Question 1

Which of these signifies the role of money in any economy?

Accepted Answer

A)  It acts as a tool for poverty alleviation in an economy. 
B)  It serves as a medium of exchange in an economy. 
C)  It indicates the economic wellbeing of a nation. 
D)  It helps to differentiate between the nominal and real income of a nation. 
E)  It is a clear indicator of the growth in national income. 
A)  It acts as a tool for poverty alleviation in an economy. 
B)  It serves as a medium of exchange in an economy. 
C)  It indicates the economic wellbeing of a nation. 
D)  It helps to differentiate between the nominal and real income of a nation. 
E)  It is a clear indicator of the growth in national income.

Question 2

The aggregate demand curve reflects:

Accepted Answer

A)  a direct relationship between the price level in an economy and the real GDP demanded. 
B)  a direct relationship between real GDP demanded and total unemployment. 
C)  an inverse relationship between the price level in an economy and the nominal GDP demanded. 
D)  an inverse relationship between the price level in an economy and the real GDP demanded. 
E)  an inverse relationship between the real GDP demanded and total unemployment. 
A)  a direct relationship between the price level in an economy and the real GDP demanded. 
B)  a direct relationship between real GDP demanded and total unemployment. 
C)  an inverse relationship between the price level in an economy and the nominal GDP demanded. 
D)  an inverse relationship between the price level in an economy and the real GDP demanded. 
E)  an inverse relationship between the real GDP demanded and total unemployment.

Question 3

According to Keynes, the adoption of an expansionary fiscal policy will cause:

Accepted Answer

A)  both equilibrium price level and equilibrium output to rise. 
B)  equilibrium price level to rise and equilibrium output to fall. 
C)  equilibrium price level to fall and equilibrium output to rise. 
D)  both equilibrium price level and equilibrium output to fall. 
E)  equilibrium price level to remain the same and equilibrium output to fall. 
A)  both equilibrium price level and equilibrium output to rise. 
B)  equilibrium price level to rise and equilibrium output to fall. 
C)  equilibrium price level to fall and equilibrium output to rise. 
D)  both equilibrium price level and equilibrium output to fall. 
E)  equilibrium price level to remain the same and equilibrium output to fall.

Question 4

Which of these statements correctly explains the shape of the aggregate demand curve?

Accepted Answer

A)  As prices fall, nominal income rises and so does the demand for real goods and services. 
B)  Rising prices reduce people's wealth and thereby decrease spending. 
C)  With falling prices, government decides to spend less to increase the price level. 
D)  Businesses increase investment spending in response to higher interest rates caused by inflation. 
E)  As prices fall, domestically produced goods become more expensive relative to foreign goods, resulting in an increase in production. 
A)  As prices fall, nominal income rises and so does the demand for real goods and services. 
B)  Rising prices reduce people's wealth and thereby decrease spending. 
C)  With falling prices, government decides to spend less to increase the price level. 
D)  Businesses increase investment spending in response to higher interest rates caused by inflation. 
E)  As prices fall, domestically produced goods become more expensive relative to foreign goods, resulting in an increase in production.

Question 5

Which of these is a supply-side approach to increase growth?

Accepted Answer

A)  Spending on the construction and repair of state highways 
B)  Providing tax benefits to start-up companies 
C)  Investing in the production of arms and ammunitions 
D)  Replacing old aircrafts with new fighter planes 
E)  Increasing transfer payments to retirees 
A)  Spending on the construction and repair of state highways 
B)  Providing tax benefits to start-up companies 
C)  Investing in the production of arms and ammunitions 
D)  Replacing old aircrafts with new fighter planes 
E)  Increasing transfer payments to retirees

Question 6

Which of the following is a flow variable?

Accepted Answer

A)  Price level 
B)  U.S. population 
C)  Money supply 
D)  Investment spending 
E)  Household debt 
A)  Price level 
B)  U.S. population 
C)  Money supply 
D)  Investment spending 
E)  Household debt

Question 7

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

Accepted Answer

A)  increases in consumer spending. 
B)  high levels of federal debt. 
C)  supply-side shocks from the oil-exporting countries. 
D)  runaway inflation in the U.S. 
E)  retaliations from other countries. 
A)  increases in consumer spending. 
B)  high levels of federal debt. 
C)  supply-side shocks from the oil-exporting countries. 
D)  runaway inflation in the U.S. 
E)  retaliations from other countries.

Question 8

The Reagan administration's policies were aimed at managing aggregate demand.

Accepted Answer

A) True 
 B)False

Question 9

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Accepted Answer

A)  An increase in household wealth 
B)  A fall in domestic interest rates 
C)  An increase in government spending 
D)  An appreciation of the dollar relative to other currencies 
E)  A decrease in the nation's money supply 
A)  An increase in household wealth 
B)  A fall in domestic interest rates 
C)  An increase in government spending 
D)  An appreciation of the dollar relative to other currencies 
E)  A decrease in the nation's money supply

Question 10

Economic activities that signal forthcoming changes in the economy are referred to as:

Accepted Answer

A)  coincidental economic indicators. 
B)  GDP implicit price deflators. 
C)  lagging economic indicators. 
D)  perfect economic indicators. 
E)  leading economic indicators. 
A)  coincidental economic indicators. 
B)  GDP implicit price deflators. 
C)  lagging economic indicators. 
D)  perfect economic indicators. 
E)  leading economic indicators.

Question 11

Which of the following is true of economic fluctuations?

Accepted Answer

A)  They can be experienced by the world economy as well as by a single nation. 
B)  They tend to be equal in length and intensity. 
C)  They reflect an economy's socio-political condition. 
D)  They tend to become more severe when the government attempts to stabilize an economy. 
E)  They have been completely offset by appropriate government policies during the last 40 years. 
A)  They can be experienced by the world economy as well as by a single nation. 
B)  They tend to be equal in length and intensity. 
C)  They reflect an economy's socio-political condition. 
D)  They tend to become more severe when the government attempts to stabilize an economy. 
E)  They have been completely offset by appropriate government policies during the last 40 years.

Question 12

According to John Maynard Keynes' General Theory of Employment, Interest and Money, the government should _____ in order to get an economy out of a depression.

Accepted Answer

A)  increase spending 
B)  decrease spending 
C)  reduce subsidies 
D)  increase taxes 
E)  allow the economy to correct itself 
A)  increase spending 
B)  decrease spending 
C)  reduce subsidies 
D)  increase taxes 
E)  allow the economy to correct itself

Question 13

A federal budget deficit can simultaneously reduce inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following financial institutions reported the largest bankruptcy in U.S. history in September 2008?

Accepted Answer

A)  Morgan Stanley 
B)  Goldman Sachs 
C)  Lehman Brothers 
D)  JP Morgan Chase 
E)  Barclays Capital 
A)  Morgan Stanley 
B)  Goldman Sachs 
C)  Lehman Brothers 
D)  JP Morgan Chase 
E)  Barclays Capital

Question 15

For a given aggregate supply curve, an increase in aggregate demand will:

Accepted Answer

A)  decrease the real interest rate. 
B)  increase real GDP. 
C)  decrease the price level. 
D)  increase the real exchange rate. 
E)  decrease real GDP. 
A)  decrease the real interest rate. 
B)  increase real GDP. 
C)  decrease the price level. 
D)  increase the real exchange rate. 
E)  decrease real GDP.

Question 16

A recession is best defined as a period during which:

Accepted Answer

A)  the percentage of the population employed increases. 
B)  employment, output, and income decrease. 
C)  the average price level in an economy decreases. 
D)  the usage of labor and capital resources increases. 
E)  budget deficit and trade deficit decrease. 
A)  the percentage of the population employed increases. 
B)  employment, output, and income decrease. 
C)  the average price level in an economy decreases. 
D)  the usage of labor and capital resources increases. 
E)  budget deficit and trade deficit decrease.

Question 17

Identify the most likely impact of a decrease in the wealth of consumers in an economy, other things remaining constant.

Accepted Answer

A)  A leftward shift of the aggregate supply curve 
B)  A leftward shift of the aggregate demand curve 
C)  An upward movement along the aggregate demand curve 
D)  A downward movement along the aggregate demand curve 
E)  A steeper aggregate supply curve 
A)  A leftward shift of the aggregate supply curve 
B)  A leftward shift of the aggregate demand curve 
C)  An upward movement along the aggregate demand curve 
D)  A downward movement along the aggregate demand curve 
E)  A steeper aggregate supply curve

Question 18

The word stagflation describes a situation in which:

Accepted Answer

A)  a higher price level occurs simultaneously with higher employment. 
B)  a lower price level occurs simultaneously with economic growth. 
C)  a higher price level occurs simultaneously with lower aggregate output. 
D)  a lower price level occurs simultaneously with federal budget deficits. 
E)  a higher price level occurs simultaneously with federal budget surpluses. 
A)  a higher price level occurs simultaneously with higher employment. 
B)  a lower price level occurs simultaneously with economic growth. 
C)  a higher price level occurs simultaneously with lower aggregate output. 
D)  a lower price level occurs simultaneously with federal budget deficits. 
E)  a higher price level occurs simultaneously with federal budget surpluses.

Question 19

Identify the correct statement.

Accepted Answer

A)  If the price level increases, we feel poorer and buy less. 
B)  If the price level increases, we feel richer and buy more. 
C)  If domestic prices increase, we substitute domestic goods for imported ones. 
D)  An increase in the price of a particular good leads to a substitution. 
E)  A decrease in the price of a particular good is like an increase in income and therefore we buy more. 
A)  If the price level increases, we feel poorer and buy less. 
B)  If the price level increases, we feel richer and buy more. 
C)  If domestic prices increase, we substitute domestic goods for imported ones. 
D)  An increase in the price of a particular good leads to a substitution. 
E)  A decrease in the price of a particular good is like an increase in income and therefore we buy more.

Question 20

The aggregate supply curve represents:

Accepted Answer

A)  the quantity of aggregate output that producers are willing and able to supply at each possible price level. 
B)  the total quantity of a particular good that all producers are willing to supply at each possible price level. 
C)  the total quantity of a particular good that all producers are willing to supply at the equilibrium price level. 
D)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level. 
E)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP. 
A)  the quantity of aggregate output that producers are willing and able to supply at each possible price level. 
B)  the total quantity of a particular good that all producers are willing to supply at each possible price level. 
C)  the total quantity of a particular good that all producers are willing to supply at the equilibrium price level. 
D)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level. 
E)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP.

Which of these signifies the role of money in any economy?

The aggregate demand curve reflects:

According to Keynes, the adoption of an expansionary fiscal policy will cause:

Which of these statements correctly explains the shape of the aggregate demand curve?

Which of these is a supply-side approach to increase growth?

Which of the following is a flow variable?

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

The Reagan administration's policies were aimed at managing aggregate demand.

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Economic activities that signal forthcoming changes in the economy are referred to as:

Which of the following is true of economic fluctuations?

According to John Maynard Keynes' General Theory of Employment, Interest and Money, the government should _____ in order to get an economy out of a depression.

A federal budget deficit can simultaneously reduce inflation and unemployment.

Which of the following financial institutions reported the largest bankruptcy in U.S. history in September 2008?

For a given aggregate supply curve, an increase in aggregate demand will:

A recession is best defined as a period during which:

Identify the most likely impact of a decrease in the wealth of consumers in an economy, other things remaining constant.

The word stagflation describes a situation in which:

Identify the correct statement.

The aggregate supply curve represents:

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

Which of these signifies the role of money in any economy?

The aggregate demand curve reflects:

According to Keynes, the adoption of an expansionary fiscal policy will cause:

Which of these statements correctly explains the shape of the aggregate demand curve?

Which of these is a supply-side approach to increase growth?

Which of the following is a flow variable?

The mercantilism policy failed to generate gains from trade for countries which adopted it because of:

The Reagan administration's policies were aimed at managing aggregate demand.

The figure below shows the aggregate demand and supply curves for the U.S. In this figure, which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Economic activities that signal forthcoming changes in the economy are referred to as:

Which of the following is true of economic fluctuations?

According to John Maynard Keynes' General Theory of Employment, Interest and Money, the government should _____ in order to get an economy out of a depression.

A federal budget deficit can simultaneously reduce inflation and unemployment.

Which of the following financial institutions reported the largest bankruptcy in U.S. history in September 2008?

For a given aggregate supply curve, an increase in aggregate demand will:

A recession is best defined as a period during which:

Identify the most likely impact of a decrease in the wealth of consumers in an economy, other things remaining constant.

The word stagflation describes a situation in which:

Identify the correct statement.

The aggregate supply curve represents:

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