The general consensus on minimum wage laws is that they:
a. do create some unemployment.
b. Directly affect workers at all skill levels.
c. lead to extremely low rates of unemployment.
d. increase employment possibilities for teenagers.
Question 2The time span between recognition of the need for a policy change and the legislation being signed into a law is known as:
a. signal lag.
b. implementation lag.
c. impact lag.
d. recognition lag.
Question 3Which of the following statements about inflation targeting is true?
a. Inflation targeting allows the central bank to achieve multiple goals like low unemployment and economic growth.
b. Inflation targeting has not been adopted by the Fed.
c. A central bank that adopts inflation targeting is intrinsically dependent on fiscal policy.
d. Inflation targeting decreases the perceived uncertainty derived from the central bank's course of action.
e. Inflation targeting increases the uncertainty associated with the central bank's course of action.
Question 4In the market for natural gas, a particularly mild winter will lead to:
a. a decrease in the demand and an increase in both equilibrium price and quantity.
b. an increase in the supply and an increase in both equilibrium price and quantity.
c. an increase in the supply, a decrease in equilibrium price, and an increase in equilibrium quantity.
d. a decrease in the demand and a decrease in both equilibrium price and quantity.
Question 5After legislation is signed into law, the time it takes before actual fiscal stimulus is noticed is termed as:
a. signal lag.
b. implementation lag.
c. impact lag.
d. recognition lag.
Question 6The interest rate that banks pay for borrowing overnight from other banks is called:
a. bank rate.
b. target rate.
c. federal funds rate.
d. real interest rate.
e. prime lending rate.
Question 7Assume a price floor is imposed at the current equilibrium price in the market for lettuce. If the demand for lettuce then increases:
a. a surplus of lettuce will be created.
b. a shortage of lettuce will be created.
c. the quantity of lettuce traded remains the same.
d. the quantity of lettuce supplied will increase.
Question 8The time span between the beginning of a downturn and the time by which hard data to indicate a downturn is made available is called:
a. the signal lag.
b. the implementation lag.
c. the impact lag.
d. the recognition lag.
Question 9Assume that the Fed increases the money supply when there is substantial unemployment in the economy. According to the quantity theory of money, if velocity is constant, then:
a. the price level will decrease.
b. real GDP will decrease.
c. nominal GDP will increase.
d. nominal GDP will decrease.
e. real GDP will remain constant while price level will decrease.
Question 10Assume a price ceiling is imposed at the current equilibrium price in the market for wheat. If the supply of wheat then decreases as a result of bad weather,
a. a surplus of wheat will be created.
b. a shortage of wheat will be created.
c. the quantity of wheat traded remains the same.
d. the quantity of wheat supplied will increase.
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