Question 1

When Sarah watches her baby sister each Saturday, gross domestic product increases.

Accepted Answer

A) True 
 B)False

Question 2

The Great Depression of the 1930s

Accepted Answer

A) confirmed the value of a "hands off" policy for governments. 
B) was exacerbated by an expansionary monetary policy. 
C) was a worldwide event. 
D) continued throughout the 1940s without any interruption. 
A) confirmed the value of a "hands off" policy for governments. 
B) was exacerbated by an expansionary monetary policy. 
C) was a worldwide event. 
D) continued throughout the 1940s without any interruption.

Question 3

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  
-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 4

In her book on the American work week, economist Juliet Schorr argues that Americans work too much.Her argument may be interpreted as concluding that this behavior

Accepted Answer

A) increases GDP but decreases well-being. 
B) increases GDP and increases well-being. 
C) decreases GDP and decreases well-being. 
D) decreases GDP but increases well-being. 
A) increases GDP but decreases well-being. 
B) increases GDP and increases well-being. 
C) decreases GDP and decreases well-being. 
D) decreases GDP but increases well-being.

Question 5

The major difference between nominal GDP and real GDP is that

Accepted Answer

A) real GDP is the absolute value of goods and services and nominal GDP is a relative value. 
B) real GDP refers to products made in the United States and nominal GDP refers to both exports and imports. 
C) nominal GDP is the market value and real GDP has been adjusted for inflation. 
D) real GDP is a relative value and nominal GDP is an absolute value. 
A) real GDP is the absolute value of goods and services and nominal GDP is a relative value. 
B) real GDP refers to products made in the United States and nominal GDP refers to both exports and imports. 
C) nominal GDP is the market value and real GDP has been adjusted for inflation. 
D) real GDP is a relative value and nominal GDP is an absolute value.

Question 6

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 7

Stabilization policy describes

Accepted Answer

A) government programs designed to prevent or shorten recessions and counteract inflation. 
B) legislation that redistributes income. 
C) policy that removes price controls. 
D) policy that follows natural disasters. 
A) government programs designed to prevent or shorten recessions and counteract inflation. 
B) legislation that redistributes income. 
C) policy that removes price controls. 
D) policy that follows natural disasters.

Question 8

A rightward shift in the aggregate demand curve is most likely to result in

Accepted Answer

A) deflation. 
B) recession. 
C) inflation. 
D) decrease in employment. 
A) deflation. 
B) recession. 
C) inflation. 
D) decrease in employment.

Question 9

Government policy to reduce unemployment and increase national output can be illustrated by an

Accepted Answer

A) outward shift of the aggregate demand curve caused by an increase in government spending. 
B) outward shift of the aggregate supply curve caused by a reduction in government spending. 
C) inward shift of the aggregate demand curve caused by an increase in government spending. 
D) inward shift of the aggregate supply curve caused by a reduction in government spending. 
A) outward shift of the aggregate demand curve caused by an increase in government spending. 
B) outward shift of the aggregate supply curve caused by a reduction in government spending. 
C) inward shift of the aggregate demand curve caused by an increase in government spending. 
D) inward shift of the aggregate supply curve caused by a reduction in government spending.

Question 10

Toyota (a Japanese-based company) produces Tundras in the state of Texas.In which country's GDP is it included?

Accepted Answer

A) Japan and the United States 
B) Japan because Toyota is a Japanese company 
C) The United States because that is where it was produced 
D) Neither country because it is sold internationally 
A) Japan and the United States 
B) Japan because Toyota is a Japanese company 
C) The United States because that is where it was produced 
D) Neither country because it is sold internationally

Question 11

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 12

International per capita GDP comparisons are misleading when countries involved differ greatly in

Accepted Answer

A) the type of economic system each country uses to solve its economic problem. 
B) the freedom of their election processes. 
C) the percentage of economic activity that is transacted in organized markets. 
D) the quantity of human and natural resources they possess. 
A) the type of economic system each country uses to solve its economic problem. 
B) the freedom of their election processes. 
C) the percentage of economic activity that is transacted in organized markets. 
D) the quantity of human and natural resources they possess.

Exam 21: An Introduction to Macroeconomics

When Sarah watches her baby sister each Saturday, gross domestic product increases.

The Great Depression of the 1930s

In her book on the American work week, economist Juliet Schorr argues that Americans work too much.Her argument may be interpreted as concluding that this behavior

The major difference between nominal GDP and real GDP is that

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

Stabilization policy describes

A rightward shift in the aggregate demand curve is most likely to result in

Government policy to reduce unemployment and increase national output can be illustrated by an

Toyota (a Japanese-based company) produces Tundras in the state of Texas.In which country's GDP is it included?

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

International per capita GDP comparisons are misleading when countries involved differ greatly in

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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