and the inflation rate is 6%...
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her real wages rise by 4%
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In what way did the Federal Reserve fail during the 1930s?
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They allowed the money supply to fall.
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If the Federal Reserve increases the money supply by 8% per year and velocity is constant, then ...
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an inflation rate of 6% occurs if real output is rising by 2%.
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If the nominal interest rate is 9% and the real interest rate is 6%, then inflation rate is ....
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3%
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If the nominal interest rate is 9% and the real interest rate is 6%, then inflation rate is ....
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3%
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When the money supply increases and the price level rises, what happens to the demand and supply of labor?
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the demand increases and the supply decreases.
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Real income rises when ....
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nominal income rises faster than prices.
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The labor force participation rate is equal to ...
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the labor force divided by the population
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The unemployment rate is equal to ....
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the number of unemployed people divided by the labor force.
and 100% minus the employment rate. |
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According to the classical economists, unemployment ...
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does not occur in the long run unless there is an effective minimum wage.
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Keynes suggested that a decrease in the demand for labor would cause ....
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unemployment because wages were "sticky."
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According to the modern view of the labor market, unemployment ...
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always exists, but it may be above, below, or equal to the natural rate depending upon the level of wages relative to the equilibrium wage.
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There are always some unemployed people because ....
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it takes time to find and accept job offers and there are always new people entering the job market.
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If wages are above the equilibrium level, then what is not true?
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The number of unemployed people is less than the number of job vacancies.
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The unemployment rate is greater than the natural rate when ....
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wages are above the equilibrium level.
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If the number of job vacancies is greater than the number of unemployed people, then what is not true?
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Wages are above the equilibrium level.
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The short-run Phillips curve shows that the ....
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rate of unemployment falls as the actual rate of inflation rises.
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The long-run Phillips curve shows that the ...
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rate of unemployment is independent of the rate of inflation.
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If the money supply is rising at 8% per year, real output is rising at 2% per year, and velocity is rising at 1% per year, then inflation is equal to ....
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7%.
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The economy would not go through periods of over-full or under-full employment if ....
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wages were flexible enough to adjust to the equilibrium level.
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What monetary policy did Milton Friedman recommend?
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The money supply should grow at a constant low rate between 2% and 3% every year.
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What policies did not contribute to the inflation in the U.S. over the past three decades?
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persistent decreases in the productive capacity of the nation.
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If the real rate of interest is 6% while the nominal rate of interest is 8%, then what is the level of inflation?
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2%
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During periods of inflation, what happens to the demand and supply of final goods and services?
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demand increases and supply decreases
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What describes Keynesian monetary policy recommendations?
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The monetary authorities should maintain low, stable interest rates by increasing or decreasing the money supply as necessary.
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A monetary policy of targeting interest rates, will lead to ....
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inflation if deficit spending occurs.
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Why did Milton Friedman recomment that Federal Reserve increase the money supply by 2-3% per year? Because ....
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output increases by about 2-3% per year.
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What best describes full employment?
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The level of employment that occurs when the unemployment rate is equal to the natural rate of unemployment.
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The quantity theory of money suggests that ....
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the price level is directly and proportionately related to the quantity of money.
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If the nominal rate of interest is 15% while the real rate of interest is 8%, the what is the level of inflation?
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7%
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During periods of inflation, what happens to the demand and supply of final goods and services?
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demand increases and supply decreases
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During periods of inflation, what happens to the demand and supply of labor?
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demand increases and supply decreases
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If inflation rises from 4% to 8%, what happens to the demand and supply of loanable funds?
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demand increases and supply decreases
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Which individuals is most likely to suffer decreased real income due to an unexpected increase in the inflation rate?
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A market speculator who just purchased $10,000 worth of bonds that pay a fixed interest.
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The quantity theory of money suggests that ....
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the price level is directly and proportionately related to the quantity of money.
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If the money supply is rising at 6% per year, real output is rising at 3% per year, and velocity is rising at 1% per year, then inflation is equal to ...
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4%
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If the nominal rate of interest is 15% while the real rate of interest is 8%, the what is the level of inflation?
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7%
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If the Federal Reserve increases the money supply by 12% per year and velocity is constant, then ....
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an inflation rate greater than 12% occurs if real output is falling.
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During periods of inflation, what happens to the demand and supply of final goods and services?
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demand increases and supply decreases
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If velocity is constant, real output is growing at 3% per year, and the monetary authorities increase the money supply growth rate from 3 to 7% per year, then inflation will rise from ....
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0 to 4%
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During periods of inflation, what happens to the demand and supply of labor?
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demand increases and supply decreases
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According to the classical theory, unemployment is not a problem in the long run because ....
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wages will adjust to the level that forces the number of people who wigh to work into equality with the number of people that businesses wish to hire.
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If inflation rises from 4% to 8%, what happens to the demand and supply of loanable funds?
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demand increases and supply decreases
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Which individuals is most likely to suffer decreased real income due to an unexpected increase in the inflation rate?
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A market speculator who just purchased $10,000 worth of bonds that pay a fixed interest.
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If the money supply is rising at 6% per year, real output is rising at 3% per year, and velocity is rising at 1% per year, then inflation is equal to ...
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4%
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If the Federal Reserve increases the money supply by 12% per year and velocity is constant, then ....
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an inflation rate greater than 12% occurs if real output is falling.
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If velocity is constant, real output is growing at 3% per year, and the monetary authorities increase the money supply growth rate from 3 to 7% per year, then inflation will rise from ....
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0 to 4%
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According to the classical theory, unemployment is not a problem in the long run because ....
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wages will adjust to the level that forces the number of people who wigh to work into equality with the number of people that businesses wish to hire.
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When the number of job vacancies is greater than the number unemployed people ...
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the current level of wages is less than the equilibrium level of wages.
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The short-run Phillips curve shifts in towards the origin when the ....
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expected rate of inflation falls.
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If the expected rate of inflation is 10% and the actual rate of inflation is 5%, then ....
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the rate of unemployment in the economy is greater than the natural rate.
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If the nominal interest rate is 6% and the inflation rate is 3%, then real rate of interest is ...
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3%
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What is the most important factor in determining the rate of inflation that people expect to occur in the near future?
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the rate of inflation in the recent past
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Which is false?
a. If nominal income is rising faster than prices, then real income is rising. b. The percent change in real income is equal to the percent change in nominal income plus the inflation rate. |
B.
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Which is false
a. If the actual rate of inflation is less than the expected rate of inflation, then wages will be below the equilibuium level. b. If the expected rate of inflation is greater than the actual rate of inflation, then unemployment will be greater than the natural rate. |
A.
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