Question 1

Real GDP

Accepted Answer

A)  is GDP adjusted for changes in the price level. 
B)  is also called nominal GDP. 
C)  measures GDP minus depreciation of capital. 
D)  will always change when prices change. 
A)  is GDP adjusted for changes in the price level. 
B)  is also called nominal GDP. 
C)  measures GDP minus depreciation of capital. 
D)  will always change when prices change.

Question 2

Gross domestic product includes the sale of intermediate goods and services.

Accepted Answer

A) True 
 B)False

Question 3

In 2015, Richard buys a 2003 Chevrolet minivan from a neighbor. Will this be counted in the GDP for 2015?

Accepted Answer

A)  Yes 
B)  No 
C)  Yes, if sales tax is paid 
D)  No, because the purchase was from an individual not a dealer 
A)  Yes 
B)  No 
C)  Yes, if sales tax is paid 
D)  No, because the purchase was from an individual not a dealer

Question 4

Macroeconomists pay little attention to the composition of aggregate output.

Accepted Answer

A) True 
 B)False

Question 5

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 6

What was not an effect of the Great Depression?

Accepted Answer

A)  Policy makers recommended boots in government spending after recessions. 
B)  Policy makers believed reductions in taxes would promote growth. 
C)  The government limited its role in correcting the economy. 
D)  The Federal Reserve increased its role in correcting the economy. 
A)  Policy makers recommended boots in government spending after recessions. 
B)  Policy makers believed reductions in taxes would promote growth. 
C)  The government limited its role in correcting the economy. 
D)  The Federal Reserve increased its role in correcting the economy.

Question 7

Which of the following is not an abstraction of macroeconomics?

Accepted Answer

A)  Inflation rate 
B)  Total costs 
C)  Unemployment 
D)  Aggregate supply 
A)  Inflation rate 
B)  Total costs 
C)  Unemployment 
D)  Aggregate supply

Question 8

When the Art Institute of Chicago purchases a painting by Mary Cassatt that she produced in Paris in 1885, this would not be included in the U.S. GDP for 2015.

Accepted Answer

A) True 
 B)False

Question 9

A recession is a period during which

Accepted Answer

A)  aggregate demand, production, and unemployment rise. 
B)  aggregate demand, production, and unemployment fall. 
C)  aggregate demand, production, and unemployment remain the same. 
D)  aggregate demand and production rise while unemployment remains the same. 
E)  aggregate demand and production fall while unemployment rises. 
A)  aggregate demand, production, and unemployment rise. 
B)  aggregate demand, production, and unemployment fall. 
C)  aggregate demand, production, and unemployment remain the same. 
D)  aggregate demand and production rise while unemployment remains the same. 
E)  aggregate demand and production fall while unemployment rises.

Question 10

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 11

What makes the macroeconomic performance of the 1993 to 1998 period so unusual is the

Accepted Answer

A)  simultaneous occurrence of unemployment and inflation increases. 
B)  simultaneous occurrence of real GDP decreases and inflation rate increases. 
C)  occurrence of real GDP decreases while the unemployment rate increases. 
D)  simultaneous occurrence of reduced unemployment rates and falling inflation rates. 
A)  simultaneous occurrence of unemployment and inflation increases. 
B)  simultaneous occurrence of real GDP decreases and inflation rate increases. 
C)  occurrence of real GDP decreases while the unemployment rate increases. 
D)  simultaneous occurrence of reduced unemployment rates and falling inflation rates.

Question 12

To fight inflation, the government may

Accepted Answer

A)  decrease aggregate demand, which will also lead to lower unemployment rates. 
B)  increase aggregate demand, which will also lead to lower unemployment rates. 
C)  increase aggregate demand, which will also lead to higher unemployment rates. 
D)  decrease aggregate demand, which will also lead to higher unemployment rates. 
A)  decrease aggregate demand, which will also lead to lower unemployment rates. 
B)  increase aggregate demand, which will also lead to lower unemployment rates. 
C)  increase aggregate demand, which will also lead to higher unemployment rates. 
D)  decrease aggregate demand, which will also lead to higher unemployment rates.

Question 13

If the aggregate demand curve shifts to the left and the aggregate supply curve shifts to the right, the result will be a

Accepted Answer

A)  decrease in the level of output. 
B)  decrease in the price level. 
C)  higher price level. 
D)  higher unemployment rate. 
A)  decrease in the level of output. 
B)  decrease in the price level. 
C)  higher price level. 
D)  higher unemployment rate.

Question 14

Individuals live and work in both individual and aggregate economic entities.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Macroeconomists differ from microeconomists because macroeconomists focus on the study of

Accepted Answer

A)  inflation, unemployment, and GDP than in individual markets. 
B)  market prices than the cost of living. 
C)  inflation in the United States rather than inflation in Puerto Rico. 
D)  tariffs than global trade. 
A)  inflation, unemployment, and GDP than in individual markets. 
B)  market prices than the cost of living. 
C)  inflation in the United States rather than inflation in Puerto Rico. 
D)  tariffs than global trade.

Question 17

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 18

Supply and demand provides the basic explanatory framework for constructing both microeconomic and macroeconomic models.

Accepted Answer

A) True 
 B)False

Question 19

Growth in GDP systematically understates the growth in national well-being because

Accepted Answer

A)  ecological costs are netted out of GDP. 
B)  "bads" as well as "goods" get included in GDP. 
C)  investment is not included in GDP. 
D)  as a country gets richer, leisure time increases. 
A)  ecological costs are netted out of GDP. 
B)  "bads" as well as "goods" get included in GDP. 
C)  investment is not included in GDP. 
D)  as a country gets richer, leisure time increases.

Question 20

In contrast to the post-World War II period, before 1940 the government

Accepted Answer

A)  actively intervened in the economy for stabilization purposes. 
B)  used aggregate demand management to avoid recessions. 
C)  rarely intervened in the economy to influence inflation or unemployment rates. 
D)  used government ownership to guarantee full employment. 
A)  actively intervened in the economy for stabilization purposes. 
B)  used aggregate demand management to avoid recessions. 
C)  rarely intervened in the economy to influence inflation or unemployment rates. 
D)  used government ownership to guarantee full employment.

Exam 21: An Introduction to Macroeconomics

Real GDP

Gross domestic product includes the sale of intermediate goods and services.

In 2015, Richard buys a 2003 Chevrolet minivan from a neighbor. Will this be counted in the GDP for 2015?

Macroeconomists pay little attention to the composition of aggregate output.

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

What was not an effect of the Great Depression?

Which of the following is not an abstraction of macroeconomics?

When the Art Institute of Chicago purchases a painting by Mary Cassatt that she produced in Paris in 1885, this would not be included in the U.S. GDP for 2015.

A recession is a period during which

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

What makes the macroeconomic performance of the 1993 to 1998 period so unusual is the

To fight inflation, the government may

If the aggregate demand curve shifts to the left and the aggregate supply curve shifts to the right, the result will be a

Individuals live and work in both individual and aggregate economic entities.

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

Macroeconomists differ from microeconomists because macroeconomists focus on the study of

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

Supply and demand provides the basic explanatory framework for constructing both microeconomic and macroeconomic models.

Growth in GDP systematically understates the growth in national well-being because

In contrast to the post-World War II period, before 1940 the government

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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 Us Economy

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