ECON 2020 LATEST
Below are the recent monthly unemployment figures for an
economy:Persons moving to a new city and seeking work
100,000Persons out of work because their industry has just been
rendered obsolete by technological change 12,000Persons in all
industries laid off due to general economic slowdown120,000Persons
taking 2 months off from work to pursue education100,000Applying the
Bureau of Labor Statistics' guidelines for calculating the official
unemployment statistics, what is the "natural" level of unemployment
for this economy?
A. 200,000
B. 212,000
C. 232,000
D. 320,000 - ANSWERS-B. 212,000
In a capitalistic society, it is not considered possible to have 100%
employment of the labor force. Therefore, full employment is defined as
something less than 100% employment because of the existence of
A. Structural and cyclical unemployment.
B. Structural and frictional unemployment.
C. Cyclical and frictional unemployment.
END OF
PAGE
1
, ECON 2020 LATEST
D. Frictional and part-time unemployment. - ANSWERS-B. Structural
and frictional unemployment.
What is the amount needed to close the recessionary gap if the
economy's full-employment real gross domestic product (GDP) is $1.2
trillion and its equilibrium real GDP is $1.0 trillion?
A. $200 billion.
B. $200 billion divided by the multiplier.
C. $200 billion multiplied by the multiplier.
D. $200 billion times the reciprocal of the marginal propensity to
consume (MPC). - ANSWERS-B. $200 billion divided by the multiplier.
The most effective fiscal policy program to help reduce demand-pull
inflation would be to
A. Decrease the rate of growth of the money supply.
B. Increase both taxes and government spending.
C. Decrease taxes and increase government spending.
D. Increase taxes and decrease government spending. - ANSWERS-D.
Increase taxes and decrease government spending.
END OF
PAGE
2
, ECON 2020 LATEST
If a government were to use only fiscal policy to stimulate the economy
from a recession, it would
A. Raise consumer taxes and increase government spending.
B. Lower business taxes and government spending.
C. Increase the money supply and increase government spending.
D. Lower consumer taxes and increase government spending. -
ANSWERS-D. Lower consumer taxes and increase government
spending.
According to fiscal policy principles, a tax increase will
A. Increase spending and increase aggregate demand.
B. Increase spending and reduce aggregate demand.
C. Reduce spending and increase aggregate demand.
D. Reduce spending and reduce aggregate demand. - ANSWERS-D.
Reduce spending and reduce aggregate demand.
A major problem arising from the use of fiscal policy to help stimulate
an economy is that there
A. Are too few fiscal goals that have wide public support.
B. May be an expansionary and, therefore, inflationary bias to such
policies.
END OF
PAGE
3
, ECON 2020 LATEST
C. Is too short a lag between recognizing an economic problem and
implementing a cure.
D. Is a balanced budget that promotes cyclical fluctuations. -
ANSWERS-B. May be an expansionary and, therefore, inflationary bias
to such policies.
During a recession, the goal of government fiscal policy is to raise
equilibrium output. An appropriate governmental action in this situation
is to
A. Decrease government spending.
B. Increase government taxes.
C. Increase government spending.
D. Increase government taxes and decrease government spending by
equal amounts. - ANSWERS-C. Increase government spending.
The full-employment gross domestic product (GDP) is $1.3 trillion, and
the actual gross domestic product is $1.2 trillion. The marginal
propensity to consume (MPC) is 0.8. When inflation is ignored, what
increase in government expenditures is necessary to produce full
employment?
A. $100 billion.
B. $80 billion.
END OF
PAGE
4
Below are the recent monthly unemployment figures for an
economy:Persons moving to a new city and seeking work
100,000Persons out of work because their industry has just been
rendered obsolete by technological change 12,000Persons in all
industries laid off due to general economic slowdown120,000Persons
taking 2 months off from work to pursue education100,000Applying the
Bureau of Labor Statistics' guidelines for calculating the official
unemployment statistics, what is the "natural" level of unemployment
for this economy?
A. 200,000
B. 212,000
C. 232,000
D. 320,000 - ANSWERS-B. 212,000
In a capitalistic society, it is not considered possible to have 100%
employment of the labor force. Therefore, full employment is defined as
something less than 100% employment because of the existence of
A. Structural and cyclical unemployment.
B. Structural and frictional unemployment.
C. Cyclical and frictional unemployment.
END OF
PAGE
1
, ECON 2020 LATEST
D. Frictional and part-time unemployment. - ANSWERS-B. Structural
and frictional unemployment.
What is the amount needed to close the recessionary gap if the
economy's full-employment real gross domestic product (GDP) is $1.2
trillion and its equilibrium real GDP is $1.0 trillion?
A. $200 billion.
B. $200 billion divided by the multiplier.
C. $200 billion multiplied by the multiplier.
D. $200 billion times the reciprocal of the marginal propensity to
consume (MPC). - ANSWERS-B. $200 billion divided by the multiplier.
The most effective fiscal policy program to help reduce demand-pull
inflation would be to
A. Decrease the rate of growth of the money supply.
B. Increase both taxes and government spending.
C. Decrease taxes and increase government spending.
D. Increase taxes and decrease government spending. - ANSWERS-D.
Increase taxes and decrease government spending.
END OF
PAGE
2
, ECON 2020 LATEST
If a government were to use only fiscal policy to stimulate the economy
from a recession, it would
A. Raise consumer taxes and increase government spending.
B. Lower business taxes and government spending.
C. Increase the money supply and increase government spending.
D. Lower consumer taxes and increase government spending. -
ANSWERS-D. Lower consumer taxes and increase government
spending.
According to fiscal policy principles, a tax increase will
A. Increase spending and increase aggregate demand.
B. Increase spending and reduce aggregate demand.
C. Reduce spending and increase aggregate demand.
D. Reduce spending and reduce aggregate demand. - ANSWERS-D.
Reduce spending and reduce aggregate demand.
A major problem arising from the use of fiscal policy to help stimulate
an economy is that there
A. Are too few fiscal goals that have wide public support.
B. May be an expansionary and, therefore, inflationary bias to such
policies.
END OF
PAGE
3
, ECON 2020 LATEST
C. Is too short a lag between recognizing an economic problem and
implementing a cure.
D. Is a balanced budget that promotes cyclical fluctuations. -
ANSWERS-B. May be an expansionary and, therefore, inflationary bias
to such policies.
During a recession, the goal of government fiscal policy is to raise
equilibrium output. An appropriate governmental action in this situation
is to
A. Decrease government spending.
B. Increase government taxes.
C. Increase government spending.
D. Increase government taxes and decrease government spending by
equal amounts. - ANSWERS-C. Increase government spending.
The full-employment gross domestic product (GDP) is $1.3 trillion, and
the actual gross domestic product is $1.2 trillion. The marginal
propensity to consume (MPC) is 0.8. When inflation is ignored, what
increase in government expenditures is necessary to produce full
employment?
A. $100 billion.
B. $80 billion.
END OF
PAGE
4
