Question 1

During the first year of the Obama administration in 2009, the American economy experienced

Accepted Answer

A) low unemployment. 
B) stagnation. 
C) slow rate of growth. 
D) deflation. 
A) low unemployment. 
B) stagnation. 
C) slow rate of growth. 
D) deflation.

Question 2

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 3

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 4

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 5

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 6

In the past 100 years, the U.S.economy has primarily experienced

Accepted Answer

A) deflation. 
B) unemployment. 
C) inflation. 
D) depression. 
A) deflation. 
B) unemployment. 
C) inflation. 
D) depression.

Question 7

The Italian government collects a smaller amount of the taxes it is owed than the U.S.government.Other things being equal,

Accepted Answer

A) U.S.and Italian GDP should be equal. 
B) U.S.GDP may be higher than Italian GDP. 
C) U.S.GDP should be lower than Italian GDP. 
D) U.S.residents are better off than Italian residents. 
A) U.S.and Italian GDP should be equal. 
B) U.S.GDP may be higher than Italian GDP. 
C) U.S.GDP should be lower than Italian GDP. 
D) U.S.residents are better off than Italian residents.

Question 8

The end of the housing boom of the early 2000s can be illustrated by a decline in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 9

The definition of gross domestic product is

Accepted Answer

A) the total value of all sales in the economy. 
B) the total value of production in the domestic economy plus the production of domestic firms in foreign countries. 
C) the total value of all sales of final and intermediate goods in the domestic economy. 
D) the total of the money values of all final goods and services produced in the domestic economy within a specific time period. 
A) the total value of all sales in the economy. 
B) the total value of production in the domestic economy plus the production of domestic firms in foreign countries. 
C) the total value of all sales of final and intermediate goods in the domestic economy. 
D) the total of the money values of all final goods and services produced in the domestic economy within a specific time period.

Question 10

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 11

Macroeconomic models use abstract concepts such as "price level" and "national income" that are calculated by combining many markets into one.This process is known as

Accepted Answer

A) analysis and synthesis. 
B) integration and derivation. 
C) conceptualization. 
D) aggregation. 
A) analysis and synthesis. 
B) integration and derivation. 
C) conceptualization. 
D) aggregation.

Question 12

Stabilization policy has helped ameliorate the impact of recessions since the 1950s.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Stabilization policy often faces a trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following transactions would be included in GDP for 2015?

Accepted Answer

A) On January 5, 2015, Chris Carter sold 100 shares of stock in IBM Corporation. 
B) Bonita Delgado purchases a new 2015 Chevrolet on March 10, 2015. 
C) Nadav Daniel buys a used desk from the "Struggling Students Used Furniture" store on May 9, 2015. 
D) Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois, on June 23, 2015. 
A) On January 5, 2015, Chris Carter sold 100 shares of stock in IBM Corporation. 
B) Bonita Delgado purchases a new 2015 Chevrolet on March 10, 2015. 
C) Nadav Daniel buys a used desk from the "Struggling Students Used Furniture" store on May 9, 2015. 
D) Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois, on June 23, 2015.

Question 16

The aggregate demand curve shows the quantity of domestic product

Accepted Answer

A) produced at each possible price level. 
B) demanded and produced at each possible price level. 
C) that is exported at each possible price level. 
D) demanded at each possible price level. 
A) produced at each possible price level. 
B) demanded and produced at each possible price level. 
C) that is exported at each possible price level. 
D) demanded at each possible price level.

Question 17

The key characteristic of macroeconomics is the process of aggregation.

Accepted Answer

A) True 
 B)False

Question 18

John Maynard Keynes wrote that economies can suffer recession or depression for many years if the government does not intervene.

Accepted Answer

A) True 
 B)False

Question 19

The main reason that President Clinton was forced to revise his campaign promise to cut taxes was that, in 1993, he faced a large

Accepted Answer

A) balance of payments surplus. 
B) balance of payments deficit. 
C) federal budget deficit. 
D) federal budget surplus. 
A) balance of payments surplus. 
B) balance of payments deficit. 
C) federal budget deficit. 
D) federal budget surplus.

Question 20

Which of the following is included in GDP?

Accepted Answer

A) The value of illegally produced goods 
B) The value of housework by a stay-at-home dad 
C) The value of volunteer work done at a local homeless shelter 
D) The cost of government-provided social services 
A) The value of illegally produced goods 
B) The value of housework by a stay-at-home dad 
C) The value of volunteer work done at a local homeless shelter 
D) The cost of government-provided social services

Exam 21: An Introduction to Macroeconomics

During the first year of the Obama administration in 2009, the American economy experienced

Nominal GDP is calculated by using

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

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

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

In the past 100 years, the U.S.economy has primarily experienced

The Italian government collects a smaller amount of the taxes it is owed than the U.S.government.Other things being equal,

The end of the housing boom of the early 2000s can be illustrated by a decline in aggregate demand.

The definition of gross domestic product is

The clearest sign of inflation would be a(n)

Macroeconomic models use abstract concepts such as "price level" and "national income" that are calculated by combining many markets into one.This process is known as

Stabilization policy has helped ameliorate the impact of recessions since the 1950s.

Stabilization policy often faces a trade-off between inflation and unemployment.

Which of the following transactions would be included in GDP for 2015?

The aggregate demand curve shows the quantity of domestic product

The key characteristic of macroeconomics is the process of aggregation.

John Maynard Keynes wrote that economies can suffer recession or depression for many years if the government does not intervene.

The main reason that President Clinton was forced to revise his campaign promise to cut taxes was that, in 1993, he faced a large

Which of the following is included in GDP?

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

Filters

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