Question 1

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes, thereby reducing the federal budget deficit.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true of a recession?

Accepted Answer

A)  It is typically accompanied by inflation and investment growth. 
B)  It lasts for more than two years on an average. 
C)  It is typically longer than periods of expansion. 
D)  It begins after an expansion has peaked. 
E)  It continues as long as actual output exceeds the potential output. 
A)  It is typically accompanied by inflation and investment growth. 
B)  It lasts for more than two years on an average. 
C)  It is typically longer than periods of expansion. 
D)  It begins after an expansion has peaked. 
E)  It continues as long as actual output exceeds the potential output.

Question 3

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment, their expectations are usually fulfilled.

Accepted Answer

A) True 
 B)False

Question 4

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

Accepted Answer

A)  budget surpluses. 
B)  decreases in aggregate supply. 
C)  trade deficits. 
D)  decreases in aggregate demand. 
E)  budget deficits. 
A)  budget surpluses. 
B)  decreases in aggregate supply. 
C)  trade deficits. 
D)  decreases in aggregate demand. 
E)  budget deficits.

Question 5

A depression can be defined as:

Accepted Answer

A)  a mild reduction in total production coupled with a rising unemployment rate that lasts for several years. 
B)  a mild decline in total production that lasts less than six months. 
C)  a severe fall in stock prices that causes financial panic and lasts for several years. 
D)  a severe reduction in total production coupled with high unemployment that lasts for several years. 
E)  a decline in government spending and taxes that lasts for several months. 
A)  a mild reduction in total production coupled with a rising unemployment rate that lasts for several years. 
B)  a mild decline in total production that lasts less than six months. 
C)  a severe fall in stock prices that causes financial panic and lasts for several years. 
D)  a severe reduction in total production coupled with high unemployment that lasts for several years. 
E)  a decline in government spending and taxes that lasts for several months.

Question 6

Which of the following is most likely to happen if the aggregate demand curve for an economy (which was initially in equilibrium) shifts to the left?

Accepted Answer

A)  The equilibrium real GDP will decrease. 
B)  The equilibrium price level in the economy will increase. 
C)  The aggregate supply curve will shift rightward. 
D)  The aggregate supply curve will shift leftward. 
E)  The economy will experience an expansion. 
A)  The equilibrium real GDP will decrease. 
B)  The equilibrium price level in the economy will increase. 
C)  The aggregate supply curve will shift rightward. 
D)  The aggregate supply curve will shift leftward. 
E)  The economy will experience an expansion.

Question 7

From 2009 to 2013, the price level in the U.S. has increased by 8.3 percent. This implies that the price index in 2012 was:

Accepted Answer

A)  108.3. 
B)  183. 
C)  100. 
D)  98.3. 
E)  92.7. 
A)  108.3. 
B)  183. 
C)  100. 
D)  98.3. 
E)  92.7.

Question 8

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

Accepted Answer

A) True 
 B)False

Question 9

The economic policy based on the incorrect theory that a nation's economic objective should be to accumulate precious metals in the public treasury is called _____.

Accepted Answer

A)  laissez-faire 
B)  deficit financing 
C)  socialism 
D)  mercantilism 
E)  capitalism 
A)  laissez-faire 
B)  deficit financing 
C)  socialism 
D)  mercantilism 
E)  capitalism

Question 10

Which of these is most likely to result when a demand-management policy is used in an economy that is experiencing stagflation?

Accepted Answer

A)  A decrease in investment spending 
B)  An increase in the rate of inflation 
C)  An increase in unemployment 
D)  A decrease in the rate of inflation 
E)  A decrease in real GDP 
A)  A decrease in investment spending 
B)  An increase in the rate of inflation 
C)  An increase in unemployment 
D)  A decrease in the rate of inflation 
E)  A decrease in real GDP

Question 11

In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?

Accepted Answer

A)  After the Great Depression to the early 1970s 
B)  Since the early 1980s 
C)  The colonial period 
D)  Before and during the Great Depression 
E)  From the early 1970s to the early 1980s 
A)  After the Great Depression to the early 1970s 
B)  Since the early 1980s 
C)  The colonial period 
D)  Before and during the Great Depression 
E)  From the early 1970s to the early 1980s

Question 12

Which of the following best describes a flow rather than a stock?

Accepted Answer

A)  You own $5,000 worth of government bonds. 
B)  You own a $100,000 house. 
C)  You own a coin collection valued at $10,000. 
D)  You earn $500 per week. 
E)  You own a $45,000 automobile. 
A)  You own $5,000 worth of government bonds. 
B)  You own a $100,000 house. 
C)  You own a coin collection valued at $10,000. 
D)  You earn $500 per week. 
E)  You own a $45,000 automobile.

Question 13

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, as the aggregate demand curve shifts from AD to AD', the equilibrium price level in period 1:

Accepted Answer

A)  increases from 3 to 4. 
B)  decreases from 4 to 3. 
C)  decreases from 4 to 1. 
D)  increases from 1 to 4. 
E)  decreases from 4 to 2. 
A)  increases from 3 to 4. 
B)  decreases from 4 to 3. 
C)  decreases from 4 to 1. 
D)  increases from 1 to 4. 
E)  decreases from 4 to 2.

Question 14

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

Accepted Answer

A)  An increase in the quantity of real GDP supplied 
B)  A decrease in the quantity of real GDP supplied 
C)  A leftward shift of the aggregate supply curve 
D)  A rightward shift of the aggregate supply curve 
E)  An increase in the slope of the aggregate supply curve 
A)  An increase in the quantity of real GDP supplied 
B)  A decrease in the quantity of real GDP supplied 
C)  A leftward shift of the aggregate supply curve 
D)  A rightward shift of the aggregate supply curve 
E)  An increase in the slope of the aggregate supply curve

Question 15

The tax cuts passed during the Reagan administration were designed primarily to:

Accepted Answer

A)  boost savings among consumers. 
B)  shift the aggregate demand curve rightward. 
C)  reduce the balance-of-payments deficit. 
D)  increase the supply of productive resources. 
E)  increase the tax base and include more tax payers. 
A)  boost savings among consumers. 
B)  shift the aggregate demand curve rightward. 
C)  reduce the balance-of-payments deficit. 
D)  increase the supply of productive resources. 
E)  increase the tax base and include more tax payers.

Question 16

An economic variable that measures something at a particular point in time is called a _____.

Accepted Answer

A)  stock variable 
B)  periodic variable 
C)  dummy variable 
D)  flow variable 
E)  constant variable 
A)  stock variable 
B)  periodic variable 
C)  dummy variable 
D)  flow variable 
E)  constant variable

Question 17

If the government of a country owes $3,500 billion to the International Monetary Fund and then borrows $300 billion more this year, it implies that the:

Accepted Answer

A)  national debt is $300 billion and fiscal deficit is $3.8 trillion. 
B)  national debt is $3,800 billion and fiscal deficit is $300 billion. 
C)  national debt is $4,100 billion. 
D)  fiscal deficit is $3,800 billion. 
E)  national debt and fiscal deficit both equal $3.8 trillion. 
A)  national debt is $300 billion and fiscal deficit is $3.8 trillion. 
B)  national debt is $3,800 billion and fiscal deficit is $300 billion. 
C)  national debt is $4,100 billion. 
D)  fiscal deficit is $3,800 billion. 
E)  national debt and fiscal deficit both equal $3.8 trillion.

Question 18

The period between two successive peaks in a business cycle is called a contraction.

Accepted Answer

A) True 
 B)False

Question 19

A federal policy that leads to an increase in aggregate supply is likely to result in:

Accepted Answer

A)  lower levels of employment. 
B)  an increase in aggregate demand. 
C)  a higher price level. 
D)  lower levels of real GDP. 
E)  an economic expansion. 
A)  lower levels of employment. 
B)  an increase in aggregate demand. 
C)  a higher price level. 
D)  lower levels of real GDP. 
E)  an economic expansion.

Question 20

The ultimate objective of macroeconomics is to:

Accepted Answer

A)  reduce the unemployment rate in an economy. 
B)  stabilize the growth rate in an economy. 
C)  develop and test theories about how the overall economy works. 
D)  improve the international competitiveness of U.S. financial markets. 
E)  maximize the efficiency of government intervention in the marketplace. 
A)  reduce the unemployment rate in an economy. 
B)  stabilize the growth rate in an economy. 
C)  develop and test theories about how the overall economy works. 
D)  improve the international competitiveness of U.S. financial markets. 
E)  maximize the efficiency of government intervention in the marketplace.

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes, thereby reducing the federal budget deficit.

Which of the following is true of a recession?

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment, their expectations are usually fulfilled.

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

A depression can be defined as:

Which of the following is most likely to happen if the aggregate demand curve for an economy (which was initially in equilibrium) shifts to the left?

From 2009 to 2013, the price level in the U.S. has increased by 8.3 percent. This implies that the price index in 2012 was:

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

The economic policy based on the incorrect theory that a nation's economic objective should be to accumulate precious metals in the public treasury is called _____.

Which of these is most likely to result when a demand-management policy is used in an economy that is experiencing stagflation?

In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?

Which of the following best describes a flow rather than a stock?

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, as the aggregate demand curve shifts from AD to AD', the equilibrium price level in period 1:

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

The tax cuts passed during the Reagan administration were designed primarily to:

An economic variable that measures something at a particular point in time is called a _____.

If the government of a country owes $3,500 billion to the International Monetary Fund and then borrows $300 billion more this year, it implies that the:

The period between two successive peaks in a business cycle is called a contraction.

A federal policy that leads to an increase in aggregate supply is likely to result in:

The ultimate objective of macroeconomics is to:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 5: Introduction to Macroeconomics

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes, thereby reducing the federal budget deficit.

Which of the following is true of a recession?

When business leaders become pessimistic about future sales and profits and increase their spending on plant and equipment, their expectations are usually fulfilled.

Keynesian policies are ineffective at combating stagflation because stagflation is caused by:

A depression can be defined as:

Which of the following is most likely to happen if the aggregate demand curve for an economy (which was initially in equilibrium) shifts to the left?

From 2009 to 2013, the price level in the U.S. has increased by 8.3 percent. This implies that the price index in 2012 was:

An investment bank is a financial institution that finances federal budget deficits at very low interest rates.

The economic policy based on the incorrect theory that a nation's economic objective should be to accumulate precious metals in the public treasury is called _____.

Which of these is most likely to result when a demand-management policy is used in an economy that is experiencing stagflation?

In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?

Which of the following best describes a flow rather than a stock?

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, as the aggregate demand curve shifts from AD to AD', the equilibrium price level in period 1:

Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?

The tax cuts passed during the Reagan administration were designed primarily to:

An economic variable that measures something at a particular point in time is called a _____.

If the government of a country owes $3,500 billion to the International Monetary Fund and then borrows $300 billion more this year, it implies that the:

The period between two successive peaks in a business cycle is called a contraction.

A federal policy that leads to an increase in aggregate supply is likely to result in:

The ultimate objective of macroeconomics is to:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters