Question 1

Milk prices tend to be stickier than gasoline prices.

Accepted Answer

A) True 
 B)False

Question 2

Why are high rates of unemployment of concern to economists?

Accepted Answer

A) Higher rates of unemployment generally lead to higher inflation rates. 
B) Environmental destruction is more prevalent when unemployment rates are high. 
C) There is lost output that could have been produced if the unemployed had been working. 
D) All of these options are reasons why economists are concerned about high unemployment rates. 
A) Higher rates of unemployment generally lead to higher inflation rates. 
B) Environmental destruction is more prevalent when unemployment rates are high. 
C) There is lost output that could have been produced if the unemployed had been working. 
D) All of these options are reasons why economists are concerned about high unemployment rates.

Question 3

Decisions about saving and investment are

Accepted Answer

A) generally made under conditions of complete certainty about the future. 
B) complicated by the fact that the future is uncertain. 
C) unaffected by expectations of the future. 
D) independent of expectations about the future. 
A) generally made under conditions of complete certainty about the future. 
B) complicated by the fact that the future is uncertain. 
C) unaffected by expectations of the future. 
D) independent of expectations about the future.

Question 4

(Consider This) The U.S.recession that occurred in 2008 and 2009 represented a case where

Accepted Answer

A) government policy intervention effectively offset the negative demand shock and minimized the effects on output and employment. 
B) prices were somewhat flexible, so the impact of the demand shock was felt about the same in terms of price and output changes. 
C) prices were relatively flexible, minimizing the impact on total output and employment. 
D) prices were relatively sticky and most of the impact was on total output. 
A) government policy intervention effectively offset the negative demand shock and minimized the effects on output and employment. 
B) prices were somewhat flexible, so the impact of the demand shock was felt about the same in terms of price and output changes. 
C) prices were relatively flexible, minimizing the impact on total output and employment. 
D) prices were relatively sticky and most of the impact was on total output.

Question 5

The "sticky price" model is the only one used by macroeconomists.

Accepted Answer

A) True 
 B)False

Question 6

One major reason for sticky prices could be that firms selling final goods and services do not want to annoy customers with frequently changing prices.

Accepted Answer

A) True 
 B)False

Question 7

Investment happens when

Accepted Answer

A) current income is greater than current spending. 
B) current consumption is greater than current output. 
C) resources are devoted toward increasing current output. 
D) resources are devoted toward increasing future output. 
A) current income is greater than current spending. 
B) current consumption is greater than current output. 
C) resources are devoted toward increasing current output. 
D) resources are devoted toward increasing future output.

Question 8

Prices tend to be more flexible when there are only two or three rival firms rather than a large number of sellers in the market.

Accepted Answer

A) True 
 B)False

Question 9

Before the period of modern economic growth,

Accepted Answer

A) only civilizations such as the Roman Empire experienced economic growth. 
B) rates of population growth virtually matched rates of output growth. 
C) most economies realized high rates of growth in output per person. 
D) output and population growth were stagnant. 
A) only civilizations such as the Roman Empire experienced economic growth. 
B) rates of population growth virtually matched rates of output growth. 
C) most economies realized high rates of growth in output per person. 
D) output and population growth were stagnant.

Question 10

For many decades prior to the Industrial Revolution, the standards of living in England and China

Accepted Answer

A) remained roughly constant. 
B) increased steadily. 
C) declined substantially. 
D) increased many times over. 
A) remained roughly constant. 
B) increased steadily. 
C) declined substantially. 
D) increased many times over.

Question 11

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent.In this situation,

Accepted Answer

A) output per person necessarily increases. 
B) output per person necessarily decreases. 
C) output per person necessarily remains unchanged. 
D) there is not enough information to determine what happens to output per person. 
A) output per person necessarily increases. 
B) output per person necessarily decreases. 
C) output per person necessarily remains unchanged. 
D) there is not enough information to determine what happens to output per person.

Question 12

The opportunity cost of investment is a reduction in future consumption.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) Ford Motor Co.builds a new manufacturing plant. 
B) A student pursues an MBA degree. 
C) A retiree purchases Google stock. 
D) A young couple purchases a new home. 
A) Ford Motor Co.builds a new manufacturing plant. 
B) A student pursues an MBA degree. 
C) A retiree purchases Google stock. 
D) A young couple purchases a new home.

Question 14

Economists were sharply divided over how to best fight the Great Recession.The majority of economists favored the "Stimulus Solution," which involves

Accepted Answer

A) relying on the invisible hand of the market to set things right. 
B) government actions to increase the total demand for output in the economy. 
C) making prices become more flexible so that equilibrium can be attained once more. 
D) stimulus from abroad through international trade and treaties. 
A) relying on the invisible hand of the market to set things right. 
B) government actions to increase the total demand for output in the economy. 
C) making prices become more flexible so that equilibrium can be attained once more. 
D) stimulus from abroad through international trade and treaties.

Question 15

Business cycles refer to short-term fluctuations in prices.

Accepted Answer

A) True 
 B)False

Question 16

Shocks occur when actual events do not match expectations.

Accepted Answer

A) True 
 B)False

Question 17

Real GDP is calculated using current prices of outputs.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an adjustment made when comparing standards of living across countries?

Accepted Answer

A) converting each country's GDP into U.S.dollars 
B) dividing each country's GDP by the size of its population 
C) adjusting for different price levels across countries 
D) adjusting for different unemployment rates across countries 
A) converting each country's GDP into U.S.dollars 
B) dividing each country's GDP by the size of its population 
C) adjusting for different price levels across countries 
D) adjusting for different unemployment rates across countries

Question 19

The so-called Great Recession in the U.S.

Accepted Answer

A) is another name for the Great Depression. 
B) was the worst economic downturn since the Great Depression. 
C) was triggered by oil-supply shocks. 
D) was caused by a sharp increase in the value of the U.S.dollar. 
A) is another name for the Great Depression. 
B) was the worst economic downturn since the Great Depression. 
C) was triggered by oil-supply shocks. 
D) was caused by a sharp increase in the value of the U.S.dollar.

Question 20

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Accepted Answer

A) True 
 B)False

Exam 26: An Introduction to Macroeconomics

Milk prices tend to be stickier than gasoline prices.

Why are high rates of unemployment of concern to economists?

Decisions about saving and investment are

(Consider This) The U.S.recession that occurred in 2008 and 2009 represented a case where

The "sticky price" model is the only one used by macroeconomists.

One major reason for sticky prices could be that firms selling final goods and services do not want to annoy customers with frequently changing prices.

Investment happens when

Prices tend to be more flexible when there are only two or three rival firms rather than a large number of sellers in the market.

Before the period of modern economic growth,

For many decades prior to the Industrial Revolution, the standards of living in England and China

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent.In this situation,

The opportunity cost of investment is a reduction in future consumption.

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

Economists were sharply divided over how to best fight the Great Recession.The majority of economists favored the "Stimulus Solution," which involves

Business cycles refer to short-term fluctuations in prices.

Shocks occur when actual events do not match expectations.

Real GDP is calculated using current prices of outputs.

Which of the following is not an adjustment made when comparing standards of living across countries?

The so-called Great Recession in the U.S.

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

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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