Question 1

Sticky prices could be the result of firms being afraid of price wars.

Accepted Answer

A) True 
 B)False

Question 2

Modern economic growth

Accepted Answer

A) started occurring during the time of the Roman Empire. 
B) has been experienced by all countries around the world. 
C) refers to the phenomenon when a country's total output rises. 
D) makes a country's output per person rise at a compounded rate. 
A) started occurring during the time of the Roman Empire. 
B) has been experienced by all countries around the world. 
C) refers to the phenomenon when a country's total output rises. 
D) makes a country's output per person rise at a compounded rate.

Question 3

Saving in the economy

Accepted Answer

A) occurs when current spending is less than current incomes. 
B) is generally not a determinant of future output. 
C) and investment are essentially the same concept. 
D) occurs when current consumption is more than current output. 
A) occurs when current spending is less than current incomes. 
B) is generally not a determinant of future output. 
C) and investment are essentially the same concept. 
D) occurs when current consumption is more than current output.

Question 4

Real gross domestic product

Accepted Answer

A) is a measure of inflation. 
B) will increase if the price level increases. 
C) will increase if the level of output increases. 
D) can change from one year to the next even if there is no change in output. 
A) is a measure of inflation. 
B) will increase if the price level increases. 
C) will increase if the level of output increases. 
D) can change from one year to the next even if there is no change in output.

Question 5

If prices of goods and services were free to quickly adjust, then

Accepted Answer

A) a negative demand shock would lead to increased unemployment in the short run. 
B) a positive demand shock would lead to increased unemployment in the short run. 
C) a negative demand shock would have no short-run effect on unemployment. 
D) there would be no short-run demand shocks. 
A) a negative demand shock would lead to increased unemployment in the short run. 
B) a positive demand shock would lead to increased unemployment in the short run. 
C) a negative demand shock would have no short-run effect on unemployment. 
D) there would be no short-run demand shocks.

Question 6

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each.This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas) but sold them for $12 each.Based on this information, we can conclude that Harry's production of large pepperoni pizzas

Accepted Answer

A) increased both nominal and real GDP from last year. 
B) increased nominal GDP from last year, but real GDP was unaffected. 
C) increased real GDP from last year, but nominal GDP was unaffected. 
D) did not change either nominal or real GDP from last year. 
A) increased both nominal and real GDP from last year. 
B) increased nominal GDP from last year, but real GDP was unaffected. 
C) increased real GDP from last year, but nominal GDP was unaffected. 
D) did not change either nominal or real GDP from last year.

Question 7

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

Accepted Answer

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

Question 8

Prices tend to be stickier in the shorter run than in the longer run.

Accepted Answer

A) True 
 B)False

Question 9

An increase in worker productivity will lead to a

Accepted Answer

A) negative demand shock. 
B) positive demand shock. 
C) negative supply shock. 
D) positive supply shock. 
A) negative demand shock. 
B) positive demand shock. 
C) negative supply shock. 
D) positive supply shock.

Question 10

Unemployment describes the condition where

Accepted Answer

A) equipment and machinery are going unused. 
B) a person cannot get a job but is willing to work and is actively seeking work. 
C) a person does not have a job, regardless of whether or not he or she wants one. 
D) any resource sits idle. 
A) equipment and machinery are going unused. 
B) a person cannot get a job but is willing to work and is actively seeking work. 
C) a person does not have a job, regardless of whether or not he or she wants one. 
D) any resource sits idle.

Question 11

The business cycle is primarily concerned with changes in the level of overall prices over time.

Accepted Answer

A) True 
 B)False

Question 12

High rates of unemployment are undesirable because they

Accepted Answer

A) always lead to a decline in nominal GDP. 
B) are associated with higher levels of crime and illness. 
C) cannot be reduced through government policy. 
D) are associated with increases in the price level. 
A) always lead to a decline in nominal GDP. 
B) are associated with higher levels of crime and illness. 
C) cannot be reduced through government policy. 
D) are associated with increases in the price level.

Question 13

Which of the following is used to measure directly the average standard of living across countries?

Accepted Answer

A) real GDP 
B) nominal GDP 
C) purchasing power parity 
D) GDP per person 
A) real GDP 
B) nominal GDP 
C) purchasing power parity 
D) GDP per person

Question 14

Inventories held by firms

Accepted Answer

A) tend to increase the severity of short-run fluctuations. 
B) tend to reduce the severity of short-run fluctuations. 
C) are held by businesses because they are a costless way of responding to demand shocks. 
D) are the result of positive demand shocks. 
A) tend to increase the severity of short-run fluctuations. 
B) tend to reduce the severity of short-run fluctuations. 
C) are held by businesses because they are a costless way of responding to demand shocks. 
D) are the result of positive demand shocks.

Question 15

Inflation reduces the purchasing power of a person's income and savings.

Accepted Answer

A) True 
 B)False

Question 16

If expectations were always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Accepted Answer

A) True 
 B)False

Question 17

The term "recession" describes a situation where

Accepted Answer

A) inflation rates exceed normal levels. 
B) output and living standards decline. 
C) an economy's ability to produce is destroyed. 
D) government takes a less active role in economic matters. 
A) inflation rates exceed normal levels. 
B) output and living standards decline. 
C) an economy's ability to produce is destroyed. 
D) government takes a less active role in economic matters.

Question 18

In 2014, output (GDP) per person in the U.S.was about

Accepted Answer

A) $32,000. 
B) $21,000. 
C) $54,000. 
D) $76,000. 
A) $32,000. 
B) $21,000. 
C) $54,000. 
D) $76,000.

Question 19

Prices tend to be sticky partially because sellers know that consumers prefer stable prices.

Accepted Answer

A) True 
 B)False

Question 20

Which among the following countries had the highest GDP per person in 2014?

Accepted Answer

A) Mexico 
B) India 
C) Russia 
D) China 
A) Mexico 
B) India 
C) Russia 
D) China

Exam 26: An Introduction to Macroeconomics

Sticky prices could be the result of firms being afraid of price wars.

Modern economic growth

Saving in the economy

Real gross domestic product

If prices of goods and services were free to quickly adjust, then

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

Prices tend to be stickier in the shorter run than in the longer run.

An increase in worker productivity will lead to a

Unemployment describes the condition where

The business cycle is primarily concerned with changes in the level of overall prices over time.

High rates of unemployment are undesirable because they

Which of the following is used to measure directly the average standard of living across countries?

Inventories held by firms

Inflation reduces the purchasing power of a person's income and savings.

If expectations were always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

The term "recession" describes a situation where

In 2014, output (GDP) per person in the U.S.was about

Prices tend to be sticky partially because sellers know that consumers prefer stable prices.

Which among the following countries had the highest GDP per person in 2014?

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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