Innovations such as the microchip and the Internet lead to business cycle variations because:
answer
significant innovations occur irregularly and unexpectedly.
question
According to the Bureau of Labor Statistics, to be officially unemployed a person must:
answer
be in the labor force.
question
If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is:
answer
$320 billion.
question
Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percent of potential GDP is:
answer
8 percent.
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Real income is found by:
answer
dividing nominal income by the price index (in hundredths)
question
Which of the following formulas is correct? Percentage change in:
answer
real income approximates percentage change in nominal income minus percentage change in price level.
question
Who is least likely to be hurt by unanticipated inflation?
answer
an owner of a small business
question
Inflation affects:
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both the level and the distribution of income.
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The feudal practice of clipping coins illustrates the idea of:
answer
taxation through inflation.
question
Declines in stock prices measured by the Dow Jones average:
answer
sometimes precede recessions; sometimes do not.
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