Question 1

How do trends in bond interest rates help predict changes in the business cycle?

Accepted Answer

A)  When long-term rates are higher than short-term rates, a recession is likely. 
B)  When long-term rates are lower than short-term rates, a recession is likely. 
C)  When long-term rates are higher than short-term rates, a trough is present. 
D)  When long-term rates are lower than short-term rates, an expansion is likely. 
A)  When long-term rates are higher than short-term rates, a recession is likely. 
B)  When long-term rates are lower than short-term rates, a recession is likely. 
C)  When long-term rates are higher than short-term rates, a trough is present. 
D)  When long-term rates are lower than short-term rates, an expansion is likely.

Question 2

Gross domestic product is the total market value of all

Accepted Answer

A)  final goods and services produced in the United States by labor and property. 
B)  final and intermediate goods and services produced in the United States by labor and property. 
C)  intermediate goods produced in the United States by labor and property. 
D)  final goods and services sold in the United States. 
A)  final goods and services produced in the United States by labor and property. 
B)  final and intermediate goods and services produced in the United States by labor and property. 
C)  intermediate goods produced in the United States by labor and property. 
D)  final goods and services sold in the United States.

Question 3

The total of disposable income must be either spent or saved.

Accepted Answer

A) True 
 B)False

Question 4

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of money.

Accepted Answer

A) True 
 B)False

Question 5

The national income and product accounts allow economists to track the economy's condition over the course of the business cycle.

Accepted Answer

A) True 
 B)False

Question 6

Net exports equal

Accepted Answer

A)  all of the goods and services produced minus exports. 
B)  all of the goods and services produced plus imports. 
C)  exports plus imports. 
D)  exports minus imports. 
A)  all of the goods and services produced minus exports. 
B)  all of the goods and services produced plus imports. 
C)  exports plus imports. 
D)  exports minus imports.

Question 7

Suppose an economy has historically grown at a rate of 2.25%. The economy is currently growing at a rate of 3%, and the unemployment rate is low by historical standards. The economy is expected to continue to grow in the near future, but monetary authorities are concerned that inflation may increase. This economy is probably in the _____ stage of the business cycle.

Accepted Answer

A)  expansion 
B)  recovery 
C)  contraction 
D)  trough 
A)  expansion 
B)  recovery 
C)  contraction 
D)  trough

Question 8

Disposable personal income can be either _____ or _____.

Accepted Answer

A)  spent; used to pay income taxes 
B)  spent; saved 
C)  saved; used to pay income taxes 
D)  spent; used to pay Social Security taxes 
A)  spent; used to pay income taxes 
B)  spent; saved 
C)  saved; used to pay income taxes 
D)  spent; used to pay Social Security taxes

Question 9

Which of these is NOT a problem in using GDP to measure standards of living?

Accepted Answer

A)  failure to include environmental impacts 
B)  failure to include the value of nonmarket work 
C)  failure to include exports and imports 
D)  failure to include the value of investments in human capital 
A)  failure to include environmental impacts 
B)  failure to include the value of nonmarket work 
C)  failure to include exports and imports 
D)  failure to include the value of investments in human capital

Question 10

A change in the Leading Economic Index is supposed to reflect

Accepted Answer

A)  how the economy behaved recently. 
B)  how the economy is behaving. 
C)  how the economy will behave in the near future. 
D)  an average of how the economy has behaved over the most recent business cycle. 
A)  how the economy behaved recently. 
B)  how the economy is behaving. 
C)  how the economy will behave in the near future. 
D)  an average of how the economy has behaved over the most recent business cycle.

Question 11

Which of these is an example of an economic investment?

Accepted Answer

A)  building a new sales force training facility 
B)  putting funds in a certificate of deposit 
C)  purchasing a share of Google stock 
D)  trading a bond certificate 
A)  building a new sales force training facility 
B)  putting funds in a certificate of deposit 
C)  purchasing a share of Google stock 
D)  trading a bond certificate

Question 12

(Table) According to the table, net domestic product is

Accepted Answer

A)  $1,770 billion. 
B)  $1,330 billion. 
C)  $1,080 billion. 
D)  $1,580 billion. 
A)  $1,770 billion. 
B)  $1,330 billion. 
C)  $1,080 billion. 
D)  $1,580 billion.

Question 13

What event was a major influence on the development of macroeconomics?

Accepted Answer

A)  Great Depression 
B)  Employment Act of 1946 
C)  establishment of the Federal Reserve System in the United States 
D)  U.S. entry into World War II 
A)  Great Depression 
B)  Employment Act of 1946 
C)  establishment of the Federal Reserve System in the United States 
D)  U.S. entry into World War II

Question 14

(Table) According to the table, the net domestic product for 2010 was GDP Expenditures for 2010

Accepted Answer

A)  $14,592.3 billion. 
B)  $738.9 billion. 
C)  $15,622.5 billion. 
D)  $13,562.1 billion. 
A)  $14,592.3 billion. 
B)  $738.9 billion. 
C)  $15,622.5 billion. 
D)  $13,562.1 billion.

Question 15

The primary purpose of the circular flow model is to show how government policies affect businesses and households.

Accepted Answer

A) True 
 B)False

Question 16

The study of macroeconomics as a specific discipline can be attributed to

Accepted Answer

A)  Adam Smith. 
B)  John Maynard Keynes. 
C)  Milton Friedman. 
D)  Joseph Schumpeter. 
A)  Adam Smith. 
B)  John Maynard Keynes. 
C)  Milton Friedman. 
D)  Joseph Schumpeter.

Question 17

Crude oil produced in Nigeria by Exxon-Mobil, a company whose headquarters are located in the United States, would be included in U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 18

The economy is not likely to be heading into a recession when the National Activity Index equals -0.95.

Accepted Answer

A) True 
 B)False

Question 19

GDP can be found by adding up either all of the _____ or all of the _____ in the economy.

Accepted Answer

A)  spending; taxes 
B)  spending; income 
C)  investment; income 
D)  net interest payments; taxes 
A)  spending; taxes 
B)  spending; income 
C)  investment; income 
D)  net interest payments; taxes

Question 20

To solve the double counting problem, economists include only final goods and services in the summing of gross domestic product.

Accepted Answer

A) True 
 B)False

How do trends in bond interest rates help predict changes in the business cycle?

Gross domestic product is the total market value of all

The total of disposable income must be either spent or saved.

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of money.

The national income and product accounts allow economists to track the economy's condition over the course of the business cycle.

Net exports equal

Disposable personal income can be either _ or _.

Which of these is NOT a problem in using GDP to measure standards of living?

A change in the Leading Economic Index is supposed to reflect

Which of these is an example of an economic investment?

(Table) According to the table, net domestic product is

What event was a major influence on the development of macroeconomics?

(Table) According to the table, the net domestic product for 2010 was GDP Expenditures for 2010

The primary purpose of the circular flow model is to show how government policies affect businesses and households.

The study of macroeconomics as a specific discipline can be attributed to

Crude oil produced in Nigeria by Exxon-Mobil, a company whose headquarters are located in the United States, would be included in U.S. GDP.

The economy is not likely to be heading into a recession when the National Activity Index equals -0.95.

GDP can be found by adding up either all of the _ or all of the _ in the economy.

To solve the double counting problem, economists include only final goods and services in the summing of gross domestic product.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 5: Introduction to Macroeconomics

How do trends in bond interest rates help predict changes in the business cycle?

Gross domestic product is the total market value of all

The total of disposable income must be either spent or saved.

Within the circular flow diagram, the arrows pointing counterclockwise represent flows of money.

The national income and product accounts allow economists to track the economy's condition over the course of the business cycle.

Net exports equal

Disposable personal income can be either _____ or _____.

Which of these is NOT a problem in using GDP to measure standards of living?

A change in the Leading Economic Index is supposed to reflect

Which of these is an example of an economic investment?

(Table) According to the table, net domestic product is

What event was a major influence on the development of macroeconomics?

(Table) According to the table, the net domestic product for 2010 was GDP Expenditures for 2010

The primary purpose of the circular flow model is to show how government policies affect businesses and households.

The study of macroeconomics as a specific discipline can be attributed to

Crude oil produced in Nigeria by Exxon-Mobil, a company whose headquarters are located in the United States, would be included in U.S. GDP.

The economy is not likely to be heading into a recession when the National Activity Index equals -0.95.

GDP can be found by adding up either all of the _____ or all of the _____ in the economy.

To solve the double counting problem, economists include only final goods and services in the summing of gross domestic product.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Disposable personal income can be either _ or _.

GDP can be found by adding up either all of the _ or all of the _ in the economy.