Question 1

The U.S. economy is ____ and most complex in world history.

Accepted Answer

A)  the most volatile 
B)  the most stable 
C)  the largest 
D)  the most open 
E)  the most closed 
A)  the most volatile 
B)  the most stable 
C)  the largest 
D)  the most open 
E)  the most closed

Question 2

The aggregate supply curve of an economy _____

Accepted Answer

A)  is a downward-sloping straight line. 
B)  is an upward-sloping curve. 
C)  is a vertical line parallel to the price axis. 
D)  is a horizontal line parallel to the output axis. 
E)  is a ray from the origin. 
A)  is a downward-sloping straight line. 
B)  is an upward-sloping curve. 
C)  is a vertical line parallel to the price axis. 
D)  is a horizontal line parallel to the output axis. 
E)  is a ray from the origin.

Question 3

The price index _____

Accepted Answer

A)  represents the relationship between the economy's price level and aggregate output demanded. 
B)  shows how the economy's output changes over time. 
C)  is used to figure out real GDP each year. 
D)  aggregates output measured in dollars of constant purchasing power. 
E)  represents the relationship between the economy's price level and real GDP. 
A)  represents the relationship between the economy's price level and aggregate output demanded. 
B)  shows how the economy's output changes over time. 
C)  is used to figure out real GDP each year. 
D)  aggregates output measured in dollars of constant purchasing power. 
E)  represents the relationship between the economy's price level and real GDP.

Question 4

The concept of "invisible hand" introduced by Adam Smith explains _____

Accepted Answer

A)  why people act in their own best interests. 
B)  why the government intervenes to overcome failures in private markets. 
C)  how people, acting out of self-interest, unintentionally promote the general good. 
D)  how comparative advantage and specialization promote international trade. 
E)  how the creation of goods and services generates its own demand by creating employment and income. 
A)  why people act in their own best interests. 
B)  why the government intervenes to overcome failures in private markets. 
C)  how people, acting out of self-interest, unintentionally promote the general good. 
D)  how comparative advantage and specialization promote international trade. 
E)  how the creation of goods and services generates its own demand by creating employment and income.

Question 5

The term inflation is used to describe a(n) _____

Accepted Answer

A)  rise in the value of money. 
B)  decline in nominal income. 
C)  sustained increase in the price level. 
D)  general reduction in prices. 
E)  economic problem faced only by the elderly population. 
A)  rise in the value of money. 
B)  decline in nominal income. 
C)  sustained increase in the price level. 
D)  general reduction in prices. 
E)  economic problem faced only by the elderly population.

Question 6

The aim of supply-side economics is to _____

Accepted Answer

A)  increase government spending to stimulate aggregate supply. 
B)  stimulate exports to increase the balance of payments. 
C)  decrease wages to make production cheaper. 
D)  lower taxes to increase the supply of resources. 
E)  reduce both the inflation and unemployment problems through increases in taxes. 
A)  increase government spending to stimulate aggregate supply. 
B)  stimulate exports to increase the balance of payments. 
C)  decrease wages to make production cheaper. 
D)  lower taxes to increase the supply of resources. 
E)  reduce both the inflation and unemployment problems through increases in taxes.

Question 7

Before the Great Depression, macroeconomic policy was based primarily on _____

Accepted Answer

A)  human spirits. 
B)  demand-side economics. 
C)  supply-side economics. 
D)  laissez-faire philosophy. 
E)  government interference. 
A)  human spirits. 
B)  demand-side economics. 
C)  supply-side economics. 
D)  laissez-faire philosophy. 
E)  government interference.

Question 8

The Reagan tax cut of 1981 was an attempt to _____

Accepted Answer

A)  stimulate aggregate supply. 
B)  stimulate aggregate demand. 
C)  stabilize the value of the U.S. dollar. 
D)  increase the demand for U.S. exports. 
E)  reduce the federal budget deficit. 
A)  stimulate aggregate supply. 
B)  stimulate aggregate demand. 
C)  stabilize the value of the U.S. dollar. 
D)  increase the demand for U.S. exports. 
E)  reduce the federal budget deficit.

Question 9

An economic policy that is based on a flawed theory can, at times, provide a desired outcome.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Identify a valid trend observed in U.S. business cycles since 1933.

Accepted Answer

A)  Contractions lasted for more than two years on an average. 
B)  There were only two or three complete cycles. 
C)  There have been no recessions since 1979. 
D)  Expansions generally lasted longer than contractions. 
E)  Each cycle lasted longer than the previous one. 
A)  Contractions lasted for more than two years on an average. 
B)  There were only two or three complete cycles. 
C)  There have been no recessions since 1979. 
D)  Expansions generally lasted longer than contractions. 
E)  Each cycle lasted longer than the previous one.

Question 12

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)  an increase in the slope of the 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)  an increase in the slope of the aggregate supply curve

Question 13

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act, the Federal budget deficit _____.

Accepted Answer

A)  doubled 
B)  tripled 
C)  stayed the same 
D)  decreased significantly 
E)  quadrupled 
A)  doubled 
B)  tripled 
C)  stayed the same 
D)  decreased significantly 
E)  quadrupled

Question 14

Which of the following economic changes was observed during the Great Depression?

Accepted Answer

A)  a fall in the domestic price level, leading to an increase in the demand for imports 
B)  a fall in resource prices, leading to an increase in aggregate supply 
C)  an increase in unemployment, leading to a decrease in aggregate demand 
D)  an increase in the domestic price level, leading to an increase in the demand for exports 
E)  an increase in real GDP, leading to an increase in the real interest rate 
A)  a fall in the domestic price level, leading to an increase in the demand for imports 
B)  a fall in resource prices, leading to an increase in aggregate supply 
C)  an increase in unemployment, leading to a decrease in aggregate demand 
D)  an increase in the domestic price level, leading to an increase in the demand for exports 
E)  an increase in real GDP, leading to an increase in the real interest rate

Question 15

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. What is aggregate supply at a price level of $75?

Accepted Answer

A)  $200 billion dollars 
B)  $400 billion dollars 
C)  $600 billion dollars 
D)  $800 billion dollars 
E)  $1,000 billion dollars 
A)  $200 billion dollars 
B)  $400 billion dollars 
C)  $600 billion dollars 
D)  $800 billion dollars 
E)  $1,000 billion dollars

Question 16

_____ are variables that reflect peaks and troughs in economic activity as they occur.

Accepted Answer

A)  Coincident economic indicators 
B)  Lagging economic indicators 
C)  Leading economic indicators 
D)  Perfect economic indicators 
E)  Real economic indicators 
A)  Coincident economic indicators 
B)  Lagging economic indicators 
C)  Leading economic indicators 
D)  Perfect economic indicators 
E)  Real economic indicators

Question 17

Economic fluctuations or business cycles _____

Accepted Answer

A)  measure changes in the total number of new businesses started during a year. 
B)  are fluctuations in the Dow Jones industrial average relative to a long-term growth trend. 
C)  look at the role played by business on the level of unemployment. 
D)  are fluctuations in the level of economic activity relative to a long-term growth trend. 
E)  are changes in government spending that occur over a period of time. 
A)  measure changes in the total number of new businesses started during a year. 
B)  are fluctuations in the Dow Jones industrial average relative to a long-term growth trend. 
C)  look at the role played by business on the level of unemployment. 
D)  are fluctuations in the level of economic activity relative to a long-term growth trend. 
E)  are changes in government spending that occur over a period of time.

Question 18

The U.S. economy has about _____ households and more than _____ million businesses.

Accepted Answer

A)  130 million; 30 million 
B)  125 million; 28 million 
C)  120 million; 30 million 
D)  110 million; 28 million 
E)  100 million; 30 million 
A)  130 million; 30 million 
B)  125 million; 28 million 
C)  120 million; 30 million 
D)  110 million; 28 million 
E)  100 million; 30 million

Question 19

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 20

Long-term growth in production in the U.S. economy can be partially explained by _____

Accepted Answer

A)  improvements in the rules of the game that facilitate production and exchange. 
B)  the peaks and troughs of the business cycle or economic fluctuations. 
C)  trade surpluses that lead to accumulation of precious metals. 
D)  increases in government budget deficits. 
E)  a gradual but consistent increase in the price level. 
A)  improvements in the rules of the game that facilitate production and exchange. 
B)  the peaks and troughs of the business cycle or economic fluctuations. 
C)  trade surpluses that lead to accumulation of precious metals. 
D)  increases in government budget deficits. 
E)  a gradual but consistent increase in the price level.

The U.S. economy is ____ and most complex in world history.

The aggregate supply curve of an economy _____

The price index _____

The concept of "invisible hand" introduced by Adam Smith explains _____

The term inflation is used to describe a(n) _____

The aim of supply-side economics is to _____

Before the Great Depression, macroeconomic policy was based primarily on _____

The Reagan tax cut of 1981 was an attempt to _____

An economic policy that is based on a flawed theory can, at times, provide a desired outcome.

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

Identify a valid trend observed in U.S. business cycles since 1933.

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

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act, the Federal budget deficit _____.

Which of the following economic changes was observed during the Great Depression?

_____ are variables that reflect peaks and troughs in economic activity as they occur.

Economic fluctuations or business cycles _____

The U.S. economy has about _ households and more than _ million businesses.

Which of the following is true of a recession?

Long-term growth in production in the U.S. economy can be partially explained by _____

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.

The U.S. economy is ____ and most complex in world history.

The aggregate supply curve of an economy _____

The price index _____

The concept of "invisible hand" introduced by Adam Smith explains _____

The term inflation is used to describe a(n) _____

The aim of supply-side economics is to _____

Before the Great Depression, macroeconomic policy was based primarily on _____

The Reagan tax cut of 1981 was an attempt to _____

An economic policy that is based on a flawed theory can, at times, provide a desired outcome.

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

Identify a valid trend observed in U.S. business cycles since 1933.

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

Due to the implementation of the Troubled Asset Relief Program and the American Recovery and Reinvestment Act, the Federal budget deficit _____.

Which of the following economic changes was observed during the Great Depression?

_____ are variables that reflect peaks and troughs in economic activity as they occur.

Economic fluctuations or business cycles _____

The U.S. economy has about _____ households and more than _____ million businesses.

Which of the following is true of a recession?

Long-term growth in production in the U.S. economy can be partially explained by _____

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

The U.S. economy has about _ households and more than _ million businesses.