Question 1

The human consequences of the Great Depression included

Accepted Answer

A)  homeless families. 
B)  closed factories. 
C)  bankrupt farmers. 
D)  soup lines. 
E)  all of the above conditions. 
A)  homeless families. 
B)  closed factories. 
C)  bankrupt farmers. 
D)  soup lines. 
E)  all of the above conditions.

Question 2

Usually, increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence, during World War II, of

Accepted Answer

A)  full employment. 
B)  government ownership of factories. 
C)  full production. 
D)  wage and price controls. 
E)  high levels of patriotism. 
A)  full employment. 
B)  government ownership of factories. 
C)  full production. 
D)  wage and price controls. 
E)  high levels of patriotism.

Question 3

Dissatisfaction with public school education has led many parents to try home schooling for their children.If parents cut back on their jobs outside the home in order to spend time teaching their children at home, how will this affect GDP?

Accepted Answer

A)  GDP will increase. 
B)  Real GDP will increase and nominal GDP will decrease. 
C)  Both real and nominal GDP will increase. 
D)  GDP will decrease. 
A)  GDP will increase. 
B)  Real GDP will increase and nominal GDP will decrease. 
C)  Both real and nominal GDP will increase. 
D)  GDP will decrease.

Question 4

GDP in 2011 would not include the resale of a house built in 2000.

Accepted Answer

A) True 
 B)False

Question 5

Nominal GDP includes the current value of services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 6

China is the world's largest wheat producer.If China's domestic product grew by eleven percent in the previous year, it implies that

Accepted Answer

A)  production of wheat grew by more than eleven percent. 
B)  products other than wheat grew by less than eleven percent. 
C)  China's overall output grew by eleven percent. 
D)  production of wheat is declining in China. 
A)  production of wheat grew by more than eleven percent. 
B)  products other than wheat grew by less than eleven percent. 
C)  China's overall output grew by eleven percent. 
D)  production of wheat is declining in China.

Question 7

Nominal GDP is calculated by using

Accepted Answer

A)  prices set in a base year. 
B)  average prices in all major cities. 
C)  current prices 
D)  prices charged by initial producers. 
A)  prices set in a base year. 
B)  average prices in all major cities. 
C)  current prices 
D)  prices charged by initial producers.

Question 8

Large sport utility vehicles (SUVs) add significantly to air pollution because they do not have to meet passenger auto emission standards.The purchase of an SUV

Accepted Answer

A)  adds less to GDP since the pollution costs are subtracted from GDP. 
B)  adds to nominal but not real GDP because of the pollution costs. 
C)  is a net loss to GDP because the pollution costs are so large. 
D)  increases GDP. 
A)  adds less to GDP since the pollution costs are subtracted from GDP. 
B)  adds to nominal but not real GDP because of the pollution costs. 
C)  is a net loss to GDP because the pollution costs are so large. 
D)  increases GDP.

Question 9

Real GDP values current output of goods and services at their current prices.

Accepted Answer

A) True 
 B)False

Question 10

Amazon.com, an Internet retailer of books, buys a shipment of economics textbooks from a publisher.Is this included in GDP?

Accepted Answer

A)  Yes 
B)  No 
C)  It depends on how the payment is made 
D)  Yes, in real but not nominal GDP 
E)  Yes, in nominal but not real GDP 
A)  Yes 
B)  No 
C)  It depends on how the payment is made 
D)  Yes, in real but not nominal GDP 
E)  Yes, in nominal but not real GDP

Question 11

During the Great Depression of the 1930s, how much did output fall between 1929 and 1933?

Accepted Answer

A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  30 percent 
E)  50 percent 
A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  30 percent 
E)  50 percent

Question 12

The clearest sign of inflation would be a(n)

Accepted Answer

A)  increase in the price level. 
B)  increase in the quantity of total final output. 
C)  decrease in the quantity of total final output. 
D)  simultaneous increase in both output and prices. 
A)  increase in the price level. 
B)  increase in the quantity of total final output. 
C)  decrease in the quantity of total final output. 
D)  simultaneous increase in both output and prices.

Question 13

You are a collector of antique coins.You purchase a silver dollar minted in 1898.Is this sale included in GDP for the current year?

Accepted Answer

A)  Yes, provided the coin is in mint condition. 
B)  No, it is not. 
C)  No, unless the coin has been in circulation. 
D)  Yes, it is. 
E)  Only if it is part of the current money supply. 
A)  Yes, provided the coin is in mint condition. 
B)  No, it is not. 
C)  No, unless the coin has been in circulation. 
D)  Yes, it is. 
E)  Only if it is part of the current money supply.

Question 14

In 2001 the United States and its NATO allies dropped millions of dollars' worth of bombs on Afghanistan.These bombs and the aircraft from which they were dropped

Accepted Answer

A)  were netted out of GDP. 
B)  increased GDP and increased personal welfare. 
C)  decreased GDP and decreased personal welfare. 
D)  were added to GDP. 
A)  were netted out of GDP. 
B)  increased GDP and increased personal welfare. 
C)  decreased GDP and decreased personal welfare. 
D)  were added to GDP.

Question 15

Since the end of World War II, the economy of the United States has been more influenced by stabilization policy.One of the undesirable side effects of this has been that the economy now has a greater tendency to suffer from

Accepted Answer

A)  more severe recessions and depressions. 
B)  higher levels of unemployment and lower rates of employment growth. 
C)  lower rates of growth in real and nominal GDP. 
D)  more persistent periods of inflation. 
A)  more severe recessions and depressions. 
B)  higher levels of unemployment and lower rates of employment growth. 
C)  lower rates of growth in real and nominal GDP. 
D)  more persistent periods of inflation.

Question 16

In March 2011 many college students bet on the NCAA finals in dorm gambling pools.This is an example of

Accepted Answer

A)  real vs.nominal GDP. 
B)  the assumed value of household production. 
C)  underground economic activity. 
D)  the implicit value of leisure time. 
E)  a "bad" versus a "good." 
A)  real vs.nominal GDP. 
B)  the assumed value of household production. 
C)  underground economic activity. 
D)  the implicit value of leisure time. 
E)  a "bad" versus a "good."

Question 17

In economics, aggregation refers to

Accepted Answer

A)  collecting sample specimens for reclassification. 
B)  using small stones to pave an artistic walkway. 
C)  combining many markets into one overall economy. 
D)  using large computers to solve economic problems. 
A)  collecting sample specimens for reclassification. 
B)  using small stones to pave an artistic walkway. 
C)  combining many markets into one overall economy. 
D)  using large computers to solve economic problems.

Question 18

The worst post-World War II recession in the United States occurred in

Accepted Answer

A)  1964. 
B)  1973. 
C)  1981. 
D)  2007. 
A)  1964. 
B)  1973. 
C)  1981. 
D)  2007.

Question 19

Gross Domestic Product is the

Accepted Answer

A)  least inclusive aggregate used to measure the economy. 
B)  total of goods and services desired by consumers. 
C)  most comprehensive measure of total output in the United States. 
D)  most accurate measure of the trade balance of the United States. 
A)  least inclusive aggregate used to measure the economy. 
B)  total of goods and services desired by consumers. 
C)  most comprehensive measure of total output in the United States. 
D)  most accurate measure of the trade balance of the United States.

Question 20

The vertical axis of the aggregate demand-aggregate supply model measures the amount of

Accepted Answer

A)  total employment. 
B)  total final output. 
C)  the price level. 
D)  net exports. 
A)  total employment. 
B)  total final output. 
C)  the price level. 
D)  net exports.

Exam 22: An Introduction to Macroeconomics

The human consequences of the Great Depression included

Usually, increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence, during World War II, of

Dissatisfaction with public school education has led many parents to try home schooling for their children.If parents cut back on their jobs outside the home in order to spend time teaching their children at home, how will this affect GDP?

GDP in 2011 would not include the resale of a house built in 2000.

Nominal GDP includes the current value of services produced in the economy.

China is the world's largest wheat producer.If China's domestic product grew by eleven percent in the previous year, it implies that

Nominal GDP is calculated by using

Large sport utility vehicles (SUVs) add significantly to air pollution because they do not have to meet passenger auto emission standards.The purchase of an SUV

Real GDP values current output of goods and services at their current prices.

Amazon.com, an Internet retailer of books, buys a shipment of economics textbooks from a publisher.Is this included in GDP?

During the Great Depression of the 1930s, how much did output fall between 1929 and 1933?

The clearest sign of inflation would be a(n)

You are a collector of antique coins.You purchase a silver dollar minted in 1898.Is this sale included in GDP for the current year?

In 2001 the United States and its NATO allies dropped millions of dollars' worth of bombs on Afghanistan.These bombs and the aircraft from which they were dropped

Since the end of World War II, the economy of the United States has been more influenced by stabilization policy.One of the undesirable side effects of this has been that the economy now has a greater tendency to suffer from

In March 2011 many college students bet on the NCAA finals in dorm gambling pools.This is an example of

In economics, aggregation refers to

The worst post-World War II recession in the United States occurred in

Gross Domestic Product is the

The vertical axis of the aggregate demand-aggregate supply model measures the amount of

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