Inflation is:
a. a reduction in everyone's standard of living.
b. a rise in the real prices of all goods and services.
c. a general and continuing rise in the money prices of goods and services.
d. a continuing rise in everyone's standard of living.
e. an increase in the value of money compared to the value of goods.
QUESTION 2The Lorenz curve is best used to measure international competitiveness.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Which of the following is not a form of crowding out?
a. Lower household spending due to higher interest rates
b. Lower business spending due to higher interest rates
c. Lower net exports due to higher interest rates
d. Lower private spending due to higher taxes
e. Greater output and employment in the short run
QUESTION 4Which of the following factors makes the official unemployment rate an overstatement of the actual level of unemployment in the economy?
a. Inclusion of discouraged workers
b. Inclusion of those only working part time
c. Inclusion of those who are overqualified for their current jobs
d. Inclusion of those who are marginally attached to the labor force
e. Inclusion of those who pretend to look for work in order to qualify for welfare programs
QUESTION 5The Lorenz curve represents the distribution of income.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If a federal budget deficit causes crowding out, _____.
a. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because the marginal propensity to consume decreases
b. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment decreases
c. interest rates fall, reducing the burden of the debt
d. firms become more willing to invest
e. interest rates fall, so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit
QUESTION 7The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are:
a. on unemployment compensation.
b. not working.
c. working part time but prefer full-time work.
d. voluntarily retired.
e. unemployed and looking for work.
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