Question 1

If a macroeconomist aggregates many markets into one, then

Accepted Answer

A)  individual market differences are eliminated. 
B)  one must not confuse ravioli and hot dogs. 
C)  she is performing a meaningless exercise. 
D)  differences between products must still be noted. 
A)  individual market differences are eliminated. 
B)  one must not confuse ravioli and hot dogs. 
C)  she is performing a meaningless exercise. 
D)  differences between products must still be noted.

Question 2

According to the text, the government can use aggregate demand management policies to reduce unemployment rates.A byproduct of this policy will be

Accepted Answer

A)  an increase in the price level. 
B)  a decrease in real GDP. 
C)  a decrease in the price level. 
D)  an increase in the budget surplus. 
A)  an increase in the price level. 
B)  a decrease in real GDP. 
C)  a decrease in the price level. 
D)  an increase in the budget surplus.

Question 3

A recession is a period during which

Accepted Answer

A)  aggregate demand, production, and unemployment rises. 
B)  aggregate demand, production, and unemployment falls. 
C)  aggregate demand, production, and unemployment remain the same. 
D)  aggregate demand and production rises while unemployment remains the same. 
E)  aggregate demand and production falls while unemployment rises. 
A)  aggregate demand, production, and unemployment rises. 
B)  aggregate demand, production, and unemployment falls. 
C)  aggregate demand, production, and unemployment remain the same. 
D)  aggregate demand and production rises while unemployment remains the same. 
E)  aggregate demand and production falls while unemployment rises.

Question 4

Poor Asian countries may have per-capita GDP's that may be less than $250.Why is this somewhat misleading for comparative purposes?

Accepted Answer

A)  Most rich country GDP is nonmarket activity. 
B)  A significant amount of poor country GDP is nonmarket activity. 
C)  Poor countries do not use dollars. 
D)  Poor countries have few resources. 
A)  Most rich country GDP is nonmarket activity. 
B)  A significant amount of poor country GDP is nonmarket activity. 
C)  Poor countries do not use dollars. 
D)  Poor countries have few resources.

Question 5

If the aggregate demand curve shifts to the left and the aggregate supply curve shifts to the right, the result will be a

Accepted Answer

A)  decrease in the level of output. 
B)  decrease in the price level. 
C)  higher price level. 
D)  higher unemployment rate. 
A)  decrease in the level of output. 
B)  decrease in the price level. 
C)  higher price level. 
D)  higher unemployment rate.

Question 6

Phoebe and Rachel quit running in Central Park and join a health club to run on treadmills.This decision

Accepted Answer

A)  has no effect on GDP. 
B)  increases GDP. 
C)  decreases GDP. 
D)  increases nominal but not real GDP. 
A)  has no effect on GDP. 
B)  increases GDP. 
C)  decreases GDP. 
D)  increases nominal but not real GDP.

Question 7

Part of the good economic performance of the United States in the 1990s can be explained by a rightward-shifting aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 8

Gross Domestic Product accurately measures the environmental costs of producing all goods and services.

Accepted Answer

A) True 
 B)False

Question 9

Since countries differ in the amount of economic activity that is transacted in organized markets,

Accepted Answer

A)  some countries are more productive than others. 
B)  persons live better in some countries than others. 
C)  international comparisons of per capita GDP are often misleading. 
D)  comparisons between countries are totally impossible. 
A)  some countries are more productive than others. 
B)  persons live better in some countries than others. 
C)  international comparisons of per capita GDP are often misleading. 
D)  comparisons between countries are totally impossible.

Question 10

An increase in aggregate demand is most likely to result in

Accepted Answer

A)  inflation. 
B)  recession. 
C)  economic stagnation. 
D)  a decrease in real GDP. 
A)  inflation. 
B)  recession. 
C)  economic stagnation. 
D)  a decrease in real GDP.

Question 11

Figure 5-2
  
-In Figure 5-2, an increase in government spending would cause

Accepted Answer

A)  an outward shift in the aggregate supply curve and an increase in the price level. 
B)  an outward shift in the aggregate demand curve and an increase in the price level. 
C)  an inward shift of the aggregate demand curve and an increase in the price level. 
D)  an inward shift of the aggregate demand curve and a decrease in the price level. 
A)  an outward shift in the aggregate supply curve and an increase in the price level. 
B)  an outward shift in the aggregate demand curve and an increase in the price level. 
C)  an inward shift of the aggregate demand curve and an increase in the price level. 
D)  an inward shift of the aggregate demand curve and a decrease in the price level.

Question 12

Keynes' great book offered the promise of ending depressions through

Accepted Answer

A)  investors reacting to lower interest rates. 
B)  consumers taking over the ownership of factories. 
C)  government nationalizing key industries. 
D)  government influencing aggregate demand. 
A)  investors reacting to lower interest rates. 
B)  consumers taking over the ownership of factories. 
C)  government nationalizing key industries. 
D)  government influencing aggregate demand.

Question 13

Does GDP for a particular year include items produced in a previous year?

Accepted Answer

A)  Nominal GDP will not and real GDP will 
B)  Real GDP will and nominal GDP will not 
C)  Yes for both nominal and real GDP 
D)  No for both nominal and real GDP 
A)  Nominal GDP will not and real GDP will 
B)  Real GDP will and nominal GDP will not 
C)  Yes for both nominal and real GDP 
D)  No for both nominal and real GDP

Question 14

What makes the macroeconomic performance of the 1993 to 1998 period so unusual is the

Accepted Answer

A)  simultaneous occurrence of unemployment and inflation increases. 
B)  simultaneous occurrence of real GDP decreases and inflation rate increases. 
C)  occurrence of real GDP decreases while the unemployment rate increases. 
D)  simultaneous occurrence of reduced unemployment rates and falling inflation rates. 
A)  simultaneous occurrence of unemployment and inflation increases. 
B)  simultaneous occurrence of real GDP decreases and inflation rate increases. 
C)  occurrence of real GDP decreases while the unemployment rate increases. 
D)  simultaneous occurrence of reduced unemployment rates and falling inflation rates.

Question 15

Define and distinguish between real and nominal GDP.Explain why the distinction is important to economists.

Accepted Answer

Real GDP (or GDP in constant dollars) is

Question 16

Inflation refers to an increase in the

Accepted Answer

A)  price level. 
B)  rate of inflation. 
C)  total income. 
D)  real GDP. 
A)  price level. 
B)  rate of inflation. 
C)  total income. 
D)  real GDP.

Question 17

Technological change, such as the information technology revolution of the 1990s can shift the aggregate supply curve outward.If, at the same time, the government is decreasing spending, the most likely outcome of these two factors is a(n)

Accepted Answer

A)  increase in the price level. 
B)  decrease in the price level. 
C)  increase in real GDP. 
D)  decrease in real GDP. 
A)  increase in the price level. 
B)  decrease in the price level. 
C)  increase in real GDP. 
D)  decrease in real GDP.

Question 18

A macroeconomist would concentrate on which of the following issues?

Accepted Answer

A)  the price of pizzas 
B)  the profits of the IBM Corporation 
C)  the unemployment rate in Germany 
D)  the market for hot dogs 
A)  the price of pizzas 
B)  the profits of the IBM Corporation 
C)  the unemployment rate in Germany 
D)  the market for hot dogs

Question 19

When people smoke cigarettes, their friends and family members may become sick.This affects GDP by

Accepted Answer

A)  reducing GDP by the amount of medical care needed. 
B)  reducing GDP by the cost of the cigarettes purchased. 
C)  increasing GDP by the cost of the medical care and the cost of the cigarettes purchased. 
D)  decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased. 
A)  reducing GDP by the amount of medical care needed. 
B)  reducing GDP by the cost of the cigarettes purchased. 
C)  increasing GDP by the cost of the medical care and the cost of the cigarettes purchased. 
D)  decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.

Question 20

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 aggregate demand-induced Great Depression of the 1930s?

Accepted Answer

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

Exam 22: An Introduction to Macroeconomics

If a macroeconomist aggregates many markets into one, then

According to the text, the government can use aggregate demand management policies to reduce unemployment rates.A byproduct of this policy will be

A recession is a period during which

Poor Asian countries may have per-capita GDP's that may be less than $250.Why is this somewhat misleading for comparative purposes?

If the aggregate demand curve shifts to the left and the aggregate supply curve shifts to the right, the result will be a

Phoebe and Rachel quit running in Central Park and join a health club to run on treadmills.This decision

Part of the good economic performance of the United States in the 1990s can be explained by a rightward-shifting aggregate supply curve.

Gross Domestic Product accurately measures the environmental costs of producing all goods and services.

Since countries differ in the amount of economic activity that is transacted in organized markets,

An increase in aggregate demand is most likely to result in

Figure 5-2 -In Figure 5-2, an increase in government spending would cause

Keynes' great book offered the promise of ending depressions through

Does GDP for a particular year include items produced in a previous year?

What makes the macroeconomic performance of the 1993 to 1998 period so unusual is the

Define and distinguish between real and nominal GDP.Explain why the distinction is important to economists.

Inflation refers to an increase in the

Technological change, such as the information technology revolution of the 1990s can shift the aggregate supply curve outward.If, at the same time, the government is decreasing spending, the most likely outcome of these two factors is a(n)

A macroeconomist would concentrate on which of the following issues?

When people smoke cigarettes, their friends and family members may become sick.This affects GDP by

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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