Question 1

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Accepted Answer

A) True 
 B)False

Question 2

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas)
But sold them for $12 each. Based on this information, we can conclude that Harry's production of
Large pepperoni pizzas

Accepted Answer

A)  increased both nominal and real GDP from last year. 
B)  increased nominal GDP from last year, but real GDP was unaffected. 
C)  increased real GDP from last year, but nominal GDP was unaffected. 
D)  did not change either nominal or real GDP from last year. 
A)  increased both nominal and real GDP from last year. 
B)  increased nominal GDP from last year, but real GDP was unaffected. 
C)  increased real GDP from last year, but nominal GDP was unaffected. 
D)  did not change either nominal or real GDP from last year.

Question 3

During recessions, business must

Accepted Answer

A)  cut per-unit production costs so they can cut the selling price and increase sales. 
B)  reduce output levels to bring quantities supplied in line with the reduced quantity demanded. 
C)  cut per-unit production costs and increase the selling price, and also increase output levels to bring quantities supplied in line with the expected quantity demanded. 
D)  increase per-unit production costs so they can reduce sales even further, and also reduce demand to match the quantities supplied. 
E)  cut per-unit production costs to reduce the selling price, and also reduce output levels to bring quantities supplied in line with the reduced quantity demanded. 
A)  cut per-unit production costs so they can cut the selling price and increase sales. 
B)  reduce output levels to bring quantities supplied in line with the reduced quantity demanded. 
C)  cut per-unit production costs and increase the selling price, and also increase output levels to bring quantities supplied in line with the expected quantity demanded. 
D)  increase per-unit production costs so they can reduce sales even further, and also reduce demand to match the quantities supplied. 
E)  cut per-unit production costs to reduce the selling price, and also reduce output levels to bring quantities supplied in line with the reduced quantity demanded.

Question 4

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their
purchases of goods and services.

Accepted Answer

A) True 
 B)False

Question 5

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

Accepted Answer

One way to deal with unexpected shifts i

Question 6

The period known as the Industrial Revolution began in the United States in the late 1800s.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following best represents the effect of an increase in investment?

Accepted Answer

A)  moving from point a to point b 
B)  moving from point d to point c 
C)  moving from point a to point c 
D)  moving from point b to point d 
A)  moving from point a to point b 
B)  moving from point d to point c 
C)  moving from point a to point c 
D)  moving from point b to point d

Question 8

What social problems have been linked to higher rates of unemployment?

Accepted Answer

Higher unemployment rates are

Question 9

Which of the following statements is true?

Accepted Answer

A)  Short-run economic ﬂuctuations are made worse because prices are ﬂexible. 
B)  Short-run economic ﬂuctuations would be less severe if prices were inﬂexible. 
C)  If prices were fully inﬂexible, there would be no short-run economic ﬂuctuations. 
D)  If prices were fully ﬂexible, there would be no short-run economic ﬂuctuations. 
A)  Short-run economic ﬂuctuations are made worse because prices are ﬂexible. 
B)  Short-run economic ﬂuctuations would be less severe if prices were inﬂexible. 
C)  If prices were fully inﬂexible, there would be no short-run economic ﬂuctuations. 
D)  If prices were fully ﬂexible, there would be no short-run economic ﬂuctuations.

Question 10

For an economy to increase investment, it must

Accepted Answer

A)  increase saving. 
B)  increase present consumption. 
C)  buy more stocks and bonds. 
D)  increase nominal GDP. 
A)  increase saving. 
B)  increase present consumption. 
C)  buy more stocks and bonds. 
D)  increase nominal GDP.

Question 11

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a
Recession reduce demand for laptop computers, we would expect Techno to

Accepted Answer

A)  reduce output in the long run. 
B)  reduce output in the short run. 
C)  raise prices in the short run to compensate for lost revenue. 
D)  lower prices in the short run to offset the reduced demand. 
A)  reduce output in the long run. 
B)  reduce output in the short run. 
C)  raise prices in the short run to compensate for lost revenue. 
D)  lower prices in the short run to offset the reduced demand.

Question 12

(Consider This) Describe the economic conditions of the Great Recession.

Accepted Answer

The Great Recession was triggered by a s

Question 13

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Accepted Answer

A)  will increase by 5 percent. 
B)  will not change. 
C)  will increase by 1 percent. 
D)  will decrease. 
A)  will increase by 5 percent. 
B)  will not change. 
C)  will increase by 1 percent. 
D)  will decrease.

Question 14

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand
Shock and prices are ﬂexible?

Accepted Answer

A)  The ﬁrm's inventories will not change. 
B)  The ﬁrm's inventories will increase by 200 computers per week. 
C)  The ﬁrm's inventories will decrease by 150 computers per week. 
D)  The ﬁrm's inventories will increase by 350 computers per week. 
A)  The ﬁrm's inventories will not change. 
B)  The ﬁrm's inventories will increase by 200 computers per week. 
C)  The ﬁrm's inventories will decrease by 150 computers per week. 
D)  The ﬁrm's inventories will increase by 350 computers per week.

Question 15

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Accepted Answer

A)  is highly susceptible to inﬂation. 
B)  faces ﬂuctuating output levels whenever there is a demand shock. 
C)  is capable of always producing at its optimal capacity. 
D)  is largely immune to business cycles. 
A)  is highly susceptible to inﬂation. 
B)  faces ﬂuctuating output levels whenever there is a demand shock. 
C)  is capable of always producing at its optimal capacity. 
D)  is largely immune to business cycles.

Question 16

Suppose that inventories are falling. We can expect that, in the future,

Accepted Answer

A)  unemployment will likely increase. 
B)  unemployment will likely decrease. 
C)  unemployment could increase or decrease, as its direction cannot be predicted based on inventories. 
D)  real GDP will likely decrease. 
A)  unemployment will likely increase. 
B)  unemployment will likely decrease. 
C)  unemployment could increase or decrease, as its direction cannot be predicted based on inventories. 
D)  real GDP will likely decrease.

Question 17

Modern economic growth refers to any situation where a nation's output increases.

Accepted Answer

A) True 
 B)False

Question 18

Decisions about saving and investment are

Accepted Answer

A)  generally made under conditions of complete certainty about the future. 
B)  complicated by the fact that the future is uncertain. 
C)  unaffected by expectations of the future. 
D)  independent of expectations about the future. 
A)  generally made under conditions of complete certainty about the future. 
B)  complicated by the fact that the future is uncertain. 
C)  unaffected by expectations of the future. 
D)  independent of expectations about the future.

Question 19

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Accepted Answer

A)  is highly susceptible to recessions and high unemployment. 
B)  faces regularly ﬂuctuating output levels in response to demand shocks. 
C)  is capable of always producing at its optimal capacity. 
D)  can only lessen the impacts of business cycles through active government policy. 
A)  is highly susceptible to recessions and high unemployment. 
B)  faces regularly ﬂuctuating output levels in response to demand shocks. 
C)  is capable of always producing at its optimal capacity. 
D)  can only lessen the impacts of business cycles through active government policy.

Question 20

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

Accepted Answer

A) True 
 B)False

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

During recessions, business must

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

The period known as the Industrial Revolution began in the United States in the late 1800s.

Which of the following best represents the effect of an increase in investment?

What social problems have been linked to higher rates of unemployment?

Which of the following statements is true?

For an economy to increase investment, it must

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a Recession reduce demand for laptop computers, we would expect Techno to

(Consider This) Describe the economic conditions of the Great Recession.

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand Shock and prices are ﬂexible?

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Suppose that inventories are falling. We can expect that, in the future,

Modern economic growth refers to any situation where a nation's output increases.

Decisions about saving and investment are

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 6: An Introduction to Macroeconomics

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

During recessions, business must

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

The period known as the Industrial Revolution began in the United States in the late 1800s.

Which of the following best represents the effect of an increase in investment?

What social problems have been linked to higher rates of unemployment?

Which of the following statements is true?

For an economy to increase investment, it must

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a Recession reduce demand for laptop computers, we would expect Techno to

(Consider This) Describe the economic conditions of the Great Recession.

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand Shock and prices are ﬂexible?

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Suppose that inventories are falling. We can expect that, in the future,

Modern economic growth refers to any situation where a nation's output increases.

Decisions about saving and investment are

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters