Question 1

Classical economists believed that

Accepted Answer

A)  the government should play an active role in controlling the economy 
B)  the government can best help the economy by leaving it alone 
C)  the economy is controlled by the government 
D)  laissez faire will hurt the economy 
E)  economists should offer guidance to governmental leaders 
A)  the government should play an active role in controlling the economy 
B)  the government can best help the economy by leaving it alone 
C)  the economy is controlled by the government 
D)  laissez faire will hurt the economy 
E)  economists should offer guidance to governmental leaders B

Question 2

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

Accepted Answer

A) True 
 B)False  False

Question 3

In mid-2009,the unemployment rate stood at

Accepted Answer

A)  25 percent 
B)  5 percent 
C)  6 percent 
D)  9.5 percent 
E)  20 percent 
A)  25 percent 
B)  5 percent 
C)  6 percent 
D)  9.5 percent 
E)  20 percent D

Question 4

Why is inflation considered a problem?

Accepted Answer

A)  Firms gain too much economic power. 
B)  It is always very high when it exists. 
C)  People prefer falling prices. 
D)  It is costly for society. 
E)  Government gains too much economic power.. 
A)  Firms gain too much economic power. 
B)  It is always very high when it exists. 
C)  People prefer falling prices. 
D)  It is costly for society. 
E)  Government gains too much economic power..

Question 5

Who was the economist that began modern macroeconomics?

Accepted Answer

A)  Adam Smith 
B)  Paul Samuelson 
C)  Milton Friedman 
D)  John Maynard Keynes 
E)  Ben Bernanke 
A)  Adam Smith 
B)  Paul Samuelson 
C)  Milton Friedman 
D)  John Maynard Keynes 
E)  Ben Bernanke

Question 6

Recessions are identified by

Accepted Answer

A)  severe and long-lasting phases of decreased output 
B)  high employment 
C)  constant output 
D)  decreasing output 
E)  low unemployment 
A)  severe and long-lasting phases of decreased output 
B)  high employment 
C)  constant output 
D)  decreasing output 
E)  low unemployment

Question 7

If a factory hires 1,000 new workers,the nation's output level is probably

Accepted Answer

A)  increasing and unemployment is likely to increase 
B)  increasing and unemployment is likely to decrease by 1000 individuals 
C)  fluctuating 
D)  stable 
E)  increasing and unemployment is likely to decrease by less than 1,000 individuals 
A)  increasing and unemployment is likely to increase 
B)  increasing and unemployment is likely to decrease by 1000 individuals 
C)  fluctuating 
D)  stable 
E)  increasing and unemployment is likely to decrease by less than 1,000 individuals

Question 8

Because it lowers the amount of output per person,unemployment results in

Accepted Answer

A)  a shift in the economy's production possibilities frontier 
B)  increased workers' incomes 
C)  optimism about economic growth 
D)  a lower standard of living 
E)  rapid inflation 
A)  a shift in the economy's production possibilities frontier 
B)  increased workers' incomes 
C)  optimism about economic growth 
D)  a lower standard of living 
E)  rapid inflation

Question 9

The phase of the business cycle characterized by rising output is called a(n)

Accepted Answer

A)  peak 
B)  recession 
C)  depression 
D)  trough 
E)  expansion 
A)  peak 
B)  recession 
C)  depression 
D)  trough 
E)  expansion

Question 10

During the contraction phase of the business cycle

Accepted Answer

A)  employment and output are both rising 
B)  employment and output are both at a peak 
C)  employment and output are both at their lowest 
D)  employment and output are both falling 
E)  employment is falling and output is rising 
A)  employment and output are both rising 
B)  employment and output are both at a peak 
C)  employment and output are both at their lowest 
D)  employment and output are both falling 
E)  employment is falling and output is rising

Question 11

"Output fell 2 percent last quarter" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following indicates that the average standard of living is rising?

Accepted Answer

A)  Real GDP decreases faster than the price level. 
B)  Real GDP increases faster than the price level. 
C)  The population increases. 
D)  Real GDP increases faster than the population. 
E)  Population increases faster than real GDP. 
A)  Real GDP decreases faster than the price level. 
B)  Real GDP increases faster than the price level. 
C)  The population increases. 
D)  Real GDP increases faster than the population. 
E)  Population increases faster than real GDP.

Question 13

The Employment Act of 1946 directed the federal government to pursue the three objectives of maximizing employment,production,and purchasing power.

Accepted Answer

A) True 
 B)False

Question 14

The U.S.economy experienced fluctuations in employment and output over the last half of the twentieth century.However,the length of the average recession has been about the same as the length of the average expansion.

Accepted Answer

A) True 
 B)False

Question 15

During a recession,both output and unemployment fall.

Accepted Answer

A) True 
 B)False

Question 16

Macroeconomics is best suited to answering questions such as

Accepted Answer

A)  what determines the unemployment rate among students on this campus 
B)  why rent is higher in big cities than in smaller ones 
C)  how fast the overall price level will rise next year 
D)  what determines the demand for public transportation in rural areas 
E)  why sales taxes in this area are increasing 
A)  what determines the unemployment rate among students on this campus 
B)  why rent is higher in big cities than in smaller ones 
C)  how fast the overall price level will rise next year 
D)  what determines the demand for public transportation in rural areas 
E)  why sales taxes in this area are increasing

Question 17

During the 1990s and the first decade of the 2000s

Accepted Answer

A)  polls have shown that U.S.citizens are more concerned about inflation than any other national problem 
B)  the U.S.inflation rate reached double digits (10 percent or higher) 
C)  the U.S.economy consistently experienced deflation (a falling price level) 
D)  the U.S.inflation rate averaged about 8 percent per year 
E)  the U.S.inflation rate averaged less than 3 percent per year 
A)  polls have shown that U.S.citizens are more concerned about inflation than any other national problem 
B)  the U.S.inflation rate reached double digits (10 percent or higher) 
C)  the U.S.economy consistently experienced deflation (a falling price level) 
D)  the U.S.inflation rate averaged about 8 percent per year 
E)  the U.S.inflation rate averaged less than 3 percent per year

Question 18

What is the difference in the concepts of economic growth and economic expansion?

Accepted Answer

A)  Both terms are used interchangeably and refer to quarterly increases in output. 
B)  Economic growth refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.An expansion refers to a shorter time period during which output increases quarter by quarter or year by year. 
C)  An expansion refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.Economic growth refers to a shorter time period during which output increases quarter by quarter or year by year. 
D)  Both terms are used interchangeably and refer to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period. 
E)  Economic growth is the term reserved for periods of prosperity in less developed countries while expansion is the term reserved for developed industrial countries. 
A)  Both terms are used interchangeably and refer to quarterly increases in output. 
B)  Economic growth refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.An expansion refers to a shorter time period during which output increases quarter by quarter or year by year. 
C)  An expansion refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.Economic growth refers to a shorter time period during which output increases quarter by quarter or year by year. 
D)  Both terms are used interchangeably and refer to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period. 
E)  Economic growth is the term reserved for periods of prosperity in less developed countries while expansion is the term reserved for developed industrial countries.

Question 19

Why do policymakers have the goal of stable prices?

Accepted Answer

A)  Stables prices always keep the economy in expansion 
B)  Firms make too much money when prices are rising 
C)  Inflation is always associated with wars 
D)  Inflation imposes costs on society 
E)  Inflation is always associated with trade deficits 
A)  Stables prices always keep the economy in expansion 
B)  Firms make too much money when prices are rising 
C)  Inflation is always associated with wars 
D)  Inflation imposes costs on society 
E)  Inflation is always associated with trade deficits

Question 20

Aggregation is important because it allows many individual variables to be combined into one larger whole.

Accepted Answer

A) True 
 B)False

Classical economists believed that

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

In mid-2009,the unemployment rate stood at

Why is inflation considered a problem?

Who was the economist that began modern macroeconomics?

Recessions are identified by

If a factory hires 1,000 new workers,the nation's output level is probably

Because it lowers the amount of output per person,unemployment results in

The phase of the business cycle characterized by rising output is called a(n)

During the contraction phase of the business cycle

"Output fell 2 percent last quarter" is an example of a positive economic statement.

Which of the following indicates that the average standard of living is rising?

The Employment Act of 1946 directed the federal government to pursue the three objectives of maximizing employment,production,and purchasing power.

The U.S.economy experienced fluctuations in employment and output over the last half of the twentieth century.However,the length of the average recession has been about the same as the length of the average expansion.

During a recession,both output and unemployment fall.

Macroeconomics is best suited to answering questions such as

During the 1990s and the first decade of the 2000s

What is the difference in the concepts of economic growth and economic expansion?

Why do policymakers have the goal of stable prices?

Aggregation is important because it allows many individual variables to be combined into one larger whole.

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 5: What Macroeconomics Tries to Explain

Classical economists believed that

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

In mid-2009,the unemployment rate stood at

Why is inflation considered a problem?

Who was the economist that began modern macroeconomics?

Recessions are identified by

If a factory hires 1,000 new workers,the nation's output level is probably

Because it lowers the amount of output per person,unemployment results in

The phase of the business cycle characterized by rising output is called a(n)

During the contraction phase of the business cycle

"Output fell 2 percent last quarter" is an example of a positive economic statement.

Which of the following indicates that the average standard of living is rising?

The Employment Act of 1946 directed the federal government to pursue the three objectives of maximizing employment,production,and purchasing power.

The U.S.economy experienced fluctuations in employment and output over the last half of the twentieth century.However,the length of the average recession has been about the same as the length of the average expansion.

During a recession,both output and unemployment fall.

Macroeconomics is best suited to answering questions such as

During the 1990s and the first decade of the 2000s

What is the difference in the concepts of economic growth and economic expansion?

Why do policymakers have the goal of stable prices?

Aggregation is important because it allows many individual variables to be combined into one larger whole.

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters