Question 1

For which of the following goods is the price least likely to be flexible?

Accepted Answer

A) airline tickets 
B) beer 
C) milk 
D) newspapers 
A) airline tickets 
B) beer 
C) milk 
D) newspapers D

Question 2

Modern economic growth refers to countries that have experienced an increase in

Accepted Answer

A) real GDP over time. 
B) nominal GDP over time. 
C) real output spread evenly across all sectors of the economy. 
D) real output per person. 
A) real GDP over time. 
B) nominal GDP over time. 
C) real output spread evenly across all sectors of the economy. 
D) real output per person. D

Question 3

When economists refer to "investment," they are describing a situation where

Accepted Answer

A) people are buying shares of corporate stock. 
B) resources are devoted to increasing future output. 
C) money is saved in a bank account. 
D) financial assets are purchased in the hope of a monetary gain. 
A) people are buying shares of corporate stock. 
B) resources are devoted to increasing future output. 
C) money is saved in a bank account. 
D) financial assets are purchased in the hope of a monetary gain. B

Question 4

Who are the main economic investors in a market economy?

Accepted Answer

A) savers 
B) government 
C) businesses 
D) households 
A) savers 
B) government 
C) businesses 
D) households

Question 5

Which of the following is most likely to indicate higher unemployment?

Accepted Answer

A) an increase in real GDP 
B) an increase in nominal GDP 
C) a decrease in real GDP 
D) a decrease in nominal GDP 
A) an increase in real GDP 
B) an increase in nominal GDP 
C) a decrease in real GDP 
D) a decrease in nominal GDP

Question 6

Which of the following groups is the principal source of savings in an economy?

Accepted Answer

A) banks 
B) government 
C) businesses 
D) households 
A) banks 
B) government 
C) businesses 
D) households

Question 7

From 1995 until the start of the recession in 2007, the U.S.economy grew at the same rate as the economy of Japan.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not an important question that macroeconomic models help clarify?

Accepted Answer

A) Can governments reduce the severity of their economies' recessions? 
B) Is a policy of manipulating interest rates more effective at mitigating short-run economic fluctuations than a policy of changing the tax rates? 
C) How will OPEC manipulate and maintain the price of crude oil in the world markets? 
D) Is there a trade-off between lower unemployment and lower inflation? 
A) Can governments reduce the severity of their economies' recessions? 
B) Is a policy of manipulating interest rates more effective at mitigating short-run economic fluctuations than a policy of changing the tax rates? 
C) How will OPEC manipulate and maintain the price of crude oil in the world markets? 
D) Is there a trade-off between lower unemployment and lower inflation?

Question 9

An increase in the overall level of prices in an economy is called

Accepted Answer

A) growth. 
B) expansion. 
C) inflation. 
D) nominal GDP growth. 
A) growth. 
B) expansion. 
C) inflation. 
D) nominal GDP growth.

Question 10

Businesses are the main economic investors, while households are the main savers.

Accepted Answer

A) True 
 B)False

Question 11

In 2014, China's GDP per person was almost as high as that of the United States.

Accepted Answer

A) True 
 B)False

Question 12

Buying 100 shares of Google stock would be an example of economic investment.

Accepted Answer

A) True 
 B)False

Question 13

If nominal GDP increases from one year to the next, then we know that the economy's output has grown.

Accepted Answer

A) True 
 B)False

Question 14

Macroeconomics is mostly focused on

Accepted Answer

A) the individual markets within an economy. 
B) only the largest industries in the economy. 
C) the economy as a whole. 
D) why specific businesses fail. 
A) the individual markets within an economy. 
B) only the largest industries in the economy. 
C) the economy as a whole. 
D) why specific businesses fail.

Question 15

Suppose that an economy's output does not change from one year to the next, but the price level doubles.What happens to real GDP?

Accepted Answer

A) Real GDP doubles. 
B) Real GDP is halved. 
C) Real GDP doesn't change. 
D) There is not enough information to determine what happens to real GDP. 
A) Real GDP doubles. 
B) Real GDP is halved. 
C) Real GDP doesn't change. 
D) There is not enough information to determine what happens to real GDP.

Question 16

(Last Word) Advocates for a structural solution to the Great Recession argued that

Accepted Answer

A) government should cut taxes across the board to stimulate demand for goods and services. 
B) firms should be allowed to go bankrupt, allowing the economy to correct for resource misallocations. 
C) firms in financial distress should be taken over by the government and run for the public good. 
D) massive public works projects should be implemented to produce public capital, keep people employed, and help workers maintain job skills. 
A) government should cut taxes across the board to stimulate demand for goods and services. 
B) firms should be allowed to go bankrupt, allowing the economy to correct for resource misallocations. 
C) firms in financial distress should be taken over by the government and run for the public good. 
D) massive public works projects should be implemented to produce public capital, keep people employed, and help workers maintain job skills.

Question 17

Which of the following is the best example of economic investment?

Accepted Answer

A) Apple builds a new plant to manufacture iPads. 
B) Your college purchases a 5-year-old building in order to have more classrooms. 
C) A retiree purchases U.S.government bonds. 
D) A company, like Bank of America, acquires another company, like Merrill Lynch. 
A) Apple builds a new plant to manufacture iPads. 
B) Your college purchases a 5-year-old building in order to have more classrooms. 
C) A retiree purchases U.S.government bonds. 
D) A company, like Bank of America, acquires another company, like Merrill Lynch.

Question 18

Economists are in general agreement as to what caused the Great Recession and how to properly deal with it.

Accepted Answer

A) True 
 B)False

Question 19

A demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

Accepted Answer

A) True 
 B)False

Question 20

If prices of goods and services quickly adjusted to demand shocks, then

Accepted Answer

A) firms would find it difficult to produce at their optimal output rates. 
B) output rates would quickly adjust to changes in demand. 
C) firms would find it easier to produce at their optimal output rates. 
D) the economy would experience severe short-run fluctuation. 
A) firms would find it difficult to produce at their optimal output rates. 
B) output rates would quickly adjust to changes in demand. 
C) firms would find it easier to produce at their optimal output rates. 
D) the economy would experience severe short-run fluctuation.

Exam 26: An Introduction to Macroeconomics

For which of the following goods is the price least likely to be flexible?

Modern economic growth refers to countries that have experienced an increase in

When economists refer to "investment," they are describing a situation where

Who are the main economic investors in a market economy?

Which of the following is most likely to indicate higher unemployment?

Which of the following groups is the principal source of savings in an economy?

From 1995 until the start of the recession in 2007, the U.S.economy grew at the same rate as the economy of Japan.

Which of the following is not an important question that macroeconomic models help clarify?

An increase in the overall level of prices in an economy is called

Businesses are the main economic investors, while households are the main savers.

In 2014, China's GDP per person was almost as high as that of the United States.

Buying 100 shares of Google stock would be an example of economic investment.

If nominal GDP increases from one year to the next, then we know that the economy's output has grown.

Macroeconomics is mostly focused on

Suppose that an economy's output does not change from one year to the next, but the price level doubles.What happens to real GDP?

(Last Word) Advocates for a structural solution to the Great Recession argued that

Which of the following is the best example of economic investment?

Economists are in general agreement as to what caused the Great Recession and how to properly deal with it.

A demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

If prices of goods and services quickly adjusted to demand shocks, then

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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