Question 1

Stabilization policy often faces a trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 2

The vertical axis of the aggregate demand-aggregate supply model measures the amount of

Accepted Answer

A) total employment. 
B) total final output. 
C) the price level. 
D) net exports. 
A) total employment. 
B) total final output. 
C) the price level. 
D) net exports.

Question 3

China is the world's largest wheat producer.If China's domestic product grew by eleven percent in the previous year, it implies that

Accepted Answer

A) production of wheat grew by more than eleven percent. 
B) products other than wheat grew by less than eleven percent. 
C) China's overall output grew by eleven percent. 
D) production of wheat is declining in China. 
A) production of wheat grew by more than eleven percent. 
B) products other than wheat grew by less than eleven percent. 
C) China's overall output grew by eleven percent. 
D) production of wheat is declining in China.

Question 4

Gross Domestic Product is the

Accepted Answer

A) least inclusive aggregate used to measure the economy. 
B) total of goods and services desired by consumers. 
C) most comprehensive measure of total output in the United States. 
D) most accurate measure of the trade balance of the United States. 
A) least inclusive aggregate used to measure the economy. 
B) total of goods and services desired by consumers. 
C) most comprehensive measure of total output in the United States. 
D) most accurate measure of the trade balance of the United States.

Question 5

Aneta has owned an Italian sports car for several years and now she wants to sell it.She paid $8,500 for it in 1993 and she has just sold it for $39,000 in 2015.How is this sale included in the GDP for 2015?

Accepted Answer

A) $8,500 is included in 2015 GDP 
B) $39,000 is included in 2015 GDP 
C) The increase in value of $10,500 is included in 2015 GDP 
D) It is not included in 2015 GDP 
A) $8,500 is included in 2015 GDP 
B) $39,000 is included in 2015 GDP 
C) The increase in value of $10,500 is included in 2015 GDP 
D) It is not included in 2015 GDP

Question 6

Does GDP for a particular year include items produced in a previous year?

Accepted Answer

A) Nominal GDP will not and real GDP will 
B) Real GDP will and nominal GDP will not 
C) Yes for both nominal and real GDP 
D) No for both nominal and real GDP 
A) Nominal GDP will not and real GDP will 
B) Real GDP will and nominal GDP will not 
C) Yes for both nominal and real GDP 
D) No for both nominal and real GDP

Question 7

A recession is a period during which

Accepted Answer

A) aggregate demand, production, and unemployment rises. 
B) aggregate demand, production, and unemployment falls. 
C) aggregate demand, production, and unemployment remain the same. 
D) aggregate demand and production rises while unemployment remains the same. 
E) aggregate demand and production falls while unemployment rises. 
A) aggregate demand, production, and unemployment rises. 
B) aggregate demand, production, and unemployment falls. 
C) aggregate demand, production, and unemployment remain the same. 
D) aggregate demand and production rises while unemployment remains the same. 
E) aggregate demand and production falls while unemployment rises.

Question 8

Economists define an aggregate as

Accepted Answer

A) a concrete object. 
B) a specific principle. 
C) a representative good or service. 
D) a useful abstraction. 
E) something immeasurable. 
A) a concrete object. 
B) a specific principle. 
C) a representative good or service. 
D) a useful abstraction. 
E) something immeasurable.

Question 9

Changes in nominal GDP always reflect changes in real output.

Accepted Answer

A) True 
 B)False

Question 10

Real GDP

Accepted Answer

A) is nominal GDP adjusted for changes in the price level. 
B) is also called nominal GDP. 
C) measures GDP minus depreciation of capital. 
D) will always change when prices change. 
A) is nominal GDP adjusted for changes in the price level. 
B) is also called nominal GDP. 
C) measures GDP minus depreciation of capital. 
D) will always change when prices change.

Question 11

Government policy to reduce unemployment and increase national output can be illustrated by an

Accepted Answer

A) outward shift of the aggregate demand curve caused by an increase in government spending. 
B) outward shift of the aggregate supply curve caused by a reduction in government spending. 
C) inward shift of the aggregate demand curve caused by an increase in government spending. 
D) inward shift of the aggregate supply curve caused by a reduction in government spending. 
A) outward shift of the aggregate demand curve caused by an increase in government spending. 
B) outward shift of the aggregate supply curve caused by a reduction in government spending. 
C) inward shift of the aggregate demand curve caused by an increase in government spending. 
D) inward shift of the aggregate supply curve caused by a reduction in government spending.

Question 12

Define the following terms and explain their importance to the study of macroeconomics:
a.aggregation
b.recession
c.gross domestic product
d.final goods and services
e.stabilization policy

Accepted Answer

omprehension
a.Aggregation means combini

Question 13

If the prices of all goods and services rise during the year,

Accepted Answer

A) real GDP may fall. 
B) nominal GDP must rise. 
C) nominal GDP may increase. 
D) real GDP must rise. 
A) real GDP may fall. 
B) nominal GDP must rise. 
C) nominal GDP may increase. 
D) real GDP must rise.

Question 14

Economic fluctuations in the United States have been less extreme since the 1950s.

Accepted Answer

A) True 
 B)False

Question 15

Intermediate goods, like milk sold by a farmer to a supermarket, are

Accepted Answer

A) included in GDP. 
B) included in GDP at market value. 
C) included if it is imported. 
D) are not included in GDP. 
A) included in GDP. 
B) included in GDP at market value. 
C) included if it is imported. 
D) are not included in GDP.

Question 16

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 favorable macroeconomy of the late 1990s?

Accepted Answer

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

Question 17

In the aggregate demand-aggregate supply model, economic growth can be illustrated by an

Accepted Answer

A) outward shift of the aggregate demand curve. 
B) inward shift of the aggregate demand curve. 
C) inward shift of the aggregate supply curve. 
D) All of the above. 
A) outward shift of the aggregate demand curve. 
B) inward shift of the aggregate demand curve. 
C) inward shift of the aggregate supply curve. 
D) All of the above.

Question 18

Part of the good economic performance of the United States in the 1990s can be explained by a rightward-shifting aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 19

Nominal GDP is

Accepted Answer

A) also called real GDP. 
B) a more accurate measure than real GDP. 
C) real GDP adjusted for changes in the price level. 
D) GDP measured in current prices. 
A) also called real GDP. 
B) a more accurate measure than real GDP. 
C) real GDP adjusted for changes in the price level. 
D) GDP measured in current prices.

Question 20

If Honda (a Japan-based firm) produces a car in Ohio and exports it to Japan, in which country's GDP will the car be counted?

Accepted Answer

A) Japan's, because Honda is a Japanese company 
B) Japan's because that is where the car is purchased 
C) The GDP of the United States because that is where it was built 
D) Both Japan and the United States 
A) Japan's, because Honda is a Japanese company 
B) Japan's because that is where the car is purchased 
C) The GDP of the United States because that is where it was built 
D) Both Japan and the United States

Exam 22: An Introduction to Macroeconomics

Stabilization policy often faces a trade-off between inflation and unemployment.

The vertical axis of the aggregate demand-aggregate supply model measures the amount of

China is the world's largest wheat producer.If China's domestic product grew by eleven percent in the previous year, it implies that

Gross Domestic Product is the

Aneta has owned an Italian sports car for several years and now she wants to sell it.She paid $8,500 for it in 1993 and she has just sold it for $39,000 in 2015.How is this sale included in the GDP for 2015?

Does GDP for a particular year include items produced in a previous year?

A recession is a period during which

Economists define an aggregate as

Changes in nominal GDP always reflect changes in real output.

Real GDP

Government policy to reduce unemployment and increase national output can be illustrated by an

Define the following terms and explain their importance to the study of macroeconomics: a.aggregation b.recession c.gross domestic product d.final goods and services e.stabilization policy

If the prices of all goods and services rise during the year,

Economic fluctuations in the United States have been less extreme since the 1950s.

Intermediate goods, like milk sold by a farmer to a supermarket, are

In the aggregate demand-aggregate supply model, economic growth can be illustrated by an

Part of the good economic performance of the United States in the 1990s can be explained by a rightward-shifting aggregate supply curve.

Nominal GDP is

If Honda (a Japan-based firm) produces a car in Ohio and exports it to Japan, in which country's GDP will the car be counted?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

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