When actual real GDP output is below full-employment real GDP, the GDP measures the cost of cyclical unemployment.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2A decrease in real GDP would affect the U.S. economy by:
a. cutting tax revenues and raising government expenditures.
b. cutting government expenditures and raising tax revenues.
c. raising both tax revenues and government expenditures.
d. cutting both government expenditures and tax revenues.
QUESTION 3The Monetarists advocate the monetary rule in order to stabilize the business cycle which states that the money supply should be decreased by a constant rate year after year.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4Structural unemployment is a special type of cyclical unemployment.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5Which of the following is an automatic stabilizer that moves the federal budget toward deficit during an economic contraction and toward surplus during an economic expansion?
a. Personal income tax revenues.
b. Corporate income tax revenues.
c. Unemployment benefits.
d. All of these.
QUESTION 6Monetarists argue that the Fed should frequently adjust the money supply in response to ever-changing economic conditions.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7Structural unemployment refers to short periods of unemployment needed to match jobs and job seekers.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8Automatic stabilizers stabilize the level of real GDP because:
a. Congress quickly changes spending and tax revenue.
b. federal expenditures and tax revenues change as the level of real GDP changes.
c. the spending and tax multiplier are constant.
d. wages are controlled by the minimum wage law.
Quick Reply
