INFLATION QUIZ:2016

1.  The period of the business cycle in which real GDP is increasing is called the:   

       a.  expansion    b.  peak    c.  recession     d.  trough     e.  stagflation

2.A type of unemployment in which workers are in-between jobs or are searching for new and better jobs is called _______ unemployment:

       a.  frictional      b.  cyclical       c.  structural      d.  turnover    

3.Which of the following would cause the demand curve for automobiles to shift to the left?

      a.  an increase in the price of the automobiles

      b.  an increase in the interest rate paid to borrow money to pay for the automobile

      c.  an increase in buyers' incomes

      d.  an increase in the cost of production of automobiles

4."At the price of $500, tickets for the Super Bowl are expensive.  Yet, the are long lines of people who wish to buy them.  Many people who desire tickets will not be able to find them."

    From this quote, we know that the price of Super Bowl tickets must be:

    a.  below equilibrium   b. above equilibrium   c. equal to equilibrium

5.Which of the following would cause the aggregate demand curve to shift to the right?

      a.  an increase in purchases by the federal government

      b.  an increase in real interest rates

      c.  an appreciation of the American dollar

      d.  a decrease in the money supply

6.Assume that an economy begins in macroeconomic equilibrium.  Then, taxes are  significantly decreased.  As a result of this change:

       a.  there is expansion and inflation in the US     c.  there is stagflation in the US

       b.  there is recession and deflation in the US     d.  there is expansion and deflation in the US

7.A large increase in oil prices, such as the ones occurring in 1973 and 1979, will cause

      a.  inflation and expansion               c.  inflation and recession

      b.  recession and disinflation           d.  expansion and deflation

8.    Assume that the United States and Great Britain are both on the Gold Standard.  There is

inflation in the United States but not in Great Britain.  As a result of the inflation in the United States,

a.       Gold would leave the United States and go to Great Britain

b.      Gold would leave Great Britain and go to the United States

c.       The American dollar would depreciate

d.      The American money supply would increase

9.Assume that the market for computers begins in equilibrium.  Then, there is a decrease in a price of Pentium processors used in the production of computers.  When the new equilibrium is reached,

    a.  the price and quantity of computers will both have risen

    b.  the price and quantity of computers will both have fallen

    c.  the price of computers will have risen and the quantity will have fallen

    d.  the price of computers will have fallen and the quantity will have risen

 KEY:

1.a

2.a

3.b

4.a

5.a

6.a

7.c

8.a

9.d