Question 1

Gross Domestic Product includes the sale of intermediate goods and services.

Accepted Answer

A) True 
 B)False  False

Question 2

What are intermediate goods? Why do economists exclude the value of intermediate goods while calculating national income?

Accepted Answer

Intermediate goods are goods used as inputs in the production of other goods.There would be a problem of multiple counting if we include the value of both intermediate goods and final goods.For example,if chips sold to computer manufacturers were included in GDP,we would count the same chip when it was sold to the computer maker and then again as a component of the computer when it was sold to a consumer.Only final goods and services count in the GDP.

Question 3

The price controls on consumer goods during World War II led to

Accepted Answer

A)  permanent surpluses. 
B)  stable long-term prices. 
C)  a burst of inflation when they were ended. 
D)  increased production of consumer goods to satisfy demand. 
A)  permanent surpluses. 
B)  stable long-term prices. 
C)  a burst of inflation when they were ended. 
D)  increased production of consumer goods to satisfy demand. C

Question 4

Business cycles are a persistent feature of the U.S.economy.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that in 2011 you paid $150,000 for a house that was built in 2005 and sold that year for $210,000.The amount this transaction would add to the GDP in 2011 is

Accepted Answer

A)  $0. 
B)  $60,000. 
C)  $210,000. 
D)  −$60,000 
A)  $0. 
B)  $60,000. 
C)  $210,000. 
D)  −$60,000

Question 6

Cars produced by General Motors in Mexico would be included in U.S.Gross Domestic Product.

Accepted Answer

A) True 
 B)False

Question 7

Since the end of World War II,the economy of the United States has been more influenced by stabilization policy.One of the undesirable side effects of this has been that the economy now has a greater tendency to suffer from

Accepted Answer

A)  more severe recessions and depressions. 
B)  higher levels of unemployment and lower rates of employment growth. 
C)  lower rates of growth in real and nominal GDP. 
D)  more persistent periods of inflation. 
A)  more severe recessions and depressions. 
B)  higher levels of unemployment and lower rates of employment growth. 
C)  lower rates of growth in real and nominal GDP. 
D)  more persistent periods of inflation.

Question 8

The Great Depression of the 1930s led to a revolution in macroeconomic thinking,following the work of

Accepted Answer

A)  Arthur Laffer. 
B)  Milton Friedman. 
C)  Adam Smith. 
D)  John Maynard Keynes. 
E)  David Ricardo. 
A)  Arthur Laffer. 
B)  Milton Friedman. 
C)  Adam Smith. 
D)  John Maynard Keynes. 
E)  David Ricardo.

Question 9

Which of the following would tend to increase the value of officially measured GDP?

Accepted Answer

A)  decriminalization of drugs such as marijuana and cocaine 
B)  decriminalization of prostitution 
C)  decriminalization of gambling on basketball and football 
D)  all of the above 
A)  decriminalization of drugs such as marijuana and cocaine 
B)  decriminalization of prostitution 
C)  decriminalization of gambling on basketball and football 
D)  all of the above

Question 10

Contrast the economic performance of the American economy of 2001 with the economic performance of the 1996 to 2001 period.Use the appropriate aggregate demand and aggregate supply curves to distinguish the differing economic condition of the two periods.

Accepted Answer

The economic performance of the 1996 to

Question 11

Macroeconomists pay little attention to the composition of aggregate output.

Accepted Answer

A) True 
 B)False

Question 12

If a macroeconomist aggregates many markets into one,then

Accepted Answer

A)  individual market differences are eliminated. 
B)  one must not confuse ravioli and hot dogs. 
C)  she is performing a meaningless exercise. 
D)  differences between products must still be noted. 
A)  individual market differences are eliminated. 
B)  one must not confuse ravioli and hot dogs. 
C)  she is performing a meaningless exercise. 
D)  differences between products must still be noted.

Question 13

Dissatisfaction with public school education has led many parents to try home schooling for their children.If parents cut back on their jobs outside the home in order to spend time teaching their children at home,how will this affect GDP?

Accepted Answer

A)  GDP will increase. 
B)  Real GDP will increase and nominal GDP will decrease. 
C)  Both real and nominal GDP will increase. 
D)  GDP will decrease. 
A)  GDP will increase. 
B)  Real GDP will increase and nominal GDP will decrease. 
C)  Both real and nominal GDP will increase. 
D)  GDP will decrease.

Question 14

The aggregate demand curve shows the quantity of domestic product

Accepted Answer

A)  produced at each possible price level. 
B)  demanded and produced at each possible price level. 
C)  that is exported at each possible price level. 
D)  demanded at each possible price level. 
A)  produced at each possible price level. 
B)  demanded and produced at each possible price level. 
C)  that is exported at each possible price level. 
D)  demanded at each possible price level.

Question 15

To fight recession,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 higher price levels. 
C)  increase aggregate demand, which will also lead to lower price levels. 
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 higher price levels. 
C)  increase aggregate demand, which will also lead to lower price levels. 
D)  decrease aggregate demand, which will also lead to higher unemployment rates.

Question 16

You can generally distinguish an aggregate supply-caused recession from an aggregate demand-caused recession because

Accepted Answer

A)  real GDP will rise in an aggregate supply recession. 
B)  the price level will fall in an aggregate supply recession. 
C)  the price level will fall in an aggregate demand recession. 
D)  real GDP will rise in an aggregate demand recession. 
A)  real GDP will rise in an aggregate supply recession. 
B)  the price level will fall in an aggregate supply recession. 
C)  the price level will fall in an aggregate demand recession. 
D)  real GDP will rise in an aggregate demand recession.

Question 17

The Great Depression ended in the United States when

Accepted Answer

A)  the New Deal reforms were initiated by President Roosevelt. 
B)  deficit spending ended in 1937. 
C)  the United States returned to the gold standard in 1940. 
D)  the United States began to mobilize for war in the early 1940s. 
E)  the German economy suffered hyperinflation in the 1920s. 
A)  the New Deal reforms were initiated by President Roosevelt. 
B)  deficit spending ended in 1937. 
C)  the United States returned to the gold standard in 1940. 
D)  the United States began to mobilize for war in the early 1940s. 
E)  the German economy suffered hyperinflation in the 1920s.

Question 18

Aggregate demand and supply curves have been widely used to analyze the performance of the macroeconomy. Figure 5-3 shows four diagrams that represent different changes in the macroeconomy. Choose the diagram that best represents the situations described in the following questions.
Figure 5-3
  
-Which graph in Figure 5-3 best represents the supply-side shock of the 1970s oil crisis?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 19

What are the two basic principles of aggregation?

Accepted Answer

The two pr

Question 20

GDP in 2011 would not include the resale of a house built in 2000.

Accepted Answer

A) True 
 B)False

Gross Domestic Product includes the sale of intermediate goods and services.

What are intermediate goods? Why do economists exclude the value of intermediate goods while calculating national income?

The price controls on consumer goods during World War II led to

Business cycles are a persistent feature of the U.S.economy.

Suppose that in 2011 you paid $150,000 for a house that was built in 2005 and sold that year for $210,000.The amount this transaction would add to the GDP in 2011 is

Cars produced by General Motors in Mexico would be included in U.S.Gross Domestic Product.

Since the end of World War II,the economy of the United States has been more influenced by stabilization policy.One of the undesirable side effects of this has been that the economy now has a greater tendency to suffer from

The Great Depression of the 1930s led to a revolution in macroeconomic thinking,following the work of

Which of the following would tend to increase the value of officially measured GDP?

Contrast the economic performance of the American economy of 2001 with the economic performance of the 1996 to 2001 period.Use the appropriate aggregate demand and aggregate supply curves to distinguish the differing economic condition of the two periods.

Macroeconomists pay little attention to the composition of aggregate output.

If a macroeconomist aggregates many markets into one,then

Dissatisfaction with public school education has led many parents to try home schooling for their children.If parents cut back on their jobs outside the home in order to spend time teaching their children at home,how will this affect GDP?

The aggregate demand curve shows the quantity of domestic product

To fight recession,the government may

You can generally distinguish an aggregate supply-caused recession from an aggregate demand-caused recession because

The Great Depression ended in the United States when

What are the two basic principles of aggregation?

GDP in 2011 would not include the resale of a house built in 2000.

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

Filters

Exam 5: An Introduction to Macroeconomics

Gross Domestic Product includes the sale of intermediate goods and services.

What are intermediate goods? Why do economists exclude the value of intermediate goods while calculating national income?

The price controls on consumer goods during World War II led to

Business cycles are a persistent feature of the U.S.economy.

Suppose that in 2011 you paid $150,000 for a house that was built in 2005 and sold that year for $210,000.The amount this transaction would add to the GDP in 2011 is

Cars produced by General Motors in Mexico would be included in U.S.Gross Domestic Product.

Since the end of World War II,the economy of the United States has been more influenced by stabilization policy.One of the undesirable side effects of this has been that the economy now has a greater tendency to suffer from

The Great Depression of the 1930s led to a revolution in macroeconomic thinking,following the work of

Which of the following would tend to increase the value of officially measured GDP?

Contrast the economic performance of the American economy of 2001 with the economic performance of the 1996 to 2001 period.Use the appropriate aggregate demand and aggregate supply curves to distinguish the differing economic condition of the two periods.

Macroeconomists pay little attention to the composition of aggregate output.

If a macroeconomist aggregates many markets into one,then

Dissatisfaction with public school education has led many parents to try home schooling for their children.If parents cut back on their jobs outside the home in order to spend time teaching their children at home,how will this affect GDP?

The aggregate demand curve shows the quantity of domestic product

To fight recession,the government may

You can generally distinguish an aggregate supply-caused recession from an aggregate demand-caused recession because

The Great Depression ended in the United States when

What are the two basic principles of aggregation?

GDP in 2011 would not include the resale of a house built in 2000.

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

Filters