Question 1

Macroeconomic equilibrium is best described as a situation in which:

Accepted Answer

A) the slope of the aggregate demand curve equals the slope of the aggregate supply curve. 
B) quantity demanded exceeds quantity supplied. 
C) quantity demanded equals quantity supplied at a unique price level. 
D) quantity supplied exceeds quantity demanded at a unique price level. 
E) quantity supplied equals quantity demanded at a unique price level. 
A) the slope of the aggregate demand curve equals the slope of the aggregate supply curve. 
B) quantity demanded exceeds quantity supplied. 
C) quantity demanded equals quantity supplied at a unique price level. 
D) quantity supplied exceeds quantity demanded at a unique price level. 
E) quantity supplied equals quantity demanded at a unique price level.

Question 2

If all firms expect greater demand for their products or services,they will hire _____ resources like labor and capital and the economy will experience _____.

Accepted Answer

A) fewer;recession 
B) fewer;growth 
C) more;deflation 
D) more;recession 
E) more;growth 
A) fewer;recession 
B) fewer;growth 
C) more;deflation 
D) more;recession 
E) more;growth

Question 3

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes,thereby reducing the federal budget deficit.

Accepted Answer

A) True 
 B)False

Question 4

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

Accepted Answer

A) True 
 B)False

Question 5

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Accepted Answer

A) An increase in household wealth 
B) A fall in domestic interest rates 
C) An increase in government spending 
D) An appreciation of the dollar relative to other currencies 
E) A decrease in the nation's money supply 
A) An increase in household wealth 
B) A fall in domestic interest rates 
C) An increase in government spending 
D) An appreciation of the dollar relative to other currencies 
E) A decrease in the nation's money supply

Question 6

Which of these statements best describes a flow variable?

Accepted Answer

A) An economic variable that measures something at a particular point in time 
B) An economic variable whose value is determined by the market 
C) An economic variable that is measured per unit of time 
D) An economic variable whose value shows no change over time 
E) An economic variable that remains static when other related variables change 
A) An economic variable that measures something at a particular point in time 
B) An economic variable whose value is determined by the market 
C) An economic variable that is measured per unit of time 
D) An economic variable whose value shows no change over time 
E) An economic variable that remains static when other related variables change

Question 7

Which of the following happened during the Great Depression?

Accepted Answer

A) Unemployment and prices increased while output decreased. 
B) Unemployment increased while output and prices decreased. 
C) Unemployment and prices decreased while output increased. 
D) Unemployment and output decreased while prices increased. 
E) Unemployment and output increased while prices decreased. 
A) Unemployment and prices increased while output decreased. 
B) Unemployment increased while output and prices decreased. 
C) Unemployment and prices decreased while output increased. 
D) Unemployment and output decreased while prices increased. 
E) Unemployment and output increased while prices decreased.

Question 8

The aim of supply-side economics is to:

Accepted Answer

A) increase government spending to stimulate aggregate supply. 
B) stimulate exports to increase the balance of payments. 
C) decrease wages to make production cheaper. 
D) lower taxes to increase the supply of resources. 
E) reduce both the inflation and unemployment problems through increases in taxes. 
A) increase government spending to stimulate aggregate supply. 
B) stimulate exports to increase the balance of payments. 
C) decrease wages to make production cheaper. 
D) lower taxes to increase the supply of resources. 
E) reduce both the inflation and unemployment problems through increases in taxes.

Question 9

Macroeconomists test their theories using controlled economy-wide experiments of various kinds.

Accepted Answer

A) True 
 B)False

Question 10

Which of these is a central argument of Keynes's General Theory?

Accepted Answer

A) Competition does not allocate resources efficiently in a modern industrial economy. 
B) Full employment can be maintained even during a major recession if wage rates are lowered far enough. 
C) Modern industrial economies do not tend automatically toward full employment rates of output. 
D) Money does not play an important role in either causing or curing recession. 
E) Government can best stabilize the economy by letting the market system automatically adjust toward full employment. 
A) Competition does not allocate resources efficiently in a modern industrial economy. 
B) Full employment can be maintained even during a major recession if wage rates are lowered far enough. 
C) Modern industrial economies do not tend automatically toward full employment rates of output. 
D) Money does not play an important role in either causing or curing recession. 
E) Government can best stabilize the economy by letting the market system automatically adjust toward full employment.

Question 11

If the price level in the U.S.increases,aggregate output demanded:

Accepted Answer

A) decreases because U.S.products become cheaper relative to foreign products. 
B) decreases because U.S.products become more expensive relative to foreign products. 
C) increases because U.S.products become cheaper relative to foreign products. 
D) increases because U.S.products become more expensive relative to foreign products. 
E) decreases because household wealth and spending increase. 
A) decreases because U.S.products become cheaper relative to foreign products. 
B) decreases because U.S.products become more expensive relative to foreign products. 
C) increases because U.S.products become cheaper relative to foreign products. 
D) increases because U.S.products become more expensive relative to foreign products. 
E) decreases because household wealth and spending increase.

Question 12

The failure of the mercantilism policy and the tax policy during the Great Depression proves that economic policies are meaningless and they do more harm than good.

Accepted Answer

A) True 
 B)False

Question 13

Given an aggregate supply curve,a decrease in aggregate demand will:

Accepted Answer

A) increase the real interest rate. 
B) increase real GDP. 
C) increase the price level. 
D) decrease the real exchange rate. 
E) decrease real GDP. 
A) increase the real interest rate. 
B) increase real GDP. 
C) increase the price level. 
D) decrease the real exchange rate. 
E) decrease real GDP.

Question 14

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Accepted Answer

A) True 
 B)False

Question 15

Keynes believed that the best method for boosting an economy during a recession was to:

Accepted Answer

A) increase money supply so that individuals would have more incentive to spend. 
B) cut government spending and increase taxes to reduce or even eliminate fiscal deficit. 
C) increase government spending and cut taxes so that consumers could spend more. 
D) cut both government spending and taxes to reduce government expenditure in the economy. 
E) increase both government spending and taxes to increase the role of government in the economy. 
A) increase money supply so that individuals would have more incentive to spend. 
B) cut government spending and increase taxes to reduce or even eliminate fiscal deficit. 
C) increase government spending and cut taxes so that consumers could spend more. 
D) cut both government spending and taxes to reduce government expenditure in the economy. 
E) increase both government spending and taxes to increase the role of government in the economy.

Question 16

The market value of all final goods and services produced in a nation during a particular period is called the:

Accepted Answer

A) gross domestic product. 
B) net national product. 
C) national income. 
D) gross national product. 
E) gross world product. 
A) gross domestic product. 
B) net national product. 
C) national income. 
D) gross national product. 
E) gross world product.

Question 17

The Keynesian approach to economic policy is also known as:

Accepted Answer

A) supply-side economics. 
B) Classical economics. 
C) demand-side economics. 
D) mercantilism. 
E) laissez-faire. 
A) supply-side economics. 
B) Classical economics. 
C) demand-side economics. 
D) mercantilism. 
E) laissez-faire.

Question 18

_____ varies along a given aggregate demand curve.

Accepted Answer

A) The nominal interest rate in the domestic country 
B) The exchange rate between the domestic currency and a foreign currency 
C) The aggregate supply in a foreign country 
D) The price level in the domestic country 
E) The prices of resources used in production 
A) The nominal interest rate in the domestic country 
B) The exchange rate between the domestic currency and a foreign currency 
C) The aggregate supply in a foreign country 
D) The price level in the domestic country 
E) The prices of resources used in production

Question 19

A depression can be defined as:

Accepted Answer

A) a mild reduction in total production coupled with a rising unemployment rate that lasts for several years. 
B) a mild decline in total production that lasts less than six months. 
C) a severe fall in stock prices that causes financial panic and lasts for several years. 
D) a severe reduction in total production coupled with high unemployment that lasts for several years. 
E) a decline in government spending and taxes that lasts for several months. 
A) a mild reduction in total production coupled with a rising unemployment rate that lasts for several years. 
B) a mild decline in total production that lasts less than six months. 
C) a severe fall in stock prices that causes financial panic and lasts for several years. 
D) a severe reduction in total production coupled with high unemployment that lasts for several years. 
E) a decline in government spending and taxes that lasts for several months.

Question 20

The term stagflation refers to:

Accepted Answer

A) a simultaneous reduction in output and the price level. 
B) a simultaneous increase in output and the price level. 
C) a decline in the price level accompanied by increases in real output and employment. 
D) an increase in the price level accompanied by decreases in real output and employment. 
E) a simultaneous increase in both the trade deficit and the budget deficit. 
A) a simultaneous reduction in output and the price level. 
B) a simultaneous increase in output and the price level. 
C) a decline in the price level accompanied by increases in real output and employment. 
D) an increase in the price level accompanied by decreases in real output and employment. 
E) a simultaneous increase in both the trade deficit and the budget deficit.

Macroeconomic equilibrium is best described as a situation in which:

If all firms expect greater demand for their products or services,they will hire _ resources like labor and capital and the economy will experience _.

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes,thereby reducing the federal budget deficit.

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Which of these statements best describes a flow variable?

Which of the following happened during the Great Depression?

The aim of supply-side economics is to:

Macroeconomists test their theories using controlled economy-wide experiments of various kinds.

Which of these is a central argument of Keynes's General Theory?

If the price level in the U.S.increases,aggregate output demanded:

The failure of the mercantilism policy and the tax policy during the Great Depression proves that economic policies are meaningless and they do more harm than good.

Given an aggregate supply curve,a decrease in aggregate demand will:

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Keynes believed that the best method for boosting an economy during a recession was to:

The market value of all final goods and services produced in a nation during a particular period is called the:

The Keynesian approach to economic policy is also known as:

_____ varies along a given aggregate demand curve.

A depression can be defined as:

The term stagflation refers to:

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

Macroeconomic equilibrium is best described as a situation in which:

If all firms expect greater demand for their products or services,they will hire _____ resources like labor and capital and the economy will experience _____.

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes,thereby reducing the federal budget deficit.

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

The figure below shows the aggregate demand and supply curves for the U.S.In this figure,which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Which of these statements best describes a flow variable?

Which of the following happened during the Great Depression?

The aim of supply-side economics is to:

Macroeconomists test their theories using controlled economy-wide experiments of various kinds.

Which of these is a central argument of Keynes's General Theory?

If the price level in the U.S.increases,aggregate output demanded:

The failure of the mercantilism policy and the tax policy during the Great Depression proves that economic policies are meaningless and they do more harm than good.

Given an aggregate supply curve,a decrease in aggregate demand will:

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Keynes believed that the best method for boosting an economy during a recession was to:

The market value of all final goods and services produced in a nation during a particular period is called the:

The Keynesian approach to economic policy is also known as:

_____ varies along a given aggregate demand curve.

A depression can be defined as:

The term stagflation refers to:

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

If all firms expect greater demand for their products or services,they will hire _ resources like labor and capital and the economy will experience _.