B. Depreciation and indirect business taxes.

262. The unemployment rate is 10 percent. The rate of job separation is 5 percent. How high does the rate of job finding have to be to keep the unemployment rate constant? B. 45 percent

263. The unemployment resulting from wage rigidity and job rationing is called C. structural unemployment. 264. The unemployment caused by unions and by the threat of unionization is an instance of D. conflict between insiders and outsiders. 265. The unemployment caused by the time that it takes to match workers and jobs is called A. frictional unemployment.

266 The law of one price applied to the international marketplace is called D. purchasing-power parity.

267. The Solow growth model assumes that the production function exhibits B. constant returns to scale. 268. The Golden Rule level of capital accumulation is defined as the level of the capital stock that achieves a steady state with the C. highest level of consumption.

269. The steady state level of income B. the current level of income in the country.

270. The marginal product of capital (MPK) is 1/3; the marginal product of labor (MPL) is 3. Capital is increased by 30; the labor force is increased by 10. How much does output increase? D. 40

271. The change in the capital stock is equal to B. investment - depreciation.

272. The key difference between the IS-LM model and the Mundell-Fleming Model is that the B. Mundell-Fleming model assumes a small open economy.

273. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the IS* curve to D. remain unchanged.

274. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the LM* curve to D. remain unchanged.

275. The consumer price index (CPI)

A. measures the price of a fixed basket of goods and services.

276. Unions may cause unemployment if B. insiders force real wages higher than the market-clearing level.

277. Under a system of floating exchange rates, a monetary contraction by the central bank would cause the exchange rate to A. rise.

278. Under a system of fixed exchange rates, an import restriction on foreign goods would cause net exports and the level of income to A. rise.

279. Under a system of fixed exchange rates B. only fiscal policy can affect income..

280. Under a system of floating exchange rates A. only monetary policy can affect income..

281. Using the framework of the Solow growth model, the U.S. level of capital is presently C. below the Golden Rule level.

282. Unemployment insurance A. frictional unemployment.

283. Which of the following statements describes the difference between nominal and real GDP?

B. Real GDP is measured using constant base-year prices; nominal GDP is measured using current prices.

284. Which of the following is not included in GDP?

C. The value of automobile services enjoyed by car owners

285.Which of the following is a flow variable?

C. Your monthly consumption of hamburgers

286. Which of the following is not a stock variable?

D. Inventory investment

287. Which of the following statements about the CPI and the GDP deflator is true?

C. The weights given to prices are not the same.

288. Which of the following events will cause the unemployment rate to increase?

C. An increase in the labor force with no change in the number of employed workers

289. Which of the following is not a decision made by a competitive firm? C. What price to ask for its product

290. Which of the following is not a characteristic of the Cobb-Douglas production function? A. Capital and labor receive equal fractions of income.

291. Which of the following operations is not considered investment? C. An individual purchases several pieces of antique furniture.

292. Which of the following is not a function of money? A. It is a means of production.

293. Which of the following is a type of open-market operation? C. The Fed sells Treasury bills to the public.

294. Which component of the quantity equation is assumed constant by the quantity theory of money? B. The velocity of money

295. Which of the following statements is false? A. If inflation is higher than the real interest rate, then the nominal interest rate must be negative.

296 Which of the following characterizes the U.S. economy since 2001? A. Government budget deficit and negative net capital outflow

297 Which of the following did not contribute to an increase in government saving in the 1990's? C.   A shrinking trade deficit. 298. When the government raises revenue by printing money, it imposes an "inflation tax" because the A. real value of money holdings falls.

299 Which of the following causes a decrease in the real exchange rate? B. An exogenous decrease in investment

300. Which of the following is not a social cost of inflation? A. The money that people hold loses value due to the inflation tax. 301. Which of the following policies would reduce the amount of frictional unemployment? D. Public retraining programs

302. When the real wage is above the level that equilibrates supply and demand, then the quantity of labor supplied D. is greater than the quantity of labor demanded.

303. Which of the following is not a cause for real wage rigidity? B. Unemployment insurance 304. Which of the following statements about unemployment is true? B. Most unemployment is accounted for by the long-term unemployed.

305. When the nominal wage is stuck, a higher price level will cause the real wage to A. fall.

306. Which of the following is not assumed by the Solow growth model? D. Output is constant

307. Which of the following is NOT exogenous in the IS-LM model? A. The interest rate

308. Which of the following is an example of discretionary policy? D. A capital gains tax cut during a recession 309. Which of the following patterns of economic activity is most likely to occur when there is a political business cycle? D. High output growth before an election

310. Which of the following would have the strongest C. Constitutional amendment dictating a low-inflation policy