Question 1

Which of the following would be included in gross investment?

Accepted Answer

A)  The purchase of a 20-year government bond. 
B)  The purchase of Wal-Mart stock. 
C)  The construction of an automobile assembly plant. 
D)  All of the above. 
A)  The purchase of a 20-year government bond. 
B)  The purchase of Wal-Mart stock. 
C)  The construction of an automobile assembly plant. 
D)  All of the above.

Question 2

An increase in government spending will shift the aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

Aggregate demand consists of:

Accepted Answer

A)  consumption, investment, government purchases, government transfers, and net exports. 
B)  consumption, investment, government purchases, and exports. 
C)  consumption, investment, government purchases, and net exports. 
D)  consumption, investment, government transfers, and exports. 
A)  consumption, investment, government purchases, government transfers, and net exports. 
B)  consumption, investment, government purchases, and exports. 
C)  consumption, investment, government purchases, and net exports. 
D)  consumption, investment, government transfers, and exports.

Question 4

Which of the following best describes business cycle activity?

Accepted Answer

A)  Business cycles are recurring fluctuations in the level of economic activity. 
B)  Each phase of the business cycle lasts a predictable length of time. 
C)  The contraction phase of the business cycle generally lasts longer than the expansion phase. 
D)  The trough of a business cycle generally lasts about three months. 
A)  Business cycles are recurring fluctuations in the level of economic activity. 
B)  Each phase of the business cycle lasts a predictable length of time. 
C)  The contraction phase of the business cycle generally lasts longer than the expansion phase. 
D)  The trough of a business cycle generally lasts about three months.

Question 5

Suppose nominal GDP is $750 billion. The implicit price deflator is 150. What is real GDP?

Accepted Answer

Real GDP is nominal GDP divide

Question 6

Recurring fluctuations in the level of economic activity are referred to as economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that in 1998, nominal GDP in Liveria is $4,500 billion. If the GDP deflator is 150, real GDP in 1998 is:

Accepted Answer

A)  $300 billion. 
B)  $3,000 billion. 
C)  $5,000 billion. 
D)  $6,750 billion. 
A)  $300 billion. 
B)  $3,000 billion. 
C)  $5,000 billion. 
D)  $6,750 billion.

Question 8

Real GDP is derived by using the GDP deflator to deflate nominal GDP.

Accepted Answer

A) True 
 B)False

Question 9

The aggregate demand curve is negatively sloped because:

Accepted Answer

A)  higher prices cause a substitution of foreign goods for domestic goods. 
B)  higher prices will erode the value of financial assets that have values fixed in dollar terms. 
C)  higher prices will lead to an increase in interest rates. 
D)  All of the above. 
A)  higher prices cause a substitution of foreign goods for domestic goods. 
B)  higher prices will erode the value of financial assets that have values fixed in dollar terms. 
C)  higher prices will lead to an increase in interest rates. 
D)  All of the above.

Question 10

Suppose that nominal GDP fell from $5,000 billion in 1997 to $4,800 billion in 1998. Suppose that over this same period real GDP did not change. In this instance:

Accepted Answer

A)  price increased and quantity was constant. 
B)  price decreased and quantity was constant. 
C)  quantity increased and price was constant. 
D)  quantity decreased and price was constant. 
A)  price increased and quantity was constant. 
B)  price decreased and quantity was constant. 
C)  quantity increased and price was constant. 
D)  quantity decreased and price was constant.

Question 11

GDP is defined as:

Accepted Answer

A)  the market value of all goods and services bought and sold in the economy over some time period. 
B)  the market value of all final goods and services produced in the economy over some time period. 
C)  the quantity of all final goods and services produced in the economy over some time period. 
D)  the quantity of all goods and services bought and sold in the economy over some time period. 
A)  the market value of all goods and services bought and sold in the economy over some time period. 
B)  the market value of all final goods and services produced in the economy over some time period. 
C)  the quantity of all final goods and services produced in the economy over some time period. 
D)  the quantity of all goods and services bought and sold in the economy over some time period.

Question 12

The vertical portion of the aggregate supply curve is drawn on the assumption that:

Accepted Answer

A)  resource prices are constant. 
B)  resources and technology do not change. 
C)  the price level is constant. 
D)  there is no change in fiscal policy. 
A)  resource prices are constant. 
B)  resources and technology do not change. 
C)  the price level is constant. 
D)  there is no change in fiscal policy.

Question 13

Suppose nominal GDP for 1998 is $8,000 billion and real GDP is $5,000. What is the GDP deflator?

Accepted Answer

We know that:
Real GDP = Nominal GDP/GDP

Question 14

The positively sloped portion of the aggregate supply curve is drawn on the assumption that:

Accepted Answer

A)  resources are scarce. 
B)  wealth is constant. 
C)  there is no change is fiscal policy. 
D)  price levels are constant. 
A)  resources are scarce. 
B)  wealth is constant. 
C)  there is no change is fiscal policy. 
D)  price levels are constant.

Question 15

Which of the following would be included in gross investment?

Accepted Answer

A)  The purchase of a 20-year government bond. 
B)  The purchase of stocks in New York Stock Exchange. 
C)  The purchase of a new automobile by a cab company. 
D)  The purchase of a house to live in. 
A)  The purchase of a 20-year government bond. 
B)  The purchase of stocks in New York Stock Exchange. 
C)  The purchase of a new automobile by a cab company. 
D)  The purchase of a house to live in.

Question 16

Suppose that over a given time period nominal GDP rises by 6 percent and real GDP rises by 4 percent. Over this period, we know that:

Accepted Answer

A)  the quantity of goods and services produced fell while prices increased. 
B)  the quantity of goods and services produced increased while prices fell. 
C)  both the quantity of goods and services produced and prices increased. 
D)  both quantity of goods and services produced and prices fell. 
A)  the quantity of goods and services produced fell while prices increased. 
B)  the quantity of goods and services produced increased while prices fell. 
C)  both the quantity of goods and services produced and prices increased. 
D)  both quantity of goods and services produced and prices fell.

Question 17

The aggregate demand curve is negatively sloped because as the price level falls, consumers will buy more of the goods and services that are relatively cheaper.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the price of inputs decreases. As a result, we would expect:

Accepted Answer

A)  the upward sloping portion of the aggregate supply to increase. 
B)  the upward sloping portion of the aggregate supply to decrease. 
C)  aggregate demand to increase. 
D)  aggregate demand to decrease. 
A)  the upward sloping portion of the aggregate supply to increase. 
B)  the upward sloping portion of the aggregate supply to decrease. 
C)  aggregate demand to increase. 
D)  aggregate demand to decrease.

Question 19

As the domestic price level falls:

Accepted Answer

A)  both exports and imports will increase. 
B)  both exports and imports will decrease. 
C)  exports will increase and imports will decrease. 
D)  exports will decrease and imports will increase. 
A)  both exports and imports will increase. 
B)  both exports and imports will decrease. 
C)  exports will increase and imports will decrease. 
D)  exports will decrease and imports will increase.

Question 20

Net private domestic investment is a measure of the change in the nation's capital stock.

Accepted Answer

A) True 
 B)False

Which of the following would be included in gross investment?

An increase in government spending will shift the aggregate supply curve to the right.

Aggregate demand consists of:

Which of the following best describes business cycle activity?

Suppose nominal GDP is $750 billion. The implicit price deflator is 150. What is real GDP?

Recurring fluctuations in the level of economic activity are referred to as economic fluctuations.

Suppose that in 1998, nominal GDP in Liveria is $4,500 billion. If the GDP deflator is 150, real GDP in 1998 is:

Real GDP is derived by using the GDP deflator to deflate nominal GDP.

The aggregate demand curve is negatively sloped because:

Suppose that nominal GDP fell from $5,000 billion in 1997 to $4,800 billion in 1998. Suppose that over this same period real GDP did not change. In this instance:

GDP is defined as:

The vertical portion of the aggregate supply curve is drawn on the assumption that:

Suppose nominal GDP for 1998 is $8,000 billion and real GDP is $5,000. What is the GDP deflator?

The positively sloped portion of the aggregate supply curve is drawn on the assumption that:

Which of the following would be included in gross investment?

Suppose that over a given time period nominal GDP rises by 6 percent and real GDP rises by 4 percent. Over this period, we know that:

The aggregate demand curve is negatively sloped because as the price level falls, consumers will buy more of the goods and services that are relatively cheaper.

Suppose that the price of inputs decreases. As a result, we would expect:

As the domestic price level falls:

Net private domestic investment is a measure of the change in the nation's capital stock.

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Inflation: a Monetary Phenomenon

Sustained Budget Deficits: Is This Any Way to Run a Government

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

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Exam 12: Tracking and Explaining the Macroeconomy

Which of the following would be included in gross investment?

An increase in government spending will shift the aggregate supply curve to the right.

Aggregate demand consists of:

Which of the following best describes business cycle activity?

Suppose nominal GDP is $750 billion. The implicit price deflator is 150. What is real GDP?

Recurring fluctuations in the level of economic activity are referred to as economic fluctuations.

Suppose that in 1998, nominal GDP in Liveria is $4,500 billion. If the GDP deflator is 150, real GDP in 1998 is:

Real GDP is derived by using the GDP deflator to deflate nominal GDP.

The aggregate demand curve is negatively sloped because:

Suppose that nominal GDP fell from $5,000 billion in 1997 to $4,800 billion in 1998. Suppose that over this same period real GDP did not change. In this instance:

GDP is defined as:

The vertical portion of the aggregate supply curve is drawn on the assumption that:

Suppose nominal GDP for 1998 is $8,000 billion and real GDP is $5,000. What is the GDP deflator?

The positively sloped portion of the aggregate supply curve is drawn on the assumption that:

Which of the following would be included in gross investment?

Suppose that over a given time period nominal GDP rises by 6 percent and real GDP rises by 4 percent. Over this period, we know that:

The aggregate demand curve is negatively sloped because as the price level falls, consumers will buy more of the goods and services that are relatively cheaper.

Suppose that the price of inputs decreases. As a result, we would expect:

As the domestic price level falls:

Net private domestic investment is a measure of the change in the nation's capital stock.

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Inflation: a Monetary Phenomenon

Sustained Budget Deficits: Is This Any Way to Run a Government

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

Filters