Q1. All college students are excluded from the U.S. labor force.
Q2. The total U.S. labor force excludes those
a. under age 20
b. under age 18
c. under age 16
d. over age 70
Q3. Which of the following statements concerning the Humphrey-Hawkins Act's unemployment and inflation targets is correct?
a. both were met by 1983
b. neither was met by 1983
c. the unemployment rate was met but not the inflation target
d. the inflation target was met but not the unemployment target
Q4. The U.S. civilian labor force does not include
a. the self-employed
b. members of Congress
c. members of the armed services
d. lawyers and doctors
Q5. The Employment Act of 1946, passed by the U.S. Congress after World War II,
a. made the Federal Reserve responsible for achieving and maintaining full employment
b. identified specific behavior and targets for the conduct of U.S. foreign aid
c. set the goals for the U.S. economy as 4 percent unemployment and 3 percent inflation
d. made the U.S. government responsible for achieving and maintaining full employment
Q6. An increase in the number of inexperienced workers in the labor force is likely to increase the unemployment rate relative to the level of output.
Q7. Since 1930, U.S. agriculture employment
a. has decreased while agricultural output has increased
b. has increased while agricultural output also has increased
c. has decreased while agricultural output also has decreased
d. has increased while agricultural output has decreased
Q8. U.S. workers have
a. neither substantial geographic nor occupational mobility
b. both substantial geographic and occupational mobility
c. substantial geographic mobility but not occupational mobility
d. substantial occupational mobility but not geographic mobility
Q9. The Full Employment and Balanced Growth Act of 1978
a. was enacted by Congress because of fears that the U.S. economy would plunge into another depression following the end of the Vietnam War
b. set the goals for the U.S. economy as 4 percent unemployment by 1983 and zero inflation by 1988
c. specifies that the U.S. government should not engage in any economic planning for a period longer than one year
d. is better known as the Kemp-Roth Act
Q10. Which of the following has not been outsourced from the U.S.?
a. customer service centers
b. data processing
c. residential construction
d. computer programming
Q11. Which of the following types of workers has decreased as a percentage of the U.S. labor force in recent decades?
a. skilled workers
b. unskilled workers
c. semiskilled workers
d. clerical workers
Q12. In recent years, the U.S. labor force has experienced
a. an increase in the percentage of manufacturing workers
b. an increase in the percentage of older workers
c. an increase in the percentage of females
d. an increase in the percentage of unskilled workers
Q13. Employment discrimination refers to
a. differing economic opportunities offered to persons according to their productivity
b. wage differentials based on productivity differences
c. differing economic opportunities based on personal characteristics
d. wage differentials based on seniority and human capital
Q14. The curve that indicates how far actual income distribution differs from a perfectly equal income distribution is called the
a. Lorenz curve
b. Garibaldi curve
d. Herfindahl Index curve
Q15. The poverty rate for blacks is almost three times that for whites.
Q16. The Lorenz curve shows the
a. percent of families on the vertical axis and percent of income on the horizontal axis
b. percent of families on the horizontal axis and the cumulative percent of income on the vertical axis
c. cumulative percent of income on the vertical axis and the cumulative percent of families on the horizontal axis
d. cumulative percent of families on the vertical axis and the cumulative percent of income on the horizontal axis
Q17. Geographically, a higher percentage of the poor live in the
Q18. The federal government employs an absolute rather than a relative measure to determine poverty.
Q19. An income distribution in which all households receive exactly the same income is referred to as a(n)
a. just distribution of income
b. proportional distribution of income
c. equal distribution of income
d. equitable distribution of income
Q20. In 2004, households with incomes less than $22,629 received
a. 3.4 percent of aggregate income
b. 5.7 percent of aggregate income
c. 8.2 percent of aggregate income
d. 10 percent of aggregate income
Q21. If new highly progressive tax laws are enacted, the resulting Lorenz curve will move to the right-hand corner of the graph.
Q22. For many welfare recipients, taking a job reduces income.
Q23. The Gini coefficient index
a. is a curve that bows outward from the Lorenz curve
b. is a straight line coinciding with the Lorenz curve
c. has a minimum value of 1.0
d. is another way of expressing income inequality
Q24. If income were distributed equally, the Gini coefficient would
a. equal zero
b. look like a backward "L"
c. have the same value as the Lorenz coefficient
d. have a value of 1
Q25. In using the GDP as a measure of business cycles, it is best to use real GDP.
Q26. Since the Great Depression, business cycles have not been an issue in the United States.
Q27. A recession occurs whenever there's a decline in real GDP for two or more successive quarters.
Q28. Economists use the phrase "business cycle" when discussing
a. movements in interest rates
b. changes in economic productivity
c. fluctuations in employment
d. fluctuations in total output around the trend
Q29. Cost changes generally lag behind price changes during the business cycle.
Q30. A recession is defined as a period when the
a. real GDP increases less than 3 percent
b. real GDP falls by at least 5 percent in a single quarter
c. nominal GDP declines for two consecutive quarters
d. real GDP falls for two consecutive quarters
Q31. Involuntary inventory accumulation may occur during the contracting phase of the business cycle.
Q32. As the economy moves into the trough of the business cycle, there is a sizable reduction in the output of capital goods.
Q33. During the expansion phase of the business cycle, we would normally expect to see real income ________, price level ________, and unemployment rate_______.
a. increasing; increasing; increasing
b. increasing; decreasing; decreasing
c. increasing; increasing; decreasing
d. falling; increasing; increasing
Q34. Population growth and wars are examples of external forces affecting the economy's cyclical movements.
Q35. An example of an external force in business fluctuations is
a. falling interest rates due to lagging demand in a contraction
b. a devaluation in the nation's currency
c. variations in inventories
d. the lag between price changes and cost changes
Q36. The impact of hurricanes on the level of business activity in North Carolina is an example of
a. seasonal variation
b. internal force
c. cyclical fluctuation
d. random fluctuation
Q37. Which of the following statements concerning major cycles is incorrect?
a. major cycles are characterized by wide fluctuations in business activity
b. the United States has experienced ten major cycles since World War II
c. severe recessions in major cycles result in widespread unemployment
d. during major cycles, economic activity rises and falls relative to the long-term growth trend
Q38. Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
a. expansionary policies
b. fiscal dividends
c. output policies
d. laissez-faire policies
Q39. One lesson learned from the U.S. deficit spending of the 1930s was that direct spending for transfer payments stimulated the economy more than spending on public works.
Q40. Out-of-control inflation that creates severe economic distortions is known as
Q41. Demand-pull inflation usually occurs in a fully employed economy.
Q42. Credit restrictions that increase the size of down payments and shorten loan maturities promote economic expansion.
Q43. Cost-push inflation is initiated by
a. government spending
b. wage increases
c. material price increases
d. either (b) or (c)
Q44. Fiscal policy deals with
a. interest rates
b. the money supply
c. the government budget
d. bank credit
Q45. The major economic problem faced by President Ford's administration was stagflation.
Q46. Investment tax credits are a monetary policy device.
Q47. Fiscal policy is likely to be more effective than monetary policy when used to increase aggregate demand during periods of serious unemployment.
Q48. During an inflationary period caused by excessive aggregate expenditure, which type of government budget would most effectively combat inflation?
a. a deficit budget
b. a balanced budget
c. a surplus budget
d. a full-employment budget
Q49. An advantage of transfer payments over public works as a means of reducing unemployment is that transfer payments
a. provide more direct aid to those suffering most from unemployment
b. are unlikely to decrease unintended excess inventories of consumer goods
c. generate more secondary and tertiary employment
d. tend to have a larger multiplier effect
Q50. Deflation and disinflation are synonymous terms.