Question 1

-At an output level of $2.0 trillion:

Accepted Answer

A)  there are no leakages from the spending stream. 
B)  businesses will experience reductions in inventories. 
C)  the economy will go into equilibrium if spending decreases. 
D)  injections into the spending stream are less than leakages from the spending stream. 
A)  there are no leakages from the spending stream. 
B)  businesses will experience reductions in inventories. 
C)  the economy will go into equilibrium if spending decreases. 
D)  injections into the spending stream are less than leakages from the spending stream. B

Question 2

The position of new Keynesian economics is that:

Accepted Answer

A)  wages are flexible in the macroeconomy. 
B)  there is no tradeoff between unemployment and inflation. 
C)  a free market economy will automatically operate at full employment. 
D)  businesses set prices based on what is needed to maximize their profits, not on what is occurring in the economy at large. 
A)  wages are flexible in the macroeconomy. 
B)  there is no tradeoff between unemployment and inflation. 
C)  a free market economy will automatically operate at full employment. 
D)  businesses set prices based on what is needed to maximize their profits, not on what is occurring in the economy at large. D

Question 3

According to the new classical model, an increase or decrease in aggregate demand would affect the level of prices, but never the level of output in the:

Accepted Answer

A)  long run. 
B)  short run. 
C)  long run and short run. 
D)  not enough information to answer the question. 
A)  long run. 
B)  short run. 
C)  long run and short run. 
D)  not enough information to answer the question. A

Question 4

An ________economy is influenced by foreign events around the world.

Accepted Answer

The answer of An ________economy is influenced by foreign events...

Question 5

Which of the following is an assumption of the classical school?

Accepted Answer

A)  savings equal investment. 
B)  wage and prices are flexible. 
C)  supply creates its own demand. 
D)  all of the above are assumptions of the classical school. 
A)  savings equal investment. 
B)  wage and prices are flexible. 
C)  supply creates its own demand. 
D)  all of the above are assumptions of the classical school.

Question 6

-The economy is in equilibrium at an output of:

Accepted Answer

A)  $1.5 trillion. 
B)  $2.0 trillion. 
C)  $3.5 trillion. 
D)  $4.0 or more trillion. 
A)  $1.5 trillion. 
B)  $2.0 trillion. 
C)  $3.5 trillion. 
D)  $4.0 or more trillion.

Question 7

-Total planned spending at an output level of $300 billion is:

Accepted Answer

A)  $280 billion. 
B)  $300 billion. 
C)  $320 billion. 
D)  none of the above. 
A)  $280 billion. 
B)  $300 billion. 
C)  $320 billion. 
D)  none of the above.

Question 8

The use of fiscal policy to influence the level of economic activity would most likely be suggested by someone subscribing to the:

Accepted Answer

A)  classical viewpoint. 
B)  Keynesian viewpoint. 
C)  monetarist viewpoint. 
D)  new classical viewpoint. 
A)  classical viewpoint. 
B)  Keynesian viewpoint. 
C)  monetarist viewpoint. 
D)  new classical viewpoint.

Question 9

Contemporary economists who hold that government intervention through macroeconomic policy is not advisable would likely belong to the:

Accepted Answer

A)  Marxian school. 
B)  Keynesian school. 
C)  new classical school. 
D)  new Keynesian school. 
A)  Marxian school. 
B)  Keynesian school. 
C)  new classical school. 
D)  new Keynesian school.

Question 10

In the Keynesian model, if total spending by households, businesses, government units and foreign buyers is greater than the total output produced in the economy, then:

Accepted Answer

A)  total output will increase. 
B)  total spending will decrease. 
C)  total output will increase and total spending will decrease. 
D)  any of the above could happen. 
A)  total output will increase. 
B)  total spending will decrease. 
C)  total output will increase and total spending will decrease. 
D)  any of the above could happen.

Question 11

Fewer teenagers in the labor force would cause a lower rate of unemployment to accompany any given rate of inflation.

Accepted Answer

A) True 
 B)False

Question 12

The four components of model building are:

Accepted Answer

A)  identifying variables, collecting and analyzing data, interpreting conclusions, and forming policies. 
B)  identifying variables, establishing assumptions, collecting and analyzing data, and interpreting conclusions. 
C)  identifying variables, applying universal laws, collecting and analyzing data, and interpreting conclusions. 
D)  collecting and analyzing data, identifying relationships in the data, establishing assumptions, and interpreting conclusions. 
A)  identifying variables, collecting and analyzing data, interpreting conclusions, and forming policies. 
B)  identifying variables, establishing assumptions, collecting and analyzing data, and interpreting conclusions. 
C)  identifying variables, applying universal laws, collecting and analyzing data, and interpreting conclusions. 
D)  collecting and analyzing data, identifying relationships in the data, establishing assumptions, and interpreting conclusions.

Question 13

The main conclusion of Keynesian economics is:

Accepted Answer

A)  a free market economy will automatically operate at full employment. 
B)  a free market economy can operate at less than full employment for long periods of time. 
C)  there is no tradeoff between inflation and unemployment. 
D)  there is no need for government intervention in the economy. 
A)  a free market economy will automatically operate at full employment. 
B)  a free market economy can operate at less than full employment for long periods of time. 
C)  there is no tradeoff between inflation and unemployment. 
D)  there is no need for government intervention in the economy.

Question 14

Which of the following arguments was NOT given in Up for Debate: Should Government's Role in Influencing Economic Activity be Reduced?

Accepted Answer

A)  Classical and new classical economics point out that if the economy is left alone it will tend to operate at full employment. 
B)  Both new classical and new Keynesian economics tend to favor a large, interventionist government role in the macroeconomy. 
C)  Sometimes government needs to provide the "kick" that is needed to move an economy away from stagnation. 
D)  The movement of wages and prices, without government intervention, should lead to adjustments needed to reach full or natural employment. 
A)  Classical and new classical economics point out that if the economy is left alone it will tend to operate at full employment. 
B)  Both new classical and new Keynesian economics tend to favor a large, interventionist government role in the macroeconomy. 
C)  Sometimes government needs to provide the "kick" that is needed to move an economy away from stagnation. 
D)  The movement of wages and prices, without government intervention, should lead to adjustments needed to reach full or natural employment.

Question 15

The position that wage and price flexibility will bring the economy to the desired level of output is shared by the classical school and the new classical school.

Accepted Answer

A) True 
 B)False

Question 16

In the new classical model, the wealth effect suggests that:

Accepted Answer

A)  an increase in prices reduces people's wealth, so people spend less. 
B)  higher interest rates make people wealthier, so spending in the economy increases. 
C)  foreigners buy more U.S. goods when they feel wealthier. 
D)  prices do not affect the value of money. 
A)  an increase in prices reduces people's wealth, so people spend less. 
B)  higher interest rates make people wealthier, so spending in the economy increases. 
C)  foreigners buy more U.S. goods when they feel wealthier. 
D)  prices do not affect the value of money.

Question 17

All macroeconomic models attempt to explain the same relationships.

Accepted Answer

A) True 
 B)False

Question 18

The reasoning behind the new classical argument that the effects of macroeconomic policies might be distorted by the adjustment of business and household behaviors in anticipation of policymakers' strategies is based on:

Accepted Answer

A)  the supply-side effect. 
B)  the private sector effect. 
C)  classical economic theory. 
D)  rational expectations. 
A)  the supply-side effect. 
B)  the private sector effect. 
C)  classical economic theory. 
D)  rational expectations.

Question 19

In assessing macroeconomic policy proposals, it must be remembered that:

Accepted Answer

A)  there is widespread agreement that fiscal policy is more desirable than monetary policy. 
B)  an understanding of how the economy works today is, by itself, enough to deal with future problems. 
C)  the side effects of different policies must be ignored to ensure that the most efficient policy tools are used. 
D)  the economy is not composed of a set of simple relationships that can be easily manipulated to solve problems. 
A)  there is widespread agreement that fiscal policy is more desirable than monetary policy. 
B)  an understanding of how the economy works today is, by itself, enough to deal with future problems. 
C)  the side effects of different policies must be ignored to ensure that the most efficient policy tools are used. 
D)  the economy is not composed of a set of simple relationships that can be easily manipulated to solve problems.

Question 20

In the Keynesian model, if total spending in the economy is less than total output, business inventories will decrease and the level of output will increase.

Accepted Answer

A) True 
 B)False

-At an output level of $2.0 trillion:

The position of new Keynesian economics is that:

According to the new classical model, an increase or decrease in aggregate demand would affect the level of prices, but never the level of output in the:

An ________economy is influenced by foreign events around the world.

Which of the following is an assumption of the classical school?

-The economy is in equilibrium at an output of:

-Total planned spending at an output level of $300 billion is:

The use of fiscal policy to influence the level of economic activity would most likely be suggested by someone subscribing to the:

Contemporary economists who hold that government intervention through macroeconomic policy is not advisable would likely belong to the:

In the Keynesian model, if total spending by households, businesses, government units and foreign buyers is greater than the total output produced in the economy, then:

Fewer teenagers in the labor force would cause a lower rate of unemployment to accompany any given rate of inflation.

The four components of model building are:

The main conclusion of Keynesian economics is:

Which of the following arguments was NOT given in Up for Debate: Should Government's Role in Influencing Economic Activity be Reduced?

The position that wage and price flexibility will bring the economy to the desired level of output is shared by the classical school and the new classical school.

In the new classical model, the wealth effect suggests that:

All macroeconomic models attempt to explain the same relationships.

The reasoning behind the new classical argument that the effects of macroeconomic policies might be distorted by the adjustment of business and household behaviors in anticipation of policymakers' strategies is based on:

In assessing macroeconomic policy proposals, it must be remembered that:

In the Keynesian model, if total spending in the economy is less than total output, business inventories will decrease and the level of output will increase.

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Goals and Problems of the Macroeconomy: Employment, Prices and Production

Foundations of the Macroeconomy

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

Filters

Exam 9: Macroeconomic Viewpoints and Models

-At an output level of $2.0 trillion:

The position of new Keynesian economics is that:

According to the new classical model, an increase or decrease in aggregate demand would affect the level of prices, but never the level of output in the:

An ________economy is influenced by foreign events around the world.

Which of the following is an assumption of the classical school?

-The economy is in equilibrium at an output of:

-Total planned spending at an output level of $300 billion is:

The use of fiscal policy to influence the level of economic activity would most likely be suggested by someone subscribing to the:

Contemporary economists who hold that government intervention through macroeconomic policy is not advisable would likely belong to the:

In the Keynesian model, if total spending by households, businesses, government units and foreign buyers is greater than the total output produced in the economy, then:

Fewer teenagers in the labor force would cause a lower rate of unemployment to accompany any given rate of inflation.

The four components of model building are:

The main conclusion of Keynesian economics is:

Which of the following arguments was NOT given in Up for Debate: Should Government's Role in Influencing Economic Activity be Reduced?

The position that wage and price flexibility will bring the economy to the desired level of output is shared by the classical school and the new classical school.

In the new classical model, the wealth effect suggests that:

All macroeconomic models attempt to explain the same relationships.

The reasoning behind the new classical argument that the effects of macroeconomic policies might be distorted by the adjustment of business and household behaviors in anticipation of policymakers' strategies is based on:

In assessing macroeconomic policy proposals, it must be remembered that:

In the Keynesian model, if total spending in the economy is less than total output, business inventories will decrease and the level of output will increase.

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Goals and Problems of the Macroeconomy: Employment, Prices and Production

Foundations of the Macroeconomy

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

Filters