Question 1

The laissez-faire approach popular before the Great Depression influenced the U.S.government to see business downturns as:

Accepted Answer

A) natural phases in an otherwise healthy system and to therefore take short-term deficit spending measures to help recovery. 
B) natural phases in an otherwise healthy system and to therefore wait for recovery to occur naturally. 
C) serious maladies in an otherwise healthy system and to therefore work to redesign the system to avoid such failure in the future. 
D) failures of the type of system Adam Smith envisaged and to therefore work to move toward an open economy with free trade. 
E) failures of the system to achieve the form that Adam Smith envisaged and to therefore work to decrease government interference at the micro level. 
A) natural phases in an otherwise healthy system and to therefore take short-term deficit spending measures to help recovery. 
B) natural phases in an otherwise healthy system and to therefore wait for recovery to occur naturally. 
C) serious maladies in an otherwise healthy system and to therefore work to redesign the system to avoid such failure in the future. 
D) failures of the type of system Adam Smith envisaged and to therefore work to move toward an open economy with free trade. 
E) failures of the system to achieve the form that Adam Smith envisaged and to therefore work to decrease government interference at the micro level. B

Question 2

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that the price level changes from _____ when the aggregate supply curve shifts from AS' to AS''.

Accepted Answer

A) 4 to 2 
B) 2 to 3 
C) 2 to 2 
D) 3 to 1 
E) 2 to 4 
A) 4 to 2 
B) 2 to 3 
C) 2 to 2 
D) 3 to 1 
E) 2 to 4 E

Question 3

According to John Maynard Keynes' General Theory of Employment,Interest and Money,the government should _____ in order to get an economy out of a depression.

Accepted Answer

A) increase spending 
B) decrease spending 
C) reduce subsidies 
D) increase taxes 
E) allow the economy to correct itself 
A) increase spending 
B) decrease spending 
C) reduce subsidies 
D) increase taxes 
E) allow the economy to correct itself A

Question 4

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that from the beginning of period 1 to the end of period 2:

Accepted Answer

A) real GDP decreased and then increased. 
B) real GDP increased and then decreased. 
C) real GDP fell from $10,000 to $6,000. 
D) real GDP rose from $6,000 to $10,000. 
E) the inflation rate fell from 4 percent to 1 percent. 
A) real GDP decreased and then increased. 
B) real GDP increased and then decreased. 
C) real GDP fell from $10,000 to $6,000. 
D) real GDP rose from $6,000 to $10,000. 
E) the inflation rate fell from 4 percent to 1 percent.

Question 5

An example of a stock variable in economic theory will be:

Accepted Answer

A) the amount of money saved by an individual each week. 
B) the amount of money spent on buying gasoline each month. 
C) the weekly grocery bill of an average household. 
D) the total value of the government bond held by an individual. 
E) the total fiscal spending during a particular quarter. 
A) the amount of money saved by an individual each week. 
B) the amount of money spent on buying gasoline each month. 
C) the weekly grocery bill of an average household. 
D) the total value of the government bond held by an individual. 
E) the total fiscal spending during a particular quarter.

Question 6

Economists use the price index to eliminate year-to-year changes in GDP due solely to changes in:

Accepted Answer

A) the exchange rate. 
B) the unemployment rate. 
C) fiscal spending. 
D) consumer demand. 
E) the price level. 
A) the exchange rate. 
B) the unemployment rate. 
C) fiscal spending. 
D) consumer demand. 
E) the price level.

Question 7

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,as the aggregate demand curve shifts from AD to AD',the equilibrium price level in period 1:

Accepted Answer

A) increases from 3 to 4. 
B) decreases from 4 to 3. 
C) decreases from 4 to 1. 
D) increases from 1 to 4. 
E) decreases from 4 to 2. 
A) increases from 3 to 4. 
B) decreases from 4 to 3. 
C) decreases from 4 to 1. 
D) increases from 1 to 4. 
E) decreases from 4 to 2.

Question 8

An increase in wage rate,other things constant,shifts the aggregate supply curve downward.

Accepted Answer

A) True 
 B)False

Question 9

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

Accepted Answer

A) An increase in the quantity of real GDP supplied 
B) A decrease in the quantity of real GDP supplied 
C) A leftward shift of the aggregate supply curve 
D) A rightward shift of the aggregate supply curve 
E) An increase in the slope of the aggregate supply curve 
A) An increase in the quantity of real GDP supplied 
B) A decrease in the quantity of real GDP supplied 
C) A leftward shift of the aggregate supply curve 
D) A rightward shift of the aggregate supply curve 
E) An increase in the slope of the aggregate supply curve

Question 10

Which of these economic changes was observed during the Great Depression?

Accepted Answer

A) A fall in the domestic price level leading to an increase in import demand 
B) A fall in resource prices leading to an increase in aggregate supply 
C) An increase in unemployment leading to a decrease in the aggregate demand 
D) An increase in the domestic price level leading to an increase in export demand 
E) An increase in real GDP leading to an increase in the real interest rate 
A) A fall in the domestic price level leading to an increase in import demand 
B) A fall in resource prices leading to an increase in aggregate supply 
C) An increase in unemployment leading to a decrease in the aggregate demand 
D) An increase in the domestic price level leading to an increase in export demand 
E) An increase in real GDP leading to an increase in the real interest rate

Question 11

The concept of "invisible hand" introduced by Adam Smith explains:

Accepted Answer

A) why people act in their own best interests. 
B) why the government intervenes to overcome failures in private markets. 
C) how people,acting out of self-interest,unintentionally promote the general good. 
D) how comparative advantage and specialization promote international trade. 
E) how the creation of goods and services generates its own demand by creating employment and income. 
A) why people act in their own best interests. 
B) why the government intervenes to overcome failures in private markets. 
C) how people,acting out of self-interest,unintentionally promote the general good. 
D) how comparative advantage and specialization promote international trade. 
E) how the creation of goods and services generates its own demand by creating employment and income.

Question 12

A period of sustained decline in output in an economy is known as a(n)_____.

Accepted Answer

A) expansion 
B) stagnation 
C) peak 
D) trough 
E) contraction 
A) expansion 
B) stagnation 
C) peak 
D) trough 
E) contraction

Question 13

In combating stagflation,a government-induced:

Accepted Answer

A) increase in aggregate demand would help reduce inflation but aggravate unemployment. 
B) decrease in aggregate demand would help reduce unemployment but aggravate inflation. 
C) increase in aggregate demand would help reduce unemployment but aggravate inflation. 
D) decrease in aggregate demand would help reduce both unemployment and inflation. 
E) increase in aggregate demand would help reduce both unemployment and inflation. 
A) increase in aggregate demand would help reduce inflation but aggravate unemployment. 
B) decrease in aggregate demand would help reduce unemployment but aggravate inflation. 
C) increase in aggregate demand would help reduce unemployment but aggravate inflation. 
D) decrease in aggregate demand would help reduce both unemployment and inflation. 
E) increase in aggregate demand would help reduce both unemployment and inflation.

Question 14

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

Accepted Answer

A) increases in consumer spending. 
B) high levels of federal debt. 
C) supply-side shocks from the oil-exporting countries. 
D) runaway inflation in the U.S. 
E) retaliations from other countries. 
A) increases in consumer spending. 
B) high levels of federal debt. 
C) supply-side shocks from the oil-exporting countries. 
D) runaway inflation in the U.S. 
E) retaliations from other countries.

Question 15

Which of the following economic measures is most useful in comparing different economies across the world?

Accepted Answer

A) Aggregate supply 
B) Total unemployment 
C) Gross domestic product 
D) Net national product 
E) Aggregate expenditure 
A) Aggregate supply 
B) Total unemployment 
C) Gross domestic product 
D) Net national product 
E) Aggregate expenditure

Question 16

The term "fine-tuning the economy" implies:

Accepted Answer

A) making government economic policy more "people oriented". 
B) using government policies to adjust the economy and promote economic stability. 
C) solving microeconomic problems such as externalities and losing sight of the big picture. 
D) placing fewer regulations on the private sector,thereby eliminating the need for government intervention. 
E) designing policies based exclusively on leading economic indicators. 
A) making government economic policy more "people oriented". 
B) using government policies to adjust the economy and promote economic stability. 
C) solving microeconomic problems such as externalities and losing sight of the big picture. 
D) placing fewer regulations on the private sector,thereby eliminating the need for government intervention. 
E) designing policies based exclusively on leading economic indicators.

Question 17

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act,the Federal budget deficit _____.

Accepted Answer

A) doubled 
B) tripled 
C) stayed the same 
D) decreased significantly 
E) quadrupled 
A) doubled 
B) tripled 
C) stayed the same 
D) decreased significantly 
E) quadrupled

Question 18

Which of the following best describes a flow rather than a stock?

Accepted Answer

A) You own $5,000 worth of government bonds. 
B) You own a $100,000 house. 
C) You own a coin collection valued at $10,000. 
D) You earn $500 per week. 
E) You own a $45,000 automobile. 
A) You own $5,000 worth of government bonds. 
B) You own a $100,000 house. 
C) You own a coin collection valued at $10,000. 
D) You earn $500 per week. 
E) You own a $45,000 automobile.

Question 19

Which of the following would indicate the beginning of an expansionary phase in an economy?

Accepted Answer

A) A minor increase in the number of new firms 
B) A decline in stock market prices 
C) An improvement in consumer confidence 
D) A slowdown in housing construction 
E) A decrease in the number of orders for new equipment 
A) A minor increase in the number of new firms 
B) A decline in stock market prices 
C) An improvement in consumer confidence 
D) A slowdown in housing construction 
E) A decrease in the number of orders for new equipment

Question 20

One explanation for the slope of the aggregate demand curve is that:

Accepted Answer

A) nominal income falls and so does the demand for goods and services as prices rise. 
B) falling prices make people feel poorer and reduce spending. 
C) the government spends less to drive the price level back to normal as prices rise. 
D) businesses increase spending when inflation is high and rising. 
E) domestic goods become more expensive relative to foreign goods when prices rise,reducing exports. 
A) nominal income falls and so does the demand for goods and services as prices rise. 
B) falling prices make people feel poorer and reduce spending. 
C) the government spends less to drive the price level back to normal as prices rise. 
D) businesses increase spending when inflation is high and rising. 
E) domestic goods become more expensive relative to foreign goods when prices rise,reducing exports.

The laissez-faire approach popular before the Great Depression influenced the U.S.government to see business downturns as:

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that the price level changes from _____ when the aggregate supply curve shifts from AS' to AS''.

According to John Maynard Keynes' General Theory of Employment,Interest and Money,the government should _____ in order to get an economy out of a depression.

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that from the beginning of period 1 to the end of period 2:

An example of a stock variable in economic theory will be:

Economists use the price index to eliminate year-to-year changes in GDP due solely to changes in:

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,as the aggregate demand curve shifts from AD to AD',the equilibrium price level in period 1:

An increase in wage rate,other things constant,shifts the aggregate supply curve downward.

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

Which of these economic changes was observed during the Great Depression?

The concept of "invisible hand" introduced by Adam Smith explains:

A period of sustained decline in output in an economy is known as a(n)_____.

In combating stagflation,a government-induced:

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

Which of the following economic measures is most useful in comparing different economies across the world?

The term "fine-tuning the economy" implies:

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act,the Federal budget deficit _____.

Which of the following best describes a flow rather than a stock?

Which of the following would indicate the beginning of an expansionary phase in an economy?

One explanation for the slope of the aggregate demand curve is that:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 5: Introduction to Macroeconomics

The laissez-faire approach popular before the Great Depression influenced the U.S.government to see business downturns as:

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that the price level changes from _____ when the aggregate supply curve shifts from AS' to AS''.

According to John Maynard Keynes' General Theory of Employment,Interest and Money,the government should _____ in order to get an economy out of a depression.

The figure below shows the aggregate demand and supply curves for the U.S.The figure given below shows that from the beginning of period 1 to the end of period 2:

An example of a stock variable in economic theory will be:

Economists use the price index to eliminate year-to-year changes in GDP due solely to changes in:

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,as the aggregate demand curve shifts from AD to AD',the equilibrium price level in period 1:

An increase in wage rate,other things constant,shifts the aggregate supply curve downward.

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

Which of these economic changes was observed during the Great Depression?

The concept of "invisible hand" introduced by Adam Smith explains:

A period of sustained decline in output in an economy is known as a(n)_____.

In combating stagflation,a government-induced:

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

Which of the following economic measures is most useful in comparing different economies across the world?

The term "fine-tuning the economy" implies:

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act,the Federal budget deficit _____.

Which of the following best describes a flow rather than a stock?

Which of the following would indicate the beginning of an expansionary phase in an economy?

One explanation for the slope of the aggregate demand curve is that:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters