Question 1

The Classical assumptions of the macroeconomy include each of the following except

Accepted Answer

A)  wages and prices are fully flexible. 
B)  expectations are volatile and can take many forms. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition but not the level of GDP. 
A)  wages and prices are fully flexible. 
B)  expectations are volatile and can take many forms. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition but not the level of GDP.

Question 2

Government transfer payments show up in the National Income and Product Accounts as

Accepted Answer

A)  consumption spending. 
B)  negative taxes. 
C)  investment spending. 
D)  government purchases. 
A)  consumption spending. 
B)  negative taxes. 
C)  investment spending. 
D)  government purchases.

Question 3

In the United States today, investment spending averages roughly ________ of GDP and is _________ component of GDP.

Accepted Answer

A)  65%; the most volatile and variable 
B)  15%; the most stable 
C)  15%; the most volatile and variable 
D)  65%; the most stable 
A)  65%; the most volatile and variable 
B)  15%; the most stable 
C)  15%; the most volatile and variable 
D)  65%; the most stable

Question 4

If C0 is $1 trillion, Cy is .75, the tax rate is .20, and the level of national income is $10 trillion, consumption spending would equal

Accepted Answer

A)  $8.5 trillion. 
B)  $7 trillion. 
C)  $3 trillion. 
D)  $6 trillion. 
A)  $8.5 trillion. 
B)  $7 trillion. 
C)  $3 trillion. 
D)  $6 trillion.

Question 5

In the National Income and Product Accounts, net taxes equals

Accepted Answer

A)  government spending minus tax revenue. 
B)  tax revenue minus government spending. 
C)  taxes that left after all expenses are paid. 
D)  tax revenue minus transfers. 
A)  government spending minus tax revenue. 
B)  tax revenue minus government spending. 
C)  taxes that left after all expenses are paid. 
D)  tax revenue minus transfers.

Question 6

The Keynesian assumptions of the macroeconomy include each of the following except

Accepted Answer

A)  wages and prices can be "sticky" or "fixed." 
B)  expectations are volatile and can take many forms. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition and the level of GDP. 
A)  wages and prices can be "sticky" or "fixed." 
B)  expectations are volatile and can take many forms. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition and the level of GDP.

Question 7

The labor market will be in equilibrium

Accepted Answer

A)  when all of the people in the economy are employed. 
B)  when firm's total demand for workers is equal to the labor force. 
C)  when the number of workers employed equals the total adult population of the economy. 
D)  when P x MPL = W 
A)  when all of the people in the economy are employed. 
B)  when firm's total demand for workers is equal to the labor force. 
C)  when the number of workers employed equals the total adult population of the economy. 
D)  when P x MPL = W

Question 8

The Keynesian assumptions of the macroeconomy include each of the following except

Accepted Answer

A)  wages and prices are fully flexible. 
B)  expectations are volatile and can take many forms. 
C)  the labor market can be out of equilibrium, causing involuntary unemployment. 
D)  shocks to aggregate demand will change the composition and the level of GDP. 
A)  wages and prices are fully flexible. 
B)  expectations are volatile and can take many forms. 
C)  the labor market can be out of equilibrium, causing involuntary unemployment. 
D)  shocks to aggregate demand will change the composition and the level of GDP.

Question 9

The real foreign exchange rate depends on each of the following except

Accepted Answer

A)  domestic real GDP. 
B)  the average foreign exchange trader's opinion of what the exchange rate should be if there were no interest rate differentials. 
C)  domestic real interest rates. 
D)  foreign real interest rates. 
A)  domestic real GDP. 
B)  the average foreign exchange trader's opinion of what the exchange rate should be if there were no interest rate differentials. 
C)  domestic real interest rates. 
D)  foreign real interest rates.

Question 10

One of the reasons that investment spending tends to be related to the movement of stock market prices is that

Accepted Answer

A)  when expected profits are high, investors tend to purchase bonds rather than stocks, thus depressing stock prices. 
B)  when expected profits are high, businesses managers tend not undertake investment projects. 
C)  when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up bond prices. 
D)  when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up stock prices. 
A)  when expected profits are high, investors tend to purchase bonds rather than stocks, thus depressing stock prices. 
B)  when expected profits are high, businesses managers tend not undertake investment projects. 
C)  when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up bond prices. 
D)  when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up stock prices.

Question 11

In the United States today, consumption spending

Accepted Answer

A)  adds up to roughly two-thirds of GDP. 
B)  adds up to roughly one-third of GDP. 
C)  is the most volatile component of GDP. 
D)  is sometimes larger than income. 
A)  adds up to roughly two-thirds of GDP. 
B)  adds up to roughly one-third of GDP. 
C)  is the most volatile component of GDP. 
D)  is sometimes larger than income.

Question 12

National income can be divided into

Accepted Answer

A)  investment spending, saving, net taxes. 
B)  consumption spending, saving, government purchases. 
C)  consumption spending, investment spending, net taxes. 
D)  consumption spending, saving, net taxes. 
A)  investment spending, saving, net taxes. 
B)  consumption spending, saving, government purchases. 
C)  consumption spending, investment spending, net taxes. 
D)  consumption spending, saving, net taxes.

Question 13

The lower the value of the ______________________, the ___________ U.S.-made goods are to foreigners.

Accepted Answer

A)  real interest rate; cheaper 
B)  real exchange rate; cheaper 
C)  real exchange rate; more expensive 
D)  real interest rate; more expensive. 
A)  real interest rate; cheaper 
B)  real exchange rate; cheaper 
C)  real exchange rate; more expensive 
D)  real interest rate; more expensive.

Question 14

The value of the output produced by the last worker hired is

Accepted Answer

A)  the product price times the output produced. 
B)  the product price times the output produced minus the wage times the amount of labor hired. 
C)  the product price times the marginal product of labor. 
D)  the wage times the marginal product of labor. 
A)  the product price times the output produced. 
B)  the product price times the output produced minus the wage times the amount of labor hired. 
C)  the product price times the marginal product of labor. 
D)  the wage times the marginal product of labor.

Question 15

If the real exchange rate of the dollar__________, then U.S. exports will _________.

Accepted Answer

A)  appreciates; become less expensive 
B)  depreciates; increase 
C)  depreciates; decrease 
D)  appreciates; increase 
A)  appreciates; become less expensive 
B)  depreciates; increase 
C)  depreciates; decrease 
D)  appreciates; increase

Question 16

When economists use the term "investment" or "investment spending,"
They are

Accepted Answer

A)  talking about activities such as buying a stock or a bond. 
B)  talking about transactions that add to the capital stock and increase potential output. 
C)  talking about activities such as buying a certificate of deposit or commodity futures. 
D)  talking about transactions that result in interest being paid to the buyer. 
A)  talking about activities such as buying a stock or a bond. 
B)  talking about transactions that add to the capital stock and increase potential output. 
C)  talking about activities such as buying a certificate of deposit or commodity futures. 
D)  talking about transactions that result in interest being paid to the buyer.

Question 17

If consumption spending changes by $6 trillion when disposable income changes by $8 trillion, the marginal propensity to consume is equal to

Accepted Answer

A)  $2 trillion. 
B)  1.333. 
C)  $14 trillion. 
D)  .75. 
A)  $2 trillion. 
B)  1.333. 
C)  $14 trillion. 
D)  .75.

Question 18

The Classical assumptions of the macroeconomy include each of the following except

Accepted Answer

A)  wages and prices can be "sticky" or "fixed." 
B)  expectations are consistent with full employment. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition but not the level of GDP. 
A)  wages and prices can be "sticky" or "fixed." 
B)  expectations are consistent with full employment. 
C)  the labor market is always in equilibrium with full employment. 
D)  shocks to aggregate demand will change the composition but not the level of GDP.

Question 19

The amount of investment that replaces obsolete and worn-out capital is called

Accepted Answer

A)  gross investment. 
B)  net investment. 
C)  depreciation or capital consumption. 
D)  tax-free investment. 
A)  gross investment. 
B)  net investment. 
C)  depreciation or capital consumption. 
D)  tax-free investment.

Question 20

Economists categorize investment spending in each of following uses except

Accepted Answer

A)  non-residential construction. 
B)  inventory investment 
C)  equipment investment. 
D)  the renting of office space. 
A)  non-residential construction. 
B)  inventory investment 
C)  equipment investment. 
D)  the renting of office space.

The Classical assumptions of the macroeconomy include each of the following except

Government transfer payments show up in the National Income and Product Accounts as

In the United States today, investment spending averages roughly of GDP and is _ component of GDP.

If C₀ is $1 trillion, C_y is .75, the tax rate is .20, and the level of national income is $10 trillion, consumption spending would equal

In the National Income and Product Accounts, net taxes equals

The Keynesian assumptions of the macroeconomy include each of the following except

The labor market will be in equilibrium

The Keynesian assumptions of the macroeconomy include each of the following except

The real foreign exchange rate depends on each of the following except

One of the reasons that investment spending tends to be related to the movement of stock market prices is that

In the United States today, consumption spending

National income can be divided into

The lower the value of the ____________, the _ U.S.-made goods are to foreigners.

The value of the output produced by the last worker hired is

If the real exchange rate of the dollar__, then U.S. exports will _.

When economists use the term "investment" or "investment spending," They are

If consumption spending changes by $6 trillion when disposable income changes by $8 trillion, the marginal propensity to consume is equal to

The Classical assumptions of the macroeconomy include each of the following except

The amount of investment that replaces obsolete and worn-out capital is called

Economists categorize investment spending in each of following uses except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 6: Building Blocks of the Flexible-Price Model

The Classical assumptions of the macroeconomy include each of the following except

Government transfer payments show up in the National Income and Product Accounts as

In the United States today, investment spending averages roughly ________ of GDP and is _________ component of GDP.

If C0 is $1 trillion, Cy is .75, the tax rate is .20, and the level of national income is $10 trillion, consumption spending would equal

In the National Income and Product Accounts, net taxes equals

The Keynesian assumptions of the macroeconomy include each of the following except

The labor market will be in equilibrium

The Keynesian assumptions of the macroeconomy include each of the following except

The real foreign exchange rate depends on each of the following except

One of the reasons that investment spending tends to be related to the movement of stock market prices is that

In the United States today, consumption spending

National income can be divided into

The lower the value of the ______________________, the ___________ U.S.-made goods are to foreigners.

The value of the output produced by the last worker hired is

If the real exchange rate of the dollar__________, then U.S. exports will _________.

When economists use the term "investment" or "investment spending," They are

If consumption spending changes by $6 trillion when disposable income changes by $8 trillion, the marginal propensity to consume is equal to

The Classical assumptions of the macroeconomy include each of the following except

The amount of investment that replaces obsolete and worn-out capital is called

Economists categorize investment spending in each of following uses except

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

In the United States today, investment spending averages roughly of GDP and is _ component of GDP.

If C₀ is $1 trillion, C_y is .75, the tax rate is .20, and the level of national income is $10 trillion, consumption spending would equal

The lower the value of the ____________, the _ U.S.-made goods are to foreigners.

If the real exchange rate of the dollar__, then U.S. exports will _.