Question 1

Economic growth is defined as:

Accepted Answer

A) an increase in either real GDP or real GDP per capita. 
B) an increase in the nominal GDP. 
C) an increase in the overall general price level. 
D) an increase in the level of consumption. 
A) an increase in either real GDP or real GDP per capita. 
B) an increase in the nominal GDP. 
C) an increase in the overall general price level. 
D) an increase in the level of consumption.

Question 2

A well-functioning financial system helps to promote economic growth and stability.

Accepted Answer

A) True 
 B)False

Question 3

Before the start of the Industrial Revolution in the late 1700s, living standards around the world were quite different.

Accepted Answer

A) True 
 B)False

Question 4

Economic growth is best defined as the:

Accepted Answer

A) increase in consumption level as a percentage of GDP over time. 
B) percentage increase in real GDP over time. 
C) percentage increase in nominal GDP over time. 
D) percentage decrease in the overall price levels over time. 
A) increase in consumption level as a percentage of GDP over time. 
B) percentage increase in real GDP over time. 
C) percentage increase in nominal GDP over time. 
D) percentage decrease in the overall price levels over time.

Question 5

In response to some unexpected changes in demand:

Accepted Answer

A) the economy could always adjust its production level if the prices are inflexible. 
B) the economy would always produce less than what was expected if the prices of goods and services are inflexible. 
C) the economy could always produce at its optimal capacity if the prices of goods and services are inflexible. 
D) the economy could always produce at its optimal capacity if the prices of goods and services are fully flexible. 
A) the economy could always adjust its production level if the prices are inflexible. 
B) the economy would always produce less than what was expected if the prices of goods and services are inflexible. 
C) the economy could always produce at its optimal capacity if the prices of goods and services are inflexible. 
D) the economy could always produce at its optimal capacity if the prices of goods and services are fully flexible.

Question 6

When we say "Prices of many goods and services are inflexible in the short-run" it means:

Accepted Answer

A) prices change too quickly in the short-run. 
B) prices do not change in the long-run. 
C) prices change too slowly in the short- run. 
D) prices are not sticky in the short-run. 
A) prices change too quickly in the short-run. 
B) prices do not change in the long-run. 
C) prices change too slowly in the short- run. 
D) prices are not sticky in the short-run.

Question 7

Several factors contribute to short-run price stickiness.These include:

Accepted Answer

A) consumer preference for lower prices and the quality of the product. 
B) durability and the quality of the product. 
C) frequent sales and, inventory pile ups. 
D) consumer preference for predictable prices and, the fear of price war. 
A) consumer preference for lower prices and the quality of the product. 
B) durability and the quality of the product. 
C) frequent sales and, inventory pile ups. 
D) consumer preference for predictable prices and, the fear of price war.

Question 8

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

Accepted Answer

A) more rapid economic growth compared to choosing point N. 
B) a slower rate of economic growth compared to choosing point N. 
C) the same rate of growth as would occur if point N were chosen. 
D) it is unachievable because it exceeds the productive capacity of the economy. 
A) more rapid economic growth compared to choosing point N. 
B) a slower rate of economic growth compared to choosing point N. 
C) the same rate of growth as would occur if point N were chosen. 
D) it is unachievable because it exceeds the productive capacity of the economy.

Question 9

To understand how the economy works, economists could look at various data including:

Accepted Answer

A) the number of new residential building permits. 
B) the amount of new orders for capital goods. 
C) the number of manufacturers' new orders for consumer goods. 
D) all of the above. 
A) the number of new residential building permits. 
B) the amount of new orders for capital goods. 
C) the number of manufacturers' new orders for consumer goods. 
D) all of the above.

Question 10

Which of the following industries is likely to have the most frequent price change?

Accepted Answer

A) Electricity 
B) Magazines 
C) Beer 
D) Milk 
A) Electricity 
B) Magazines 
C) Beer 
D) Milk

Question 11

Refer to the diagram given below.The diagram has two panels: (a) and (b).   Panel (a) represents the demand for and the supply of a brand of automobile (Turbo car) for Fancy Auto, a car manufacturing company.Assume that DL represents the demand for Turbo cars when demand is low, DM represents the demand for Turbo cars when demand is medium, and DH represents the demand for Turbo cars when demand is high.If Fancy Auto's optimal output level is 900 cars per week and the price of Turbo cars is flexible, Fancy Auto:

Accepted Answer

A) can continue to sell its optimal output regardless of the demand level. 
B) can produce at its optimal output level only if the level of demand is DL. 
C) can produce at its optimal output level only if the level of demand is at DM. 
D) can sell more than its optimal output when the level of demand is DH. 
A) can continue to sell its optimal output regardless of the demand level. 
B) can produce at its optimal output level only if the level of demand is DL. 
C) can produce at its optimal output level only if the level of demand is at DM. 
D) can sell more than its optimal output when the level of demand is DH.

Question 12

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

Accepted Answer

A) small differences in per capita GDP levels around the world. 
B) rich countries experiencing modern economic growth while poor countries do not. 
C) small differences in nominal GDP levels around the world. 
D) large differences in population levels around the world. 
A) small differences in per capita GDP levels around the world. 
B) rich countries experiencing modern economic growth while poor countries do not. 
C) small differences in nominal GDP levels around the world. 
D) large differences in population levels around the world.

Question 13

One major difference between the short-run and long-run macroeconomic analysis is that:

Accepted Answer

A) in the short-run prices are fully flexible while in long-run they are not. 
B) in the short-run prices are sticky while in long-run they are fully flexible. 
C) in the short-run stickiness of prices would guarantee the long-run price inflexibility. 
D) the price stickiness in the long-run guarantees the flexibility of prices in the short-run. 
A) in the short-run prices are fully flexible while in long-run they are not. 
B) in the short-run prices are sticky while in long-run they are fully flexible. 
C) in the short-run stickiness of prices would guarantee the long-run price inflexibility. 
D) the price stickiness in the long-run guarantees the flexibility of prices in the short-run.

Question 14

If current prices are used to calculate the value of total output produced by a country during a specific period of time, the result is called:

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) full employment GDP. 
D) constant dollar GDP. 
A) real GDP. 
B) nominal GDP. 
C) full employment GDP. 
D) constant dollar GDP.

Question 15

In the short run, the prices of goods and services are:

Accepted Answer

A) sticky. 
B) flexible. 
C) higher than those in the long run. 
D) lower than those in the long run. 
A) sticky. 
B) flexible. 
C) higher than those in the long run. 
D) lower than those in the long run.

Question 16

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Accepted Answer

A) interest rate and, stock market prices. 
B) stock market prices only. 
C) inflation, expected rate of returns on investments. 
D) real and nominal GDP, unemployment and inflation rates. 
A) interest rate and, stock market prices. 
B) stock market prices only. 
C) inflation, expected rate of returns on investments. 
D) real and nominal GDP, unemployment and inflation rates.

Question 17

Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

Accepted Answer

A) will never have to adjust the optimal output and employment levels accordingly. 
B) has to adjust the employment level but not the optimal output. 
C) has to adjust the optimal output level but not the employment. 
D) has to adjust both optimal output level and employment accordingly. 
A) will never have to adjust the optimal output and employment levels accordingly. 
B) has to adjust the employment level but not the optimal output. 
C) has to adjust the optimal output level but not the employment. 
D) has to adjust both optimal output level and employment accordingly.

Question 18

In 2008-2009, the Canadian economy experienced:

Accepted Answer

A) a depression. 
B) the Great Recession. 
C) a decrease in the unemployment rate compared to 2007. 
D) an increase in jobs. 
A) a depression. 
B) the Great Recession. 
C) a decrease in the unemployment rate compared to 2007. 
D) an increase in jobs.

Question 19

When consumption is less than output what is this called?

Accepted Answer

A) Savings 
B) Deficit 
C) Shortage 
D) Waste 
A) Savings 
B) Deficit 
C) Shortage 
D) Waste

Question 20

The Flamingo Corporation issued $30 million in new common stock in 2008.It used $22 million of the proceeds to replace obsolete equipment in its factory and $8 million to repay bank loans.As a result, investment:

Accepted Answer

A) of $8 million has occurred. 
B) of $22 million has occurred. 
C) of $30 million has occurred. 
D) has not occurred. 
A) of $8 million has occurred. 
B) of $22 million has occurred. 
C) of $30 million has occurred. 
D) has not occurred.

Exam 6: Part B: An Introduction to Macroeconomics

Economic growth is defined as:

A well-functioning financial system helps to promote economic growth and stability.

Before the start of the Industrial Revolution in the late 1700s, living standards around the world were quite different.

Economic growth is best defined as the:

In response to some unexpected changes in demand:

When we say "Prices of many goods and services are inflexible in the short-run" it means:

Several factors contribute to short-run price stickiness.These include:

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

To understand how the economy works, economists could look at various data including:

Which of the following industries is likely to have the most frequent price change?

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

One major difference between the short-run and long-run macroeconomic analysis is that:

If current prices are used to calculate the value of total output produced by a country during a specific period of time, the result is called:

In the short run, the prices of goods and services are:

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

In 2008-2009, the Canadian economy experienced:

When consumption is less than output what is this called?

The Flamingo Corporation issued $30 million in new common stock in 2008.It used $22 million of the proceeds to replace obsolete equipment in its factory and $8 million to repay bank loans.As a result, investment:

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters