Question 1

Individuals live and work in both individual and aggregate economic entities.

Accepted Answer

A) True 
 B)False

Question 2

What was suggested by Keynes to move the economy out of a depressed state?

Accepted Answer

A)  The invisible hand 
B)  The price mechanism 
C)  Monetary and fiscal policy 
D)  Zero government intervention 
A)  The invisible hand 
B)  The price mechanism 
C)  Monetary and fiscal policy 
D)  Zero government intervention

Question 3

The horizontal axis on the aggregate demand-aggregate supply model measures

Accepted Answer

A)  the price of the specific product produced. 
B)  the level of total output. 
C)  the price level. 
D)  the level of employment. 
A)  the price of the specific product produced. 
B)  the level of total output. 
C)  the price level. 
D)  the level of employment.

Question 4

For a macroeconomist, the case for aggregation is based on two principles1) the composition of demand and supply may not matter for some purposes, and 2)

Accepted Answer

A)  during fluctuations markets normally move together. 
B)  individual markets allocate resources efficiently. 
C)  inflation, unemployment, and growth never go together. 
D)  individual markets distribute income efficiently. 
A)  during fluctuations markets normally move together. 
B)  individual markets allocate resources efficiently. 
C)  inflation, unemployment, and growth never go together. 
D)  individual markets distribute income efficiently.

Question 5

In the past 100 years the U.S.economy has primarily experienced

Accepted Answer

A)  deflation. 
B)  unemployment. 
C)  inflation. 
D)  depression. 
A)  deflation. 
B)  unemployment. 
C)  inflation. 
D)  depression.

Question 6

How does the calculation of GDP include the costs of natural resource depletion that occurs when output is produced?

Accepted Answer

A)  The value of resource depletion is added to GDP. 
B)  The cost of resource depletion is not measured in GDP. 
C)  The cost of resource depletion is added to real but not nominal GDP. 
D)  Resource depletion causes GDP to overstate well being. 
A)  The value of resource depletion is added to GDP. 
B)  The cost of resource depletion is not measured in GDP. 
C)  The cost of resource depletion is added to real but not nominal GDP. 
D)  Resource depletion causes GDP to overstate well being.

Question 7

Trish grows oregano in her backyard to use in her homemade pesto sauce.How is this gardening included in GDP?

Accepted Answer

A)  It is included in real GDP. 
B)  It is included in nominal GDP. 
C)  It is not included in GDP. 
D)  It is included as an intermediate good. 
A)  It is included in real GDP. 
B)  It is included in nominal GDP. 
C)  It is not included in GDP. 
D)  It is included as an intermediate good.

Question 8

An example of an intermediate good would be a(n)

Accepted Answer

A)  new car. 
B)  used car. 
C)  new tire for a used car. 
D)  tire for a new car. 
E)  All of the above. 
A)  new car. 
B)  used car. 
C)  new tire for a used car. 
D)  tire for a new car. 
E)  All of the above.

Question 9

An increase in aggregate demand will result in inflation.

Accepted Answer

A) True 
 B)False

Question 10

What is Gross Domestic Product? What is included in this statistic? What is excluded? Give two examples of goods or services that are included in GDP and two examples of goods or services that are excluded.

Accepted Answer

Gross Domestic Product is an aggregate a

Question 11

Nominal GDP is another term for

Accepted Answer

A)  current dollar GDP. 
B)  constant dollar GDP. 
C)  adjusted dollar GDP. 
D)  relative value GDP. 
A)  current dollar GDP. 
B)  constant dollar GDP. 
C)  adjusted dollar GDP. 
D)  relative value GDP.

Question 12

If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy should experience

Accepted Answer

A)  unemployment. 
B)  recession. 
C)  budget surpluses. 
D)  inflation. 
A)  unemployment. 
B)  recession. 
C)  budget surpluses. 
D)  inflation.

Question 13

In 1981, the Reagan administration employed a policy that included tax ____ while at the same time the Federal Reserve's strategy was to combat ____.

Accepted Answer

A)  cuts; unemployment 
B)  cuts; inflation 
C)  hikes; unemployment 
D)  hikes; inflation 
A)  cuts; unemployment 
B)  cuts; inflation 
C)  hikes; unemployment 
D)  hikes; inflation

Question 14

Figure 5-1
  
-Figure 5-1 plots potential and real output for a hypothetical economy.Based on this graph, the recession occurred

Accepted Answer

A)  between years 1 and 2. 
B)  between years 2 and 3. 
C)  between years 3 and 4. 
D)  after year 4. 
A)  between years 1 and 2. 
B)  between years 2 and 3. 
C)  between years 3 and 4. 
D)  after year 4.

Question 15

In the early 1980s, the economy experienced high unemployment with falling inflation.

Accepted Answer

A) True 
 B)False

Question 16

From 2000 to 2001, the U.S.economy's annual growth rate slowed down abruptly.

Accepted Answer

A) True 
 B)False

Question 17

To fight inflation, the government may

Accepted Answer

A)  decrease aggregate demand, which will also lead to lower unemployment rates. 
B)  increase aggregate demand, which will also lead to lower unemployment rates. 
C)  increase aggregate demand, which will also lead to higher unemployment rates. 
D)  decrease aggregate demand, which will also lead to higher unemployment rates. 
A)  decrease aggregate demand, which will also lead to lower unemployment rates. 
B)  increase aggregate demand, which will also lead to lower unemployment rates. 
C)  increase aggregate demand, which will also lead to higher unemployment rates. 
D)  decrease aggregate demand, which will also lead to higher unemployment rates.

Question 18

Discuss some of the fundamental differences between microeconomics and macroeconomics.

Accepted Answer

Microeconomics studies the decisions of

Question 19

The macroeconomic conditions during the mid-1990s confounded many economists because of the simultaneous occurrence of

Accepted Answer

A)  low unemployment and decreasing inflation rates. 
B)  low unemployment and increasing budget deficits. 
C)  low unemployment and increasing interest rates. 
D)  high unemployment and increasing inflation rates. 
A)  low unemployment and decreasing inflation rates. 
B)  low unemployment and increasing budget deficits. 
C)  low unemployment and increasing interest rates. 
D)  high unemployment and increasing inflation rates.

Question 20

Compare and contrast the U.S.economic record prior to 1940 and after 1950.How do the two time periods differ? What best explains the differences according to a macroeconomist?

Accepted Answer

The economy experienced business cycles

Exam 22: An Introduction to Macroeconomics

Individuals live and work in both individual and aggregate economic entities.

What was suggested by Keynes to move the economy out of a depressed state?

The horizontal axis on the aggregate demand-aggregate supply model measures

For a macroeconomist, the case for aggregation is based on two principles1) the composition of demand and supply may not matter for some purposes, and 2)

In the past 100 years the U.S.economy has primarily experienced

How does the calculation of GDP include the costs of natural resource depletion that occurs when output is produced?

Trish grows oregano in her backyard to use in her homemade pesto sauce.How is this gardening included in GDP?

An example of an intermediate good would be a(n)

An increase in aggregate demand will result in inflation.

What is Gross Domestic Product? What is included in this statistic? What is excluded? Give two examples of goods or services that are included in GDP and two examples of goods or services that are excluded.

Nominal GDP is another term for

If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy should experience

In 1981, the Reagan administration employed a policy that included tax ____ while at the same time the Federal Reserve's strategy was to combat ____.

Figure 5-1 -Figure 5-1 plots potential and real output for a hypothetical economy.Based on this graph, the recession occurred

In the early 1980s, the economy experienced high unemployment with falling inflation.

From 2000 to 2001, the U.S.economy's annual growth rate slowed down abruptly.

To fight inflation, the government may

Discuss some of the fundamental differences between microeconomics and macroeconomics.

The macroeconomic conditions during the mid-1990s confounded many economists because of the simultaneous occurrence of

Compare and contrast the U.S.economic record prior to 1940 and after 1950.How do the two time periods differ? What best explains the differences according to a macroeconomist?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

In 1981, the Reagan administration employed a policy that included tax while at the same time the Federal Reserve's strategy was to combat .