Question 1

Keynes proposed that the government jolt the economy out of its depression by _____

Accepted Answer

A)  increasing aggregate supply. 
B)  decreasing aggregate demand. 
C)  decreasing aggregate supply. 
D)  increasing aggregate demand. 
E)  allowing the economy to correct itself. 
A)  increasing aggregate supply. 
B)  decreasing aggregate demand. 
C)  decreasing aggregate supply. 
D)  increasing aggregate demand. 
E)  allowing the economy to correct itself.

Question 2

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 3

A key difference between recessions and depressions is that recessions are _____

Accepted Answer

A)  longer than depressions. 
B)  more severe than depressions. 
C)  accompanied by price increases, while depressions are accompanied by price decreases. 
D)  shorter and less severe than depressions. 
E)  accompanied by price decreases, while depressions are accompanied by price increases. 
A)  longer than depressions. 
B)  more severe than depressions. 
C)  accompanied by price increases, while depressions are accompanied by price decreases. 
D)  shorter and less severe than depressions. 
E)  accompanied by price decreases, while depressions are accompanied by price increases.

Question 4

The value of a country's final goods and services after adjusting for changes due to inflation is called its _____

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  disposable income. 
D)  net national product. 
E)  full employment output. 
A)  real GDP. 
B)  nominal GDP. 
C)  disposable income. 
D)  net national product. 
E)  full employment output.

Question 5

The _____ reflects the relationship between the economy's price level and aggregate output demanded.

Accepted Answer

A)  aggregate demand 
B)  aggregate demand curve 
C)  aggregate supply 
D)  aggregate supply curve 
E)  aggregate output 
A)  aggregate demand 
B)  aggregate demand curve 
C)  aggregate supply 
D)  aggregate supply curve 
E)  aggregate output

Question 6

Table 5.1
 $$\begin{array}{l}
\text { Table } 5.1\
\begin{array} { | c | c | c | } 
\hline \begin{array} { l } 
\text { Aggregate Demand (quantity } \
\text { demanded in billions of dollars) }
\end{array} & \begin{array} { l } 
\text { Price Level } \
( \$ )
\end{array} & \begin{array} { l } 
\text { Aggregate Supply (quantity supplied in billions of } \
\text { dollars) }
\end{array} \
\hline 100 & 150 & 1,200 \
\hline 200 & 125 & 1,000 \
\hline 400 & 100 & 800 \
\hline 600 & 75 & 600 \
\hline 800 & 50 & 400 \
\hline 1,000 & 25 & 200 \
\hline
\end{array}
\end{array}$$
-Refer to Table 5.1, which shows an aggregate demand schedule and an aggregate supply schedule. Which of the following is true?

Accepted Answer

A)  Equilibrium output is $1,000, and equilibrium price level is 25. 
B)  Equilibrium output is $800, and equilibrium price level is 50. 
C)  Equilibrium output is $200, and equilibrium price level is 125. 
D)  Equilibrium output is $400, and equilibrium price level is 100. 
E)  Equilibrium output is $600, and equilibrium price level is 75. 
A)  Equilibrium output is $1,000, and equilibrium price level is 25. 
B)  Equilibrium output is $800, and equilibrium price level is 50. 
C)  Equilibrium output is $200, and equilibrium price level is 125. 
D)  Equilibrium output is $400, and equilibrium price level is 100. 
E)  Equilibrium output is $600, and equilibrium price level is 75.

Question 7

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 across all nations. 
C)  They reflect an economy's sociopolitical 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 across all nations. 
C)  They reflect an economy's sociopolitical 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 8

As a rule of thumb, a recession means economic activity declines for more than _____ months.

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  5 
E)  6 
A)  2 
B)  3 
C)  4 
D)  5 
E)  6

Question 9

The demand for _____ is most severely affected by a recession.

Accepted Answer

A)  medicines 
B)  automobiles 
C)  breakfast cereals 
D)  haircuts 
E)  gasoline 
A)  medicines 
B)  automobiles 
C)  breakfast cereals 
D)  haircuts 
E)  gasoline

Question 10

Since the Great Depression, business fluctuations have become more severe and longer in duration.

Accepted Answer

A) True 
 B)False

Question 11

The Keynesian approach to economic policy is also known as _____

Accepted Answer

A)  supply-side economics. 
B)  Classical economics. 
C)  demand-side economics. 
D)  mercantilism. 
E)  laissez-faire. 
A)  supply-side economics. 
B)  Classical economics. 
C)  demand-side economics. 
D)  mercantilism. 
E)  laissez-faire.

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

Question 13

Which is the best explanation for the increased productivity of workers since 1929?

Accepted Answer

A)  The number of jobs created in the organized sector was less than that in the unorganized sector. 
B)  The number of employed people increased by less than five percent. 
C)  The availability of more and higher-quality human capital and physical capital. 
D)  The productivity of workers declined over the years. 
E)  The growth in employment opportunities was slower compared to the growth in population. 
A)  The number of jobs created in the organized sector was less than that in the unorganized sector. 
B)  The number of employed people increased by less than five percent. 
C)  The availability of more and higher-quality human capital and physical capital. 
D)  The productivity of workers declined over the years. 
E)  The growth in employment opportunities was slower compared to the growth in population.

Question 14

Which of the following statements about leading economic indicators is true?

Accepted Answer

A)  Most people refer to them before making any important spending decision. 
B)  They are the only economic indicators available to economists. 
C)  They indicate when an economy is in a recession or an expansion. 
D)  They foreshadow turning points in the business cycle. 
E)  They can predict precisely when turning points in an economy will occur. 
A)  Most people refer to them before making any important spending decision. 
B)  They are the only economic indicators available to economists. 
C)  They indicate when an economy is in a recession or an expansion. 
D)  They foreshadow turning points in the business cycle. 
E)  They can predict precisely when turning points in an economy will occur.

Question 15

Which of the following factors can partly explain the long-term growth in production in the U.S. economy?

Accepted Answer

A)  trade surpluses and accumulation of precious metals 
B)  a gradual but consistent increase in the price level 
C)  growth in population 
D)  improvements in technology 
E)  federal government budget deficits 
A)  trade surpluses and accumulation of precious metals 
B)  a gradual but consistent increase in the price level 
C)  growth in population 
D)  improvements in technology 
E)  federal government budget deficits

Question 16

What occurred during the 1930s?

Accepted Answer

A)  The deepest economic contraction in U.S. history occurred. 
B)  The economy contracted about half the time, and the unemployment rate topped 18 percent. 
C)  The outbreak of war boosted employment to fight for the country and to make tanks, ships, aircraft, and the like. 
D)  Federal spending increased on both the war and social programs at home. 
E)  Home prices declined and foreclosures rose, as more borrowers failed to make their mortgage payments. 
A)  The deepest economic contraction in U.S. history occurred. 
B)  The economy contracted about half the time, and the unemployment rate topped 18 percent. 
C)  The outbreak of war boosted employment to fight for the country and to make tanks, ships, aircraft, and the like. 
D)  Federal spending increased on both the war and social programs at home. 
E)  Home prices declined and foreclosures rose, as more borrowers failed to make their mortgage payments.

Question 17

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 18

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

Accepted Answer

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

Question 19

The term stagflation refers to _____

Accepted Answer

A)  a simultaneous reduction in output and the price level. 
B)  a simultaneous increase in output and the price level. 
C)  a decline in the price level accompanied by increases in real output and employment. 
D)  an increase in the price level accompanied by decreases in real output and employment. 
E)  a simultaneous increase in both the trade deficit and the budget deficit. 
A)  a simultaneous reduction in output and the price level. 
B)  a simultaneous increase in output and the price level. 
C)  a decline in the price level accompanied by increases in real output and employment. 
D)  an increase in the price level accompanied by decreases in real output and employment. 
E)  a simultaneous increase in both the trade deficit and the budget deficit.

Question 20

What did President Ronald Reagan and Congress do in 1981 to increase aggregate supply?

Accepted Answer

A)  increase federal spending increased on wars in and social programs at home 
B)  impose ceilings on prices and wages to combat inflation 
C)  stabilize the value of the U.S. dollar 
D)  cut personal income tax rates by an average of 23 percent 
E)  raise personal income tax rates by an average of 23 percent 
A)  increase federal spending increased on wars in and social programs at home 
B)  impose ceilings on prices and wages to combat inflation 
C)  stabilize the value of the U.S. dollar 
D)  cut personal income tax rates by an average of 23 percent 
E)  raise personal income tax rates by an average of 23 percent

Keynes proposed that the government jolt the economy out of its depression by _____

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

A key difference between recessions and depressions is that recessions are _____

The value of a country's final goods and services after adjusting for changes due to inflation is called its _____

The _____ reflects the relationship between the economy's price level and aggregate output demanded.

Which of the following is true of economic fluctuations?

As a rule of thumb, a recession means economic activity declines for more than _____ months.

The demand for _____ is most severely affected by a recession.

Since the Great Depression, business fluctuations have become more severe and longer in duration.

The Keynesian approach to economic policy is also known as _____

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

Which is the best explanation for the increased productivity of workers since 1929?

Which of the following statements about leading economic indicators is true?

Which of the following factors can partly explain the long-term growth in production in the U.S. economy?

What occurred during the 1930s?

The aggregate demand curve reflects _____

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

The term stagflation refers to _____

What did President Ronald Reagan and Congress do in 1981 to increase aggregate supply?

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 5: Introduction to Macroeconomics.

Keynes proposed that the government jolt the economy out of its depression by _____

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

A key difference between recessions and depressions is that recessions are _____

The value of a country's final goods and services after adjusting for changes due to inflation is called its _____

The _____ reflects the relationship between the economy's price level and aggregate output demanded.

Which of the following is true of economic fluctuations?

As a rule of thumb, a recession means economic activity declines for more than _____ months.

The demand for _____ is most severely affected by a recession.

Since the Great Depression, business fluctuations have become more severe and longer in duration.

The Keynesian approach to economic policy is also known as _____

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

Which is the best explanation for the increased productivity of workers since 1929?

Which of the following statements about leading economic indicators is true?

Which of the following factors can partly explain the long-term growth in production in the U.S. economy?

What occurred during the 1930s?

The aggregate demand curve reflects _____

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

The term stagflation refers to _____

What did President Ronald Reagan and Congress do in 1981 to increase aggregate supply?

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters