Question 1

What type of slope does the aggregate supply curve have?

Accepted Answer

A)  a negative slope 
B)  a positive slope 
C)  a zero slope 
D)  an infinite slope 
A)  a negative slope 
B)  a positive slope 
C)  a zero slope 
D)  an infinite slope

Question 2

Certain economic activities signal forthcoming changes in the economy.What are these activities known as?

Accepted Answer

A)  coincidental economic indicators 
B)  lagging economic indicators 
C)  composite economic indicators 
D)  leading economic indicators 
A)  coincidental economic indicators 
B)  lagging economic indicators 
C)  composite economic indicators 
D)  leading economic indicators

Question 3

In terms of budget deficits, which is a flow variable and which is a stock variable?

Accepted Answer

A)  A budget deficit is a flow variable; debt is a stock variable. 
B)  A budget deficit is a stock variable; debt is a flow variable. 
C)  A budget deficit and the debt are both stock variables. 
D)  A budget deficit and the debt are both flow variables. 
A)  A budget deficit is a flow variable; debt is a stock variable. 
B)  A budget deficit is a stock variable; debt is a flow variable. 
C)  A budget deficit and the debt are both stock variables. 
D)  A budget deficit and the debt are both flow variables.

Question 4

If GDP falls, what happens to income and expenditure?

Accepted Answer

A)  Income must rise and expenditure must rise. 
B)  Income must fall and expenditure must fall. 
C)  Income must rise, but expenditure may rise or fall. 
D)  Expenditure must rise, but income may rise or fall. 
A)  Income must rise and expenditure must rise. 
B)  Income must fall and expenditure must fall. 
C)  Income must rise, but expenditure may rise or fall. 
D)  Expenditure must rise, but income may rise or fall.

Question 5

Keynes advocated federal budget deficits.What did he believe that such a deficit would overcome?

Accepted Answer

A)  inflation 
B)  unemployment 
C)  trade deficits 
D)  trade surpluses 
A)  inflation 
B)  unemployment 
C)  trade deficits 
D)  trade surpluses

Question 6

-Refer to the graph in the exhibit.Which line represents real GDP?

Accepted Answer

A)  line a 
B)  line b 
C)  line c 
D)  line d 
A)  line a 
B)  line b 
C)  line c 
D)  line d

Question 7

-Refer to the graphs in the exhibit.In period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'?

Accepted Answer

A)  an increase in resource prices, improved technology, or an extension of patent protection 
B)  a decrease in resource prices, improved technology, or an extension of patent protection 
C)  an appreciation of the dollar, higher inflation in Europe, or a decrease in resource prices 
D)  a depreciation of the dollar, higher inflation in Asia, or improved technology 
A)  an increase in resource prices, improved technology, or an extension of patent protection 
B)  a decrease in resource prices, improved technology, or an extension of patent protection 
C)  an appreciation of the dollar, higher inflation in Europe, or a decrease in resource prices 
D)  a depreciation of the dollar, higher inflation in Asia, or improved technology

Question 8

What is the distinction between a recession and a depression?

Accepted Answer

A)  A recession is longer than a depression. 
B)  A recession is more severe than a depression. 
C)  A recession is accompanied by a price increase, and a depression is accompanied by a price decrease. 
D)  A recession is shorter and less severe than a depression. 
A)  A recession is longer than a depression. 
B)  A recession is more severe than a depression. 
C)  A recession is accompanied by a price increase, and a depression is accompanied by a price decrease. 
D)  A recession is shorter and less severe than a depression.

Question 9

Suppose an economy experiences stagflation.All things equal, which of the following remedies would be the most effective?

Accepted Answer

A)  increased aggregate demand for goods and services 
B)  decreased aggregate demand for goods and services 
C)  increased aggregate supply of goods and services 
D)  decreased aggregate supply of goods and services 
A)  increased aggregate demand for goods and services 
B)  decreased aggregate demand for goods and services 
C)  increased aggregate supply of goods and services 
D)  decreased aggregate supply of goods and services

Question 10

Who wrote The General Theory of Employment, Interest, and Money?

Accepted Answer

A)  Adam Smith 
B)  Jean Baptiste Say 
C)  François Quesnay 
D)  John Maynard Keynes 
A)  Adam Smith 
B)  Jean Baptiste Say 
C)  François Quesnay 
D)  John Maynard Keynes

Question 11

What does the aggregate supply curve indicate?

Accepted Answer

A)  the quantity of aggregate output that producers are willing and able to supply at each possible price level 
B)  the total quantity of a particular good that all producers are willing to supply at each possible price level 
C)  the total quantity of a particular good that all producers are willing to supply at the equilibrium price level 
D)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level 
A)  the quantity of aggregate output that producers are willing and able to supply at each possible price level 
B)  the total quantity of a particular good that all producers are willing to supply at each possible price level 
C)  the total quantity of a particular good that all producers are willing to supply at the equilibrium price level 
D)  the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level

Question 12

Which of the following is a stock variable?

Accepted Answer

A)  gross domestic product 
B)  consumption spending 
C)  the money supply 
D)  federal income tax 
A)  gross domestic product 
B)  consumption spending 
C)  the money supply 
D)  federal income tax

Question 13

According to a supply-side economist, what would be the effect of a cut in personal income tax rates?

Accepted Answer

A)  It would decrease government revenues. 
B)  It would increase government revenues. 
C)  It would have no effect on government revenues. 
D)  It would increase unemployment. 
A)  It would decrease government revenues. 
B)  It would increase government revenues. 
C)  It would have no effect on government revenues. 
D)  It would increase unemployment.

Question 14

Which of the following is an explanation for the negative slope of the aggregate demand curve?

Accepted Answer

A)  because as prices rise nominal income falls and so does the demand for real goods and services 
B)  because as prices rise government spends less to drive the price level back down 
C)  because businesses increase spending when inflation is high and rising 
D)  because as prices rise domestic goods become more expensive relative to foreign goods, which reduces exports 
A)  because as prices rise nominal income falls and so does the demand for real goods and services 
B)  because as prices rise government spends less to drive the price level back down 
C)  because businesses increase spending when inflation is high and rising 
D)  because as prices rise domestic goods become more expensive relative to foreign goods, which reduces exports

Question 15

Which of the following is NOT the proper subject matter for macroeconomics?

Accepted Answer

A)  unemployment levels 
B)  inflation rates 
C)  levels of national output 
D)  the price of corn 
A)  unemployment levels 
B)  inflation rates 
C)  levels of national output 
D)  the price of corn

Question 16

Suppose the government owes $3,500 billion and then borrows $300 billion more this year.What is the debt and the deficit?

Accepted Answer

A)  The debt is $3,800 billion, and the deficit is $3,500 billion. 
B)  The debt is $3,800 billion, and the deficit is $300 billion. 
C)  The debt is $300 billion, and the deficit is $3,800 billion. 
D)  The debt is $300 billion, and the deficit is $3,200 billion. 
A)  The debt is $3,800 billion, and the deficit is $3,500 billion. 
B)  The debt is $3,800 billion, and the deficit is $300 billion. 
C)  The debt is $300 billion, and the deficit is $3,800 billion. 
D)  The debt is $300 billion, and the deficit is $3,200 billion.

Question 17

-Refer to the graph in the exhibit.What represents equilibrium?

Accepted Answer

A)  line a 
B)  line b 
C)  line c 
D)  point e 
A)  line a 
B)  line b 
C)  line c 
D)  point e

Question 18

With reference to aggregate demand and aggregate supply, when output rises what would be expected to happen to employment?

Accepted Answer

A)  Employment would rise. 
B)  Employment would fall. 
C)  Employment would remain constant. 
D)  Employment would first rise, and then fall. 
A)  Employment would rise. 
B)  Employment would fall. 
C)  Employment would remain constant. 
D)  Employment would first rise, and then fall.

Question 19

When did confidence in Keynesian economics diminish?

Accepted Answer

A)  in the 1960s, as the unemployment rate fell 
B)  in the 1970s, as inflation increased and unemployment decreased 
C)  in the 1960s, as unemployment increased 
D)  in the 1970s, as inflation occurred simultaneously with unemployment 
A)  in the 1960s, as the unemployment rate fell 
B)  in the 1970s, as inflation increased and unemployment decreased 
C)  in the 1960s, as unemployment increased 
D)  in the 1970s, as inflation occurred simultaneously with unemployment

Question 20

According to Keynes, what should the government do if private-sector demand is insufficient to maintain full employment?

Accepted Answer

A)  It should act to make the economy's natural transition to the lower level of employment as easy as possible. 
B)  It should shock the economy with an increase in aggregate demand. 
C)  It should reduce aggregate supply to reduce inflation. 
D)  It should print money to promote consumer spending. 
A)  It should act to make the economy's natural transition to the lower level of employment as easy as possible. 
B)  It should shock the economy with an increase in aggregate demand. 
C)  It should reduce aggregate supply to reduce inflation. 
D)  It should print money to promote consumer spending.

What type of slope does the aggregate supply curve have?

Certain economic activities signal forthcoming changes in the economy.What are these activities known as?

In terms of budget deficits, which is a flow variable and which is a stock variable?

If GDP falls, what happens to income and expenditure?

Keynes advocated federal budget deficits.What did he believe that such a deficit would overcome?

-Refer to the graph in the exhibit.Which line represents real GDP?

-Refer to the graphs in the exhibit.In period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'?

What is the distinction between a recession and a depression?

Suppose an economy experiences stagflation.All things equal, which of the following remedies would be the most effective?

Who wrote The General Theory of Employment, Interest, and Money?

What does the aggregate supply curve indicate?

Which of the following is a stock variable?

According to a supply-side economist, what would be the effect of a cut in personal income tax rates?

Which of the following is an explanation for the negative slope of the aggregate demand curve?

Which of the following is NOT the proper subject matter for macroeconomics?

Suppose the government owes $3,500 billion and then borrows $300 billion more this year.What is the debt and the deficit?

-Refer to the graph in the exhibit.What represents equilibrium?

With reference to aggregate demand and aggregate supply, when output rises what would be expected to happen to employment?

When did confidence in Keynesian economics diminish?

According to Keynes, what should the government do if private-sector demand is insufficient to maintain full employment?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters

Exam 6: Introduction to Macroeconomics

What type of slope does the aggregate supply curve have?

Certain economic activities signal forthcoming changes in the economy.What are these activities known as?

In terms of budget deficits, which is a flow variable and which is a stock variable?

If GDP falls, what happens to income and expenditure?

Keynes advocated federal budget deficits.What did he believe that such a deficit would overcome?

-Refer to the graph in the exhibit.Which line represents real GDP?

-Refer to the graphs in the exhibit.In period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'?

What is the distinction between a recession and a depression?

Suppose an economy experiences stagflation.All things equal, which of the following remedies would be the most effective?

Who wrote The General Theory of Employment, Interest, and Money?

What does the aggregate supply curve indicate?

Which of the following is a stock variable?

According to a supply-side economist, what would be the effect of a cut in personal income tax rates?

Which of the following is an explanation for the negative slope of the aggregate demand curve?

Which of the following is NOT the proper subject matter for macroeconomics?

Suppose the government owes $3,500 billion and then borrows $300 billion more this year.What is the debt and the deficit?

-Refer to the graph in the exhibit.What represents equilibrium?

With reference to aggregate demand and aggregate supply, when output rises what would be expected to happen to employment?

When did confidence in Keynesian economics diminish?

According to Keynes, what should the government do if private-sector demand is insufficient to maintain full employment?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters