Question 1

Stagflation is the simultaneous occurrence of inflation and high unemployment.

Accepted Answer

A) True 
 B)False

Question 2

The 1960s are remembered by most economists as a period of

Accepted Answer

A)  very high rates of inflation. 
B)  very high rates of unemployment. 
C)  price controls and low inflation. 
D)  noninflationary growth. 
E)  all of the above. 
A)  very high rates of inflation. 
B)  very high rates of unemployment. 
C)  price controls and low inflation. 
D)  noninflationary growth. 
E)  all of the above.

Question 3

Which of the following is a true measure of national output?

Accepted Answer

A)  GDP at market price 
B)  Nominal GDP 
C)  GDP in current dollars 
D)  GDP in constant dollars 
A)  GDP at market price 
B)  Nominal GDP 
C)  GDP in current dollars 
D)  GDP in constant dollars

Question 4

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

Accepted Answer

A)  inward shift of the aggregate demand curve. 
B)  outward shift of the aggregate supply curve. 
C)  inward shift of the aggregate supply curve. 
D)  outward shift of the aggregate demand curve. 
A)  inward shift of the aggregate demand curve. 
B)  outward shift of the aggregate supply curve. 
C)  inward shift of the aggregate supply curve. 
D)  outward shift of the aggregate demand curve.

Question 5

Someone who studies the pricing policies of the Microsoft Corporation would be a microeconomist.

Accepted Answer

A) True 
 B)False

Question 6

Stabilization policy is the name given to government economic policies designed to

Accepted Answer

A)  stabilize the price level. 
B)  shorten and/or prevent recessions. 
C)  diminish unemployment. 
D)  All of the above are correct. 
A)  stabilize the price level. 
B)  shorten and/or prevent recessions. 
C)  diminish unemployment. 
D)  All of the above are correct.

Question 7

The term "stagflation" was invented in the 1970s to describe an economy experiencing both

Accepted Answer

A)  deflation and economic stagnation. 
B)  inflation and economic stagnation. 
C)  high inflation and high employment. 
D)  high inflation and high levels of economic growth. 
A)  deflation and economic stagnation. 
B)  inflation and economic stagnation. 
C)  high inflation and high employment. 
D)  high inflation and high levels of economic growth.

Question 8

Which of the following transactions would be included in GDP for 2011?

Accepted Answer

A)  On January 5, 2011, Chris Carter sold 100 shares of stock in IBM Corporation. 
B)  Bonita Delgado purchases a new 2011 Chevrolet on March 10, 2011. 
C)  Nadav Daniel buys a used desk from the "Struggling Students Used Furniture" store on May 9, 2011. 
D)  Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois, on June 23, 2011. 
A)  On January 5, 2011, Chris Carter sold 100 shares of stock in IBM Corporation. 
B)  Bonita Delgado purchases a new 2011 Chevrolet on March 10, 2011. 
C)  Nadav Daniel buys a used desk from the "Struggling Students Used Furniture" store on May 9, 2011. 
D)  Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois, on June 23, 2011.

Question 9

Intermediate goods, like milk sold by a farmer to a supermarket, are

Accepted Answer

A)  included in GDP. 
B)  included in GDP at market value. 
C)  included if it is imported. 
D)  are not included in GDP. 
A)  included in GDP. 
B)  included in GDP at market value. 
C)  included if it is imported. 
D)  are not included in GDP.

Question 10

Gross Domestic Product is calculated by adding together

Accepted Answer

A)  the number of goods and services produced in the economy. 
B)  money value of final goods and services. 
C)  number of workers employed in national production. 
D)  all commodities but not services produced in the economy. 
A)  the number of goods and services produced in the economy. 
B)  money value of final goods and services. 
C)  number of workers employed in national production. 
D)  all commodities but not services produced in the economy.

Question 11

Consider the economic effects of the September 11, 2001 terrorist attacks.Which of the following statements is correct?

Accepted Answer

A)  Reconstruction would lead to an increase in GDP. 
B)  Increased government spending on relief efforts in the U.S.would decrease GDP. 
C)  Lost items and buildings would lead to a decrease in GDP. 
D)  U.S.well-being was improved, despite the loss in GDP. 
A)  Reconstruction would lead to an increase in GDP. 
B)  Increased government spending on relief efforts in the U.S.would decrease GDP. 
C)  Lost items and buildings would lead to a decrease in GDP. 
D)  U.S.well-being was improved, despite the loss in GDP.

Question 12

What are the two basic principles of aggregation?

Accepted Answer

The two principles are:
1.Although the c

Question 13

Before the Great Depression of the 1930s, most economists believed that

Accepted Answer

A)  only active government policy could prevent recessions or inflation. 
B)  a capitalist economy had a natural tendency to cure recessions or inflation. 
C)  a capitalist economy had a natural tendency to inflation. 
D)  recessions and depressions were inevitable until the economy broke down completely. 
A)  only active government policy could prevent recessions or inflation. 
B)  a capitalist economy had a natural tendency to cure recessions or inflation. 
C)  a capitalist economy had a natural tendency to inflation. 
D)  recessions and depressions were inevitable until the economy broke down completely.

Question 14

Real GDP

Accepted Answer

A)  is nominal GDP adjusted for changes in the price level. 
B)  is also called nominal GDP. 
C)  measures GDP minus depreciation of capital. 
D)  will always change when prices change. 
A)  is nominal GDP adjusted for changes in the price level. 
B)  is also called nominal GDP. 
C)  measures GDP minus depreciation of capital. 
D)  will always change when prices change.

Question 15

If the government uses stabilization policies to reduce inflation, the economy may have to suffer

Accepted Answer

A)  higher rates of real GDP growth. 
B)  higher rates of unemployment. 
C)  lower rates of unemployment. 
D)  higher rates of price level growth. 
A)  higher rates of real GDP growth. 
B)  higher rates of unemployment. 
C)  lower rates of unemployment. 
D)  higher rates of price level growth.

Question 16

Mitsubishi Corporation of America builds a car in Normal, Illinois, and ships it to Japan for sale.In which country's GDP is this production included?

Accepted Answer

A)  Japan 
B)  both Japan and the United States 
C)  in Japan as retail value and the United States as wholesale value 
D)  half the value in Japan and half in the United States 
E)  the United States 
A)  Japan 
B)  both Japan and the United States 
C)  in Japan as retail value and the United States as wholesale value 
D)  half the value in Japan and half in the United States 
E)  the United States

Question 17

If aggregate demand shifts outward, the result will be inflation.

Accepted Answer

A) True 
 B)False

Question 18

The tax cut of 2001 turned out to be well-timed because it caused a

Accepted Answer

A)  rightward shift of the aggregate demand curve. 
B)  rightward shift of the aggregate supply curve. 
C)  leftward shift of the aggregate demand curve. 
D)  leftward shift of the aggregate supply curve. 
A)  rightward shift of the aggregate demand curve. 
B)  rightward shift of the aggregate supply curve. 
C)  leftward shift of the aggregate demand curve. 
D)  leftward shift of the aggregate supply curve.

Question 19

In the 1960s, U.S.economy experienced

Accepted Answer

A)  a substantial decline in real GDP but limited inflation. 
B)  a substantial decline in real GDP coupled with significant inflation. 
C)  substantial real GDP growth coupled with significant inflation. 
D)  substantial real GDP growth with limited inflation. 
A)  a substantial decline in real GDP but limited inflation. 
B)  a substantial decline in real GDP coupled with significant inflation. 
C)  substantial real GDP growth coupled with significant inflation. 
D)  substantial real GDP growth with limited inflation.

Question 20

An example of an abstraction used in macroeconomics is

Accepted Answer

A)  the price level. 
B)  total costs. 
C)  the tax rate. 
D)  the treasury bill rate. 
E)  proprietor's income. 
A)  the price level. 
B)  total costs. 
C)  the tax rate. 
D)  the treasury bill rate. 
E)  proprietor's income.

Exam 22: An Introduction to Macroeconomics

Stagflation is the simultaneous occurrence of inflation and high unemployment.

The 1960s are remembered by most economists as a period of

Which of the following is a true measure of national output?

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

Someone who studies the pricing policies of the Microsoft Corporation would be a microeconomist.

Stabilization policy is the name given to government economic policies designed to

The term "stagflation" was invented in the 1970s to describe an economy experiencing both

Which of the following transactions would be included in GDP for 2011?

Intermediate goods, like milk sold by a farmer to a supermarket, are

Gross Domestic Product is calculated by adding together

Consider the economic effects of the September 11, 2001 terrorist attacks.Which of the following statements is correct?

What are the two basic principles of aggregation?

Before the Great Depression of the 1930s, most economists believed that

Real GDP

If the government uses stabilization policies to reduce inflation, the economy may have to suffer

Mitsubishi Corporation of America builds a car in Normal, Illinois, and ships it to Japan for sale.In which country's GDP is this production included?

If aggregate demand shifts outward, the result will be inflation.

The tax cut of 2001 turned out to be well-timed because it caused a

In the 1960s, U.S.economy experienced

An example of an abstraction used in macroeconomics is

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

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