Question 1

Nominal prices and nominal wages are _____.

Accepted Answer

A)  inversely related to inﬂation 
B)  constant at all levels of output 
C)  adjusted for the effect of prices 
D)  not adjusted for inﬂation 
A)  inversely related to inﬂation 
B)  constant at all levels of output 
C)  adjusted for the effect of prices 
D)  not adjusted for inﬂation

Question 2

What are the various ?nancial ?ows in a simple circular model of income comprising only households and ?rms?

Accepted Answer

The circular ?ow of income shows the ?ow

Question 3

When the central bank of an economy raises interest rates, _____.

Accepted Answer

A)  aggregate demand will rise 
B)  aggregate supply will increase 
C)  both aggregate demand and aggregate supply will remain constant 
D)  aggregate demand will decrease 
A)  aggregate demand will rise 
B)  aggregate supply will increase 
C)  both aggregate demand and aggregate supply will remain constant 
D)  aggregate demand will decrease

Question 4

The changes in the average price level reﬂects the sum of changes in the prices of _____.

Accepted Answer

A)  agricultural and residential land across the country 
B)  a basket of commonly purchased goods and services 
C)  bonds issued by the government 
D)  stocks of companies with the largest market capitalization 
A)  agricultural and residential land across the country 
B)  a basket of commonly purchased goods and services 
C)  bonds issued by the government 
D)  stocks of companies with the largest market capitalization

Question 5

If there is a fall in national output and a rise in inﬂation, this implies that the _____.

Accepted Answer

A)  aggregate demand curve has shifted to the right 
B)  aggregate demand curve has shifted to the left 
C)  aggregate supply curve has shifted to the right 
D)  aggregate supply curve has shifted to the left 
A)  aggregate demand curve has shifted to the right 
B)  aggregate demand curve has shifted to the left 
C)  aggregate supply curve has shifted to the right 
D)  aggregate supply curve has shifted to the left

Question 6

What is meant by a trade de?cit?

Accepted Answer

A)  Trade de?cit is the difference between producer surplus and consumer surplus. 
B)  Trade de?cit is the difference between the price paid for a good and the cost of making it. 
C)  Trade de?cit is the difference between exported and imported goods and services. 
D)  Trade de?cit is the difference between the government's revenues and expenditures. 
A)  Trade de?cit is the difference between producer surplus and consumer surplus. 
B)  Trade de?cit is the difference between the price paid for a good and the cost of making it. 
C)  Trade de?cit is the difference between exported and imported goods and services. 
D)  Trade de?cit is the difference between the government's revenues and expenditures.

Question 7

In the circular ﬂow model, goods and services ﬂow from households to ﬁrms.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is likely to cause a recession?

Accepted Answer

A)  A fall in unemployment. 
B)  A rise in investment. 
C)  A rise in consumption. 
D)  A fall in total expenditure. 
A)  A fall in unemployment. 
B)  A rise in investment. 
C)  A rise in consumption. 
D)  A fall in total expenditure.

Question 9

Which of the following could cause the aggregate demand curve to shift to the right?

Accepted Answer

A)  An increase in investment. 
B)  An increase in aggregate supply. 
C)  A decrease in consumption. 
D)  A decrease in government spending. 
A)  An increase in investment. 
B)  An increase in aggregate supply. 
C)  A decrease in consumption. 
D)  A decrease in government spending.

Question 10

Since real wages are constant in the long run, the aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an injection into the circular ﬂow of income by the international sector?

Accepted Answer

A)  Taxes. 
B)  Imports. 
C)  Exports. 
D)  Savings. 
A)  Taxes. 
B)  Imports. 
C)  Exports. 
D)  Savings.

Question 12

In the early 2000s the UK economy experienced _____.

Accepted Answer

A)  a fall in government spending and a decline in the budget deﬁcit 
B)  high inﬂation which led to high unemployment 
C)  a current account surplus 
D)  low interest rates and rising GDP 
A)  a fall in government spending and a decline in the budget deﬁcit 
B)  high inﬂation which led to high unemployment 
C)  a current account surplus 
D)  low interest rates and rising GDP

Question 13

The following ﬁgure shows the business cycle for an economy over time. Refer to the ﬁgure to answer the question.   When the economy is in a recession, it is at _____.

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
A)  point A 
B)  point B 
C)  point C 
D)  point D

Question 14

An economy is in a deﬂationary recession when _____.

Accepted Answer

A)  consumption increases 
B)  aggregate demand falls 
C)  aggregate supply decreases 
D)  investment increases 
A)  consumption increases 
B)  aggregate demand falls 
C)  aggregate supply decreases 
D)  investment increases

Question 15

A deﬂationary boom is caused by an increase in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 16

A positive relationship between inﬂation and aggregate supply can exist. This is because _____.

Accepted Answer

A)  ﬁrms will be willing to decrease supply when real wages fall 
B)  ﬁrms will be willing to increase supply when nominal wages rise 
C)  ﬁrms will be willing to increase supply when real wages fall 
D)  ﬁrms will be willing to decrease supply when nominal wages fall 
A)  ﬁrms will be willing to decrease supply when real wages fall 
B)  ﬁrms will be willing to increase supply when nominal wages rise 
C)  ﬁrms will be willing to increase supply when real wages fall 
D)  ﬁrms will be willing to decrease supply when nominal wages fall

Question 17

A deﬂationary recession can be caused by a fall in consumption, investment, government spending or net exports.

Accepted Answer

A) True 
 B)False

Question 18

Low interest rates in the economy lead to increased borrowing, faster spending growth and rising GDP.

Accepted Answer

A) True 
 B)False

Question 19

GDP (gross domestic product) measures the _____.

Accepted Answer

A)  total output produced by an economy in a given year 
B)  total output, including net exports, produced in an economy in a given year 
C)  total payment made to factors of production in a given year 
D)  the amount of taxes collected by the government in a given year 
A)  total output produced by an economy in a given year 
B)  total output, including net exports, produced in an economy in a given year 
C)  total payment made to factors of production in a given year 
D)  the amount of taxes collected by the government in a given year

Question 20

Explain how product portfolio diversi?cation can help a ?rm.

Accepted Answer

Diversifying the product portf

Nominal prices and nominal wages are _____.

What are the various ?nancial ?ows in a simple circular model of income comprising only households and ?rms?

When the central bank of an economy raises interest rates, _____.

The changes in the average price level reﬂects the sum of changes in the prices of _____.

If there is a fall in national output and a rise in inﬂation, this implies that the _____.

What is meant by a trade de?cit?

In the circular ﬂow model, goods and services ﬂow from households to ﬁrms.

Which of the following is likely to cause a recession?

Which of the following could cause the aggregate demand curve to shift to the right?

Since real wages are constant in the long run, the aggregate supply curve is vertical.

Which of the following is an injection into the circular ﬂow of income by the international sector?

In the early 2000s the UK economy experienced _____.

The following ﬁgure shows the business cycle for an economy over time. Refer to the ﬁgure to answer the question. When the economy is in a recession, it is at _____.

An economy is in a deﬂationary recession when _____.

A deﬂationary boom is caused by an increase in aggregate supply.

A positive relationship between inﬂation and aggregate supply can exist. This is because _____.

A deﬂationary recession can be caused by a fall in consumption, investment, government spending or net exports.

Low interest rates in the economy lead to increased borrowing, faster spending growth and rising GDP.

GDP (gross domestic product) measures the _____.

Explain how product portfolio diversi?cation can help a ?rm.

Economics for Business

Consumers in the Marketplace

Firms in the Marketplace

Markets in Action

Market Structure and Firm Performance

Strategic Rivalry

Growth Strategies

Governing Business

Measuring Macroeconomic Variables and Policy Issues

Expenditure and Fiscal Policy

Money, Banking and Interest

Inflation, Output and Economic Policy

Supply-Side Policies and Economic Growth

Exchange Rates and the Balance of Payments

Globalization

Filters

Exam 9: Introduction to the Macroeconomy

Nominal prices and nominal wages are _____.

What are the various ?nancial ?ows in a simple circular model of income comprising only households and ?rms?

When the central bank of an economy raises interest rates, _____.

The changes in the average price level reﬂects the sum of changes in the prices of _____.

If there is a fall in national output and a rise in inﬂation, this implies that the _____.

What is meant by a trade de?cit?

In the circular ﬂow model, goods and services ﬂow from households to ﬁrms.

Which of the following is likely to cause a recession?

Which of the following could cause the aggregate demand curve to shift to the right?

Since real wages are constant in the long run, the aggregate supply curve is vertical.

Which of the following is an injection into the circular ﬂow of income by the international sector?

In the early 2000s the UK economy experienced _____.

The following ﬁgure shows the business cycle for an economy over time. Refer to the ﬁgure to answer the question. When the economy is in a recession, it is at _____.

An economy is in a deﬂationary recession when _____.

A deﬂationary boom is caused by an increase in aggregate supply.

A positive relationship between inﬂation and aggregate supply can exist. This is because _____.

A deﬂationary recession can be caused by a fall in consumption, investment, government spending or net exports.

Low interest rates in the economy lead to increased borrowing, faster spending growth and rising GDP.

GDP (gross domestic product) measures the _____.

Explain how product portfolio diversi?cation can help a ?rm.

Economics for Business

Consumers in the Marketplace

Firms in the Marketplace

Markets in Action

Market Structure and Firm Performance

Strategic Rivalry

Growth Strategies

Governing Business

Measuring Macroeconomic Variables and Policy Issues

Expenditure and Fiscal Policy

Money, Banking and Interest

Inflation, Output and Economic Policy

Supply-Side Policies and Economic Growth

Exchange Rates and the Balance of Payments

Globalization

Filters