Question

1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.

a. U.S.GDPwas32timeshigherin2014thanitwasin1960.

b. When the unemployment rate is high, the participation rate is also likely to be high.

c. The rate of unemployment tends to fall during expansions and rise during recessions.

d. IftheJapaneseCPIiscurrentlyat108andtheU.S.CPIisat 104, then the Japanese rate of inflation is higher than the U.S. rate of inflation.

e. The rate of inflation computed using the CPI is a better index of inflation than the rate of inflation computed using the GDP deflator.

f. Okun’s law shows that when output growth is lower than normal, the unemployment rate tends to rise.

g. Periods of negative GDP growth are called recessions.

h. Whentheeconomyisfunctioningnormally,theunemploy- ment rate is zero.

i. The Phillips curve is a relation between the level of prices and the level of unemployment.

Answer 1