A) affects growth by keeping interest rates high. B) affects growth by keeping interest rates low. C) affects growth by keeping inflation low and stable. D) has no effect on economic growth. E) affects growth by printing money. A) affects growth by keeping interest rates high. B) affects growth by keeping interest rates low. C) affects growth by keeping inflation low and stable. D) has no effect on economic growth. E) affects growth by printing money.

Exam 17: Macroeconomics: the Big Picture

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Exhibit 17-5 -Exhibit 17-5 shows real GDP from March 2010 through September 2012 for a certain country. Of points A, B, and C, indicate where the rate of inflation is rising, staying constant, and declining.

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Question 1

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At point A, we would expect the rate of inflation to be increasing; at point B, we would expect the rate of inflation to be declining; and at point C we would expect the rate of inflation to stay constant.

The unemployment rate is defined as

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Question 2

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What is the difference between the nominal and the real interest rate? If you go into the bank to borrow money, which rate would the bank quote you?

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Question 3

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The real interest rate is the nominal or stated interest rate minus the expected inflation rate. The nominal interest rate is the stated interest rate, uncorrected for inflation. The bank will quote you the nominal interest rate. The real interest rate is a measure of the interest you would actually pay after adjusting for changes in inflation.

Answer the questions below:

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Question 4

Which of the following statements about the recessions that have occurred over the past 50 years is true?

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Question 5

Throughout the 1980s and 1990s there was an upward trend in the interest rate.

(True/False)

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Question 6

Recessions in the United States have become less severe between 1980 and 2006.

(True/False)

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Question 7

A recession that is very severe is called a

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Question 8

GDP is the total value of all goods and services newly produced in the economy during a specified period of time, adjusted for inflation.

(True/False)

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Question 9

According to the theory of economic fluctuations, which of the following explains the relationship between aggregate demand and employment during an economic expansion?

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Question 10

If real GDP is growing at a slower rate than the growth rate of population,

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Question 11

To keep the real interest rate from changing by a large amount as inflation rises, the nominal interest rate has to increase with inflation.

(True/False)

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Question 12

The period referred to in the text as the Great Inflation occurred

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Question 13

The most recent recession officially started in

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Question 14

If aggregated demand is growing faster than potential output, then the Federal Reserve is likely to

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Question 15

The primary tools that the Federal Reserve uses to influence private spending are

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Question 16

Potential real GDP is the GDP that economists would expect to observe when the unemployment rate is zero.

(True/False)

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Question 17

A decline in real GDP that lasts for at least a year is known as a recession.

(True/False)

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Question 18

Monetary policy

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Question 19

Over the last 50 years, interest rates have risen before each recession and have fallen during and after each recession.

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Question 20

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Exam 17: Macroeconomics: the Big Picture

Exhibit 17-5 -Exhibit 17-5 shows real GDP from March 2010 through September 2012 for a certain country. Of points A, B, and C, indicate where the rate of inflation is rising, staying constant, and declining.

The unemployment rate is defined as

What is the difference between the nominal and the real interest rate? If you go into the bank to borrow money, which rate would the bank quote you?

Answer the questions below:

Which of the following statements about the recessions that have occurred over the past 50 years is true?

Throughout the 1980s and 1990s there was an upward trend in the interest rate.

Recessions in the United States have become less severe between 1980 and 2006.

A recession that is very severe is called a

GDP is the total value of all goods and services newly produced in the economy during a specified period of time, adjusted for inflation.

According to the theory of economic fluctuations, which of the following explains the relationship between aggregate demand and employment during an economic expansion?

If real GDP is growing at a slower rate than the growth rate of population,

To keep the real interest rate from changing by a large amount as inflation rises, the nominal interest rate has to increase with inflation.

The period referred to in the text as the Great Inflation occurred

The most recent recession officially started in

If aggregated demand is growing faster than potential output, then the Federal Reserve is likely to

The primary tools that the Federal Reserve uses to influence private spending are

Potential real GDP is the GDP that economists would expect to observe when the unemployment rate is zero.

A decline in real GDP that lasts for at least a year is known as a recession.

Monetary policy

Over the last 50 years, interest rates have risen before each recession and have fallen during and after each recession.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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