Question 1

The Keynesian approach to government economic policy:

Accepted Answer

A) has emphasized the role of individual self-interest as a powerful stabilizing force. 
B) has consistently failed to reduce fluctuations in economic activity. 
C) was ineffective during the 1960s. 
D) highlighted the role of aggregate demand. 
E) was rechristened supply-side economics around 1980. 
A) has emphasized the role of individual self-interest as a powerful stabilizing force. 
B) has consistently failed to reduce fluctuations in economic activity. 
C) was ineffective during the 1960s. 
D) highlighted the role of aggregate demand. 
E) was rechristened supply-side economics around 1980.

Question 2

The following table shows an aggregate demand schedule and an aggregate supply schedule.Which of the following is true?
Table 5.1
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?
$$\begin{array} { | c | c | c | } 
\hline \begin{array} { l } 
\text { Aggregate Demand (quantity } \
\text { demanded in billions of } \
\text { dollars) }
\end{array} & \begin{array} { l } 
\text { Price Level } \
\text { (\$) }
\end{array} & \begin{array} { l } 
\text { Aggregate Supply (quantity supplied in } \
\text { billions of doll ars) }
\end{array} \
\hline 100 & 150 & 1,200 \
\hline 200 & 125 & 1,000 \
\hline 400 & 100 & 800 \
\hline 600 & 75 & 600 \
\hline 800 & 50 & 400 \
\hline 1,000 & 25 & 200 \
\hline
\end{array}$$

Accepted Answer

A) Equilibrium output is $1,000,and equilibrium price level is 25. 
B) Equilibrium output is $800,and equilibrium price level is 50. 
C) Equilibrium output is $200,and equilibrium price level is 125. 
D) Equilibrium output is $400,and equilibrium price level is 25. 
E) Equilibrium output is $600,and equilibrium price level is 75. 
A) Equilibrium output is $1,000,and equilibrium price level is 25. 
B) Equilibrium output is $800,and equilibrium price level is 50. 
C) Equilibrium output is $200,and equilibrium price level is 125. 
D) Equilibrium output is $400,and equilibrium price level is 25. 
E) Equilibrium output is $600,and equilibrium price level is 75.

Question 3

Identify the correct statement.

Accepted Answer

A) If the price level increases,we feel poorer and buy less. 
B) If the price level increases,we feel richer and buy more. 
C) If domestic prices increase,we substitute domestic goods for imported ones. 
D) An increase in the price of a particular good leads to a substitution. 
E) A decrease in the price of a particular good is like an increase in income and therefore we buy more. 
A) If the price level increases,we feel poorer and buy less. 
B) If the price level increases,we feel richer and buy more. 
C) If domestic prices increase,we substitute domestic goods for imported ones. 
D) An increase in the price of a particular good leads to a substitution. 
E) A decrease in the price of a particular good is like an increase in income and therefore we buy more.

Question 4

For a given aggregate supply curve,price level and output will both increase when aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 5

Economic activities that signal forthcoming changes in the economy are referred to as:

Accepted Answer

A) coincidental economic indicators. 
B) GDP implicit price deflators. 
C) lagging economic indicators. 
D) perfect economic indicators. 
E) leading economic indicators. 
A) coincidental economic indicators. 
B) GDP implicit price deflators. 
C) lagging economic indicators. 
D) perfect economic indicators. 
E) leading economic indicators.

Question 6

Which of the following factors can partly explain the long-term growth in production in the U.S.economy?

Accepted Answer

A) Trade surpluses and accumulation of precious metals 
B) A gradual but consistent increase in the price level 
C) Growth in population 
D) Improvements in technology 
E) Federal government budget deficits 
A) Trade surpluses and accumulation of precious metals 
B) A gradual but consistent increase in the price level 
C) Growth in population 
D) Improvements in technology 
E) Federal government budget deficits

Question 7

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

Accepted Answer

A) budget surpluses. 
B) decreases in aggregate supply. 
C) trade deficits. 
D) decreases in aggregate demand. 
E) budget deficits. 
A) budget surpluses. 
B) decreases in aggregate supply. 
C) trade deficits. 
D) decreases in aggregate demand. 
E) budget deficits.

Question 8

Which of the following is true of economic fluctuations?

Accepted Answer

A) They can be experienced by the world economy as well as by a single nation. 
B) They tend to be equal in length and intensity. 
C) They reflect an economy's socio-political condition. 
D) They tend to become more severe when the government attempts to stabilize an economy. 
E) They have been completely offset by appropriate government policies during the last 40 years. 
A) They can be experienced by the world economy as well as by a single nation. 
B) They tend to be equal in length and intensity. 
C) They reflect an economy's socio-political condition. 
D) They tend to become more severe when the government attempts to stabilize an economy. 
E) They have been completely offset by appropriate government policies during the last 40 years.

Question 9

Which of these statements correctly explains the shape of the aggregate demand curve?

Accepted Answer

A) As prices fall,nominal income rises and so does the demand for real goods and services. 
B) Rising prices reduce people's wealth and thereby decrease spending. 
C) With falling prices,government decides to spend less to increase the price level. 
D) Businesses increase investment spending in response to higher interest rates caused by inflation. 
E) As prices fall,domestically produced goods become more expensive relative to foreign goods,resulting in an increase in production. 
A) As prices fall,nominal income rises and so does the demand for real goods and services. 
B) Rising prices reduce people's wealth and thereby decrease spending. 
C) With falling prices,government decides to spend less to increase the price level. 
D) Businesses increase investment spending in response to higher interest rates caused by inflation. 
E) As prices fall,domestically produced goods become more expensive relative to foreign goods,resulting in an increase in production.

Question 10

Identify a valid trend observed in U.S.business cycles since 1933.

Accepted Answer

A) Contractions lasted for more than two years on an average. 
B) There were only two or three complete cycles. 
C) There was no recession since 1979. 
D) Expansions generally lasted longer than contractions. 
E) Each cycle lasted longer than the previous one. 
A) Contractions lasted for more than two years on an average. 
B) There were only two or three complete cycles. 
C) There was no recession since 1979. 
D) Expansions generally lasted longer than contractions. 
E) Each cycle lasted longer than the previous one.

Question 11

Economic fluctuations:

Accepted Answer

A) are linked,but not perfectly synchronized,across countries. 
B) are perfectly synchronized across countries. 
C) in one country are independent of fluctuations in other countries. 
D) in the United States always occur after fluctuations in other developed economies. 
E) in the United States usually occur before fluctuations in other developed economies. 
A) are linked,but not perfectly synchronized,across countries. 
B) are perfectly synchronized across countries. 
C) in one country are independent of fluctuations in other countries. 
D) in the United States always occur after fluctuations in other developed economies. 
E) in the United States usually occur before fluctuations in other developed economies.

Question 12

Identify the correct statement.

Accepted Answer

A) A budget deficit is a flow variable,while debt is a stock variable. 
B) A budget deficit is a stock variable,while debt is a flow variable. 
C) A budget deficit and debt are both stock variables. 
D) The budget deficit decreases when aggregate demand decreases. 
E) Debt increases when the budget deficit decreases. 
A) A budget deficit is a flow variable,while debt is a stock variable. 
B) A budget deficit is a stock variable,while debt is a flow variable. 
C) A budget deficit and debt are both stock variables. 
D) The budget deficit decreases when aggregate demand decreases. 
E) Debt increases when the budget deficit decreases.

Question 13

The aggregate supply curve reflects the inverse relationship between the interest rate and the quantity of real GDP supplied.

Accepted Answer

A) True 
 B)False

Question 14

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment,their expectations are usually fulfilled.

Accepted Answer

A) True 
 B)False

Question 15

A recession is best defined as a period during which:

Accepted Answer

A) the percentage of the population employed increases. 
B) employment,output,and income decrease. 
C) the average price level in an economy decreases. 
D) the usage of labor and capital resources increases. 
E) budget deficit and trade deficit decrease. 
A) the percentage of the population employed increases. 
B) employment,output,and income decrease. 
C) the average price level in an economy decreases. 
D) the usage of labor and capital resources increases. 
E) budget deficit and trade deficit decrease.

Question 16

Which of these faulty economic policies was adopted by President Hoover during the Great Depression?

Accepted Answer

A) An increase in tax rate 
B) An increase in trade barriers 
C) A decrease in tax rate 
D) A decrease in government spending 
E) An increase in government spending 
A) An increase in tax rate 
B) An increase in trade barriers 
C) A decrease in tax rate 
D) A decrease in government spending 
E) An increase in government spending

Question 17

Identify an example of a flow variable.

Accepted Answer

A) The volume of the federal government's debt 
B) The population of a country in a particular year 
C) The total amount of an individual's wealth 
D) The amount of sales tax collected per year 
E) The total amount of unemployment in an economy 
A) The volume of the federal government's debt 
B) The population of a country in a particular year 
C) The total amount of an individual's wealth 
D) The amount of sales tax collected per year 
E) The total amount of unemployment in an economy

Question 18

Which of the following statements regarding the gross domestic product is true?

Accepted Answer

A) It is useful in comparing the overall performance of different economies at the same time. 
B) It measures aggregate income in an economy over a period of ten years. 
C) It measures the value of all goods and services produced in the world during a given period. 
D) It is a measure of an economy's price level during a particular year. 
E) It records the cumulative value of all goods and services produced by domestically owned factors of production. 
A) It is useful in comparing the overall performance of different economies at the same time. 
B) It measures aggregate income in an economy over a period of ten years. 
C) It measures the value of all goods and services produced in the world during a given period. 
D) It is a measure of an economy's price level during a particular year. 
E) It records the cumulative value of all goods and services produced by domestically owned factors of production.

Question 19

Which of the following is true of a recessionary period?

Accepted Answer

A) It is usually accompanied by an improvement in the value of an economy's currency. 
B) It is usually accompanied by low levels of inflation. 
C) It is usually accompanied by a dramatic decline in the stock of inventories. 
D) It usually lasts for a few months. 
E) It leads to a drastic decline in government spending. 
A) It is usually accompanied by an improvement in the value of an economy's currency. 
B) It is usually accompanied by low levels of inflation. 
C) It is usually accompanied by a dramatic decline in the stock of inventories. 
D) It usually lasts for a few months. 
E) It leads to a drastic decline in government spending.

Question 20

Suppose an economy is initially in equilibrium and there is a sudden increase in oil prices.Which of the following is the most likely result?​

Accepted Answer

A) Growth in real GDP 
B) Price stability 
C) Full employment output 
D) Stagflation 
E) Deflation 
A) Growth in real GDP 
B) Price stability 
C) Full employment output 
D) Stagflation 
E) Deflation

The Keynesian approach to government economic policy:

Identify the correct statement.

For a given aggregate supply curve,price level and output will both increase when aggregate demand decreases.

Economic activities that signal forthcoming changes in the economy are referred to as:

Which of the following factors can partly explain the long-term growth in production in the U.S.economy?

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

Which of the following is true of economic fluctuations?

Which of these statements correctly explains the shape of the aggregate demand curve?

Identify a valid trend observed in U.S.business cycles since 1933.

Economic fluctuations:

Identify the correct statement.

The aggregate supply curve reflects the inverse relationship between the interest rate and the quantity of real GDP supplied.

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment,their expectations are usually fulfilled.

A recession is best defined as a period during which:

Which of these faulty economic policies was adopted by President Hoover during the Great Depression?

Identify an example of a flow variable.

Which of the following statements regarding the gross domestic product is true?

Which of the following is true of a recessionary period?

Suppose an economy is initially in equilibrium and there is a sudden increase in oil prices.Which of the following is the most likely result?

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 Keynesian approach to government economic policy:

Identify the correct statement.

For a given aggregate supply curve,price level and output will both increase when aggregate demand decreases.

Economic activities that signal forthcoming changes in the economy are referred to as:

Which of the following factors can partly explain the long-term growth in production in the U.S.economy?

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

Which of the following is true of economic fluctuations?

Which of these statements correctly explains the shape of the aggregate demand curve?

Identify a valid trend observed in U.S.business cycles since 1933.

Economic fluctuations:

Identify the correct statement.

The aggregate supply curve reflects the inverse relationship between the interest rate and the quantity of real GDP supplied.

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment,their expectations are usually fulfilled.

A recession is best defined as a period during which:

Which of these faulty economic policies was adopted by President Hoover during the Great Depression?

Identify an example of a flow variable.

Which of the following statements regarding the gross domestic product is true?

Which of the following is true of a recessionary period?

Suppose an economy is initially in equilibrium and there is a sudden increase in oil prices.Which of the following is the most likely result?​

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

Suppose an economy is initially in equilibrium and there is a sudden increase in oil prices.Which of the following is the most likely result?