Question

Transfer payments are

a. payments for goods or services that individuals provide

b. used to pay state employees

c. examples of government investment

d. included in the government purchases category of GDP

e. funds given to people or organizations when no good or service is received in exchange

The events of September 11, 2001 had a major direct impact on the economy's GDP.

a. False

b. True

What is creeping inflation?

a. Price levels that suddenly rise without warning.

b. Inflation that suddenly appears without warning.

c. Price levels that continue to rise but slowly.

d. Inflation that continues to rise but slowly.

e. Inflation that suddenly appears and creates panic.

What is true of both expansions and recessions?

a. There is a poorer than normal match between workers and their jobs.

b. The labor market clears.

c. The economy operates at its potential output.

d. Cyclical unemployment is zero.

e. None of the above.

During a recession, a rising unemployment rate is

a. rare

b. almost inevitable

c. stimulating higher levels of inflation

d. the basis for a new economics expansion

e. predicted by the classical model