1. Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run.
A) True
B) False
2. Discouraged workers cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness.
A) True
B) False
3 .If a firm is employing the profit maximizing number of workers, and then output price rises, the firm will respond by laying off workers.
A) True
B) False
4. In a consumption function with income (Y) on the horizontal axis and consumption (C) on the vertical axis, a rise in stock market wealth, all else constant, will result in a movement along the consumption function.
A) True
B) False
5. Suppose the value of the US dollar changes from $1 = 1.2 euros to $1 = 1.30 euros. This being the case, imports from the US to Europe, have become less expensive to European citizens, all else constant.
A) True
B) False
6. The FOMC meets 8 times per year unless conditions warrant more frequent meetings.
A) True
B) False
7. Milton Friedman felt that high inflation was always caused by excessive money growth. In fact, he has been quoted as saying "Inflation is always and everywhere a monetary phenomenon."
A) True
B) False
8. A supply side economist would most likely support raising the corporate income tax.
A) True
B) False
9. Friedman and Phelps agreed that there is a trade-off between unemployment and inflation, but only in the long run.
A) True
B) False
10. In a closed economy, savings = investment is the same as the closed economy goods market equilibrium condition we know as Y = C + I + G.
A) True
B) False