Unit 3 Week 4 Quiz

Unexpected increases in inventories usually precede

• increases in inflation

• increases in imports

• stagflation

• decreases in production

• decreases in unemployment

When inventories rise, as compared to last year, what is technically happening?

• GDP is shrinking

• Investment is increasing

• Savings are increasing

An inflationary gap can be eliminated by all of the following EXCEPT

• an increase in personal income taxes

• an increase in the money supply

• an increase in interest rates

• a decrease in government spending

• a decrease in net exports

The value of the spending multiplier decreases when

• tax rates are reduced

• exports decline

• imports decline

• government spending increases

• the marginal propensity to save increases

Stocks sold, for the purpose of raising funds to grow a company, during an IPO for a company are considered part of the GDP? True or False

• True

• False

The official unemployment rate is not an accurate indicator of actual unemployment in the economy because

• structural unemployment is greater than cyclical unemployment at the going wage rate

• full employment is greater than natural unemployment

• the unemployment rate is less than natural unemployment

• the official rate does not include persons who have given up looking for work

• the official rate does not reflect the number of people receiving unemployment compensation