Question 1

Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?

Accepted Answer

Recession and unemployment are often cau

Question 2

If a woman marries her housekeeper, GDP would remain constant.

Accepted Answer

A) True 
 B)False

Question 3

In the United States during the period from 1870 to 1940, the price level was most likely to

Accepted Answer

A)  fluctuate. 
B)  increase. 
C)  decrease. 
D)  trend generally upward. 
A)  fluctuate. 
B)  increase. 
C)  decrease. 
D)  trend generally upward.

Question 4

Growth in GDP systematically understates the growth in national well being because

Accepted Answer

A)  ecological costs are netted out of GDP. 
B)  "bads" as well as "goods" get included in GDP. 
C)  investment is not included in GDP. 
D)  as a country gets richer, leisure time increases. 
A)  ecological costs are netted out of GDP. 
B)  "bads" as well as "goods" get included in GDP. 
C)  investment is not included in GDP. 
D)  as a country gets richer, leisure time increases.

Question 5

Economic aggregates are not observable in the "real world."

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is counted in GDP?

Accepted Answer

A)  the cost of the reconstruction and cleanup following September 11, 2001. 
B)  the value of leisure time 
C)  the value of a househusband's work at home 
D)  the value of your do-it-yourself work 
A)  the cost of the reconstruction and cleanup following September 11, 2001. 
B)  the value of leisure time 
C)  the value of a househusband's work at home 
D)  the value of your do-it-yourself work

Question 7

Figure 5-2
  
-In Figure 5-2, if the aggregate demand curve shifts outward over time, the economy will

Accepted Answer

A)  experience inflation. 
B)  see a sustained decrease in the price level. 
C)  experience a significant decrease in unemployment. 
D)  experience economic recession. 
A)  experience inflation. 
B)  see a sustained decrease in the price level. 
C)  experience a significant decrease in unemployment. 
D)  experience economic recession.

Question 8

Aggregate demand and supply curves have been widely used to analyze the performance of the macroeconomy.Figure 5-3 shows four diagrams that represent different changes in the macroeconomy.Choose the diagram that best represents the situations described in the following questions.
Figure 5-3
  
-Which graph in Figure 5-3 best represents the economic conditions of the American economy in 2001?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 9

Gross Domestic Product includes the sale of intermediate goods and services.

Accepted Answer

A) True 
 B)False

Question 10

The Great Depression ended in the United States when

Accepted Answer

A)  the New Deal reforms were initiated by President Roosevelt. 
B)  deficit spending ended in 1937. 
C)  the United States returned to the gold standard in 1940. 
D)  the United States began to mobilize for war in the early 1940s. 
E)  the German economy suffered hyperinflation in the 1920s. 
A)  the New Deal reforms were initiated by President Roosevelt. 
B)  deficit spending ended in 1937. 
C)  the United States returned to the gold standard in 1940. 
D)  the United States began to mobilize for war in the early 1940s. 
E)  the German economy suffered hyperinflation in the 1920s.

Question 11

Which of the following would be counted in the U.S.GDP for 2011?

Accepted Answer

A)  a Ford Fiesta made in Mexico 
B)  the $5,000 an investor used to purchase stock in Home Depot 
C)  Ford buying tires from Goodyear for new Ford Mustangs 
D)  none of the above 
A)  a Ford Fiesta made in Mexico 
B)  the $5,000 an investor used to purchase stock in Home Depot 
C)  Ford buying tires from Goodyear for new Ford Mustangs 
D)  none of the above

Question 12

Business cycles in the United States after World War II have been

Accepted Answer

A)  more severe than before the war. 
B)  less severe than before the war. 
C)  the same as the pre-war cycles. 
D)  easier to predict than the pre-war cycles. 
A)  more severe than before the war. 
B)  less severe than before the war. 
C)  the same as the pre-war cycles. 
D)  easier to predict than the pre-war cycles.

Question 13

The key characteristic of macroeconomics is the process of aggregation.

Accepted Answer

A) True 
 B)False

Question 14

In 2001, the first year of the Bush administration, Americans learned that recessions were a thing of the past.

Accepted Answer

A) True 
 B)False

Question 15

In 2011, Richard buys a 2003 Chevrolet minivan from a neighbor.Will this be counted in the GDP for 2011?

Accepted Answer

A)  Yes 
B)  No 
C)  Yes, if sales tax is paid 
D)  No, because the purchase was from an individual not a dealer 
A)  Yes 
B)  No 
C)  Yes, if sales tax is paid 
D)  No, because the purchase was from an individual not a dealer

Question 16

Gross Domestic Product represents the money value of all final goods and services produced in the domestic economy within the year.

Accepted Answer

A) True 
 B)False

Question 17

John Maynard Keynes wrote The General Theory of Employment, Interest, and Money (1936) to

Accepted Answer

A)  improve the gold supply balances of the British government. 
B)  prove that the punitive nature of the Treaty of Versailles would ultimately lead to recession in Europe. 
C)  prove that active government policy would produce unemployment and high rates of inflation. 
D)  demonstrate that pessimistic consumers and businesspersons could reduce their spending and condemn the economy to long-run stagnation. 
A)  improve the gold supply balances of the British government. 
B)  prove that the punitive nature of the Treaty of Versailles would ultimately lead to recession in Europe. 
C)  prove that active government policy would produce unemployment and high rates of inflation. 
D)  demonstrate that pessimistic consumers and businesspersons could reduce their spending and condemn the economy to long-run stagnation.

Question 18

The most severe depression in the United States was the 30 percent decrease in real GDP that occurred between

Accepted Answer

A)  1899 and 1913. 
B)  1929 and 1933. 
C)  1959 and 1963. 
D)  1979 and 1983. 
A)  1899 and 1913. 
B)  1929 and 1933. 
C)  1959 and 1963. 
D)  1979 and 1983.

Question 19

A period in which the price level is rising is experiencing

Accepted Answer

A)  inflation. 
B)  reflation. 
C)  deflation. 
D)  deconstruction. 
A)  inflation. 
B)  reflation. 
C)  deflation. 
D)  deconstruction.

Question 20

Nominal GDP is

Accepted Answer

A)  also called real GDP. 
B)  a more accurate measure than real GDP. 
C)  real GDP adjusted for changes in the price level. 
D)  GDP measured in current prices. 
A)  also called real GDP. 
B)  a more accurate measure than real GDP. 
C)  real GDP adjusted for changes in the price level. 
D)  GDP measured in current prices.

Exam 22: An Introduction to Macroeconomics

Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?

If a woman marries her housekeeper, GDP would remain constant.

In the United States during the period from 1870 to 1940, the price level was most likely to

Growth in GDP systematically understates the growth in national well being because

Economic aggregates are not observable in the "real world."

Which of the following is counted in GDP?

Figure 5-2 -In Figure 5-2, if the aggregate demand curve shifts outward over time, the economy will

Gross Domestic Product includes the sale of intermediate goods and services.

The Great Depression ended in the United States when

Which of the following would be counted in the U.S.GDP for 2011?

Business cycles in the United States after World War II have been

The key characteristic of macroeconomics is the process of aggregation.

In 2001, the first year of the Bush administration, Americans learned that recessions were a thing of the past.

In 2011, Richard buys a 2003 Chevrolet minivan from a neighbor.Will this be counted in the GDP for 2011?

Gross Domestic Product represents the money value of all final goods and services produced in the domestic economy within the year.

John Maynard Keynes wrote The General Theory of Employment, Interest, and Money (1936) to

The most severe depression in the United States was the 30 percent decrease in real GDP that occurred between

A period in which the price level is rising is experiencing

Nominal GDP 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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