Question 1

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Accepted Answer

A)  Nominal and real GDP would both rise. 
B)  Nominal and real GDP would both be unchanged. 
C)  Real GDP would rise, but nominal GDP would be unchanged. 
D)  Nominal GDP would rise, but real GDP would be unchanged. 
A)  Nominal and real GDP would both rise. 
B)  Nominal and real GDP would both be unchanged. 
C)  Real GDP would rise, but nominal GDP would be unchanged. 
D)  Nominal GDP would rise, but real GDP would be unchanged.

Question 2

Which of the following is not an important question that macroeconomic models help clarify?

Accepted Answer

A)  Can governments reduce the severity of their economies' recessions? 
B)  Is a policy of manipulating interest rates more effective at mitigating short-run economic ﬂuctuations than a policy of changing the tax rates? 
C)  How will OPEC manipulate and maintain the price of crude oil in the world markets? 
D)  Is there a trade-off between lower unemployment and lower inﬂation? 
A)  Can governments reduce the severity of their economies' recessions? 
B)  Is a policy of manipulating interest rates more effective at mitigating short-run economic ﬂuctuations than a policy of changing the tax rates? 
C)  How will OPEC manipulate and maintain the price of crude oil in the world markets? 
D)  Is there a trade-off between lower unemployment and lower inﬂation?

Question 3

Buying 100 shares of Google stock would be an example of economic investment.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Accepted Answer

A)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase. 
B)  Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease. 
C)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase. 
D)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will decrease. 
A)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase. 
B)  Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease. 
C)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase. 
D)  Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will decrease.

Question 5

Nominal GDP measures a nation's output in current year prices.

Accepted Answer

A) True 
 B)False

Question 6

Demand shocks

Accepted Answer

A)  refer to unexpected changes in the desires of households and businesses to buy goods and services. 
B)  refer to unexpected changes in the ability of ﬁrms to produce and sell goods and services. 
C)  always have a negative effect on the economy. 
D)  cause fewer short-run ﬂuctuations than supply shocks. 
A)  refer to unexpected changes in the desires of households and businesses to buy goods and services. 
B)  refer to unexpected changes in the ability of ﬁrms to produce and sell goods and services. 
C)  always have a negative effect on the economy. 
D)  cause fewer short-run ﬂuctuations than supply shocks.

Question 7

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Accepted Answer

A)  cause inﬂation. 
B)  increase unemployment. 
C)  lower prices but leave output unaffected. 
D)  reduce both prices and output. 
A)  cause inﬂation. 
B)  increase unemployment. 
C)  lower prices but leave output unaffected. 
D)  reduce both prices and output.

Question 8

Financial institutions reward savers with the following, except

Accepted Answer

A)  interest. 
B)  wages. 
C)  dividends. 
D)  capital gains. 
A)  interest. 
B)  wages. 
C)  dividends. 
D)  capital gains.

Question 9

Firms that choose to use a ﬁxed-price policy

Accepted Answer

A)  will tend to experience larger inventory changes than ﬁrms that follow a ﬂexible-price policy. 
B)  will tend to experience smaller inventory changes than ﬁrms that follow a ﬂexible-price policy. 
C)  ﬁnd that their inventories do not respond to demand shocks. 
D)  will not hold inventories. 
A)  will tend to experience larger inventory changes than ﬁrms that follow a ﬂexible-price policy. 
B)  will tend to experience smaller inventory changes than ﬁrms that follow a ﬂexible-price policy. 
C)  ﬁnd that their inventories do not respond to demand shocks. 
D)  will not hold inventories.

Question 10

Real GDP measures the change in the price level over time.

Accepted Answer

A) True 
 B)False

Question 11

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and
real estate.

Accepted Answer

A) True 
 B)False

Question 12

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 this year

Accepted Answer

A)  increased nominal GDP by $20,000 but left real GDP unchanged. 
B)  increased nominal GDP by $120,000 and increased real GDP by $100,000. 
C)  left nominal GDP unchanged but increased real GDP by $20,000. 
D)  increased nominal GDP by $120,000 but left real GDP unchanged. 
A)  increased nominal GDP by $20,000 but left real GDP unchanged. 
B)  increased nominal GDP by $120,000 and increased real GDP by $100,000. 
C)  left nominal GDP unchanged but increased real GDP by $20,000. 
D)  increased nominal GDP by $120,000 but left real GDP unchanged.

Question 13

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

Accepted Answer

A)  real gross domestic product. 
B)  inﬂation statistics. 
C)  prices of oil and gasoline. 
D)  unemployment data. 
A)  real gross domestic product. 
B)  inﬂation statistics. 
C)  prices of oil and gasoline. 
D)  unemployment data.

Question 14

The two topics of primary concern in macroeconomics are

Accepted Answer

A)  short-run ﬂuctuations in output and employment and long-run economic growth. 
B)  unemployment and wage rates in labor markets. 
C)  monopoly power of corporations and small business proﬁtability. 
D)  oil prices and housing markets. 
A)  short-run ﬂuctuations in output and employment and long-run economic growth. 
B)  unemployment and wage rates in labor markets. 
C)  monopoly power of corporations and small business proﬁtability. 
D)  oil prices and housing markets.

Question 15

(Consider This) Which of the following is an example of economic investment?

Accepted Answer

A)  Volvo buys an old factory building from General Motors. 
B)  Nike buys a new machine that increases shoe production. 
C)  Bill Gates buys shares of stock in IBM. 
D)  Warren Buffet buys U.S. savings bonds. 
A)  Volvo buys an old factory building from General Motors. 
B)  Nike buys a new machine that increases shoe production. 
C)  Bill Gates buys shares of stock in IBM. 
D)  Warren Buffet buys U.S. savings bonds.

Question 16

Inventories rise when

Accepted Answer

A)  actual demand for output is more than expected. 
B)  actual demand for output is less than expected. 
C)  actual supply of output is less than expected. 
D)  actual demand for output is about the same as expected. 
A)  actual demand for output is more than expected. 
B)  actual demand for output is less than expected. 
C)  actual supply of output is less than expected. 
D)  actual demand for output is about the same as expected.

Question 17

Business cycle ﬂuctuations typically arise because

Accepted Answer

A)  the actual supply of goods and services ends up being more or less than what consumers were expecting. 
B)  the actual demand for goods and services ends up being more or less than the expected supply of goods and services. 
C)  the actual demand for goods and services ends up being more or less than what ﬁrms were expecting. 
D)  prices tend to be ﬂexible in the short run. 
A)  the actual supply of goods and services ends up being more or less than what consumers were expecting. 
B)  the actual demand for goods and services ends up being more or less than the expected supply of goods and services. 
C)  the actual demand for goods and services ends up being more or less than what ﬁrms were expecting. 
D)  prices tend to be ﬂexible in the short run.

Question 18

Business cycles refer to short-term ﬂuctuations in prices.

Accepted Answer

A) True 
 B)False

Question 19

In 2017, China's GDP per person was almost as high as that of the United States.

Accepted Answer

A) True 
 B)False

Question 20

Refer to the ﬁgures. Which ﬁgure(s) represent(s) a situation where prices are sticky?

Accepted Answer

A)  A only 
B)  B only 
C)  both A and B 
D)  neither A nor B 
A)  A only 
B)  B only 
C)  both A and B 
D)  neither A nor B

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Which of the following is not an important question that macroeconomic models help clarify?

Buying 100 shares of Google stock would be an example of economic investment.

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Nominal GDP measures a nation's output in current year prices.

Demand shocks

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Financial institutions reward savers with the following, except

Firms that choose to use a ﬁxed-price policy

Real GDP measures the change in the price level over time.

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and real estate.

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

The two topics of primary concern in macroeconomics are

(Consider This) Which of the following is an example of economic investment?

Inventories rise when

Business cycle ﬂuctuations typically arise because

Business cycles refer to short-term ﬂuctuations in prices.

In 2017, China's GDP per person was almost as high as that of the United States.

Refer to the ﬁgures. Which ﬁgure(s) represent(s) a situation where prices are sticky?

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

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Which of the following is not an important question that macroeconomic models help clarify?

Buying 100 shares of Google stock would be an example of economic investment.

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Nominal GDP measures a nation's output in current year prices.

Demand shocks

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Financial institutions reward savers with the following, except

Firms that choose to use a ﬁxed-price policy

Real GDP measures the change in the price level over time.

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and real estate.

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

The two topics of primary concern in macroeconomics are

(Consider This) Which of the following is an example of economic investment?

Inventories rise when

Business cycle ﬂuctuations typically arise because

Business cycles refer to short-term ﬂuctuations in prices.

In 2017, China's GDP per person was almost as high as that of the United States.

Refer to the ﬁgures. Which ﬁgure(s) represent(s) a situation where prices are sticky?

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