Test #7, Chapter 8

Once the full-employment level of aggregate supply has been reached, further expansions of the aggregate demand curve will cause deflation to occur in the economy.

Your answer:
True False

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The economy is considered to be at full employment when the rate of cyclical unemployment is zero.

Your answer:
True False

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Paul, an out-of-work coal miner in the Appalachian Mountains, has recently quit looking for work after having tried for two years. Since he was already included as an unemployed worker, Bureau of Labor Statistics (BLS) unemployment statistics will be unaffected by his decision.

Your answer:
True False

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The occurrence of inflation in a nation’s economy hurts every citizen and, thus, creates a clear public desire to halt it from continuing.

Your answer:
True False

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Unions understand that they can end up being big winners from inflation if they sign multiyear fixed-wage contracts.

Your answer:
True False

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John Maynard Keynes’s contribution to our understanding of the economy was to show that an economy can be in equilibrium with high levels of unemployment.

Your answer:
True False

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Categories of unemployment include frictional unemployment, structural unemployment, cyclical unemployment, discouraged workers, and the underemployed.

Your answer:
True False

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Closing an inflationary gap involves the creation of a surplus budget where tax revenues exceed government spending.

Your answer:
True False

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To John Maynard Keynes, investment demand depends less upon the availability of saving than upon the profit expectations of producers.

Your answer:
True False

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The Bureau of Labor Statistics (BLS) calculates the unemployment rate by dividing the number of unemployed workers by the total number of workers.

Your answer:
True False

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The Bureau of Labor Statistics (BLS) includes discouraged workers in its measure of the labor force.

Your answer:
True False

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The economy achieves full employment when the actual rate of unemployment equals the natural rate of unemployment.

Your answer:
True False

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When aggregate expenditure exceeds the level needed to generate a full-employment, noninflationary equilibrium, then a recessionary gap exists.

Your answer:
True False

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Fiscal policy is the use of government spending and taxation to make changes in the level of national income.

Your answer:
True False

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The unemployment rate rises any time there is an increase in the number of unemployed.

Your answer:
True False

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