Question 1

According to Keynes, what should the government do in order to get the economy out of a recession?

Accepted Answer

A)  plan for a budget deficit 
B)  encourage firms to export to other nations, thereby jump-starting the economy 
C)  follow an expansionary monetary policy 
D)  follow a contractionary monetary policy 
A)  plan for a budget deficit 
B)  encourage firms to export to other nations, thereby jump-starting the economy 
C)  follow an expansionary monetary policy 
D)  follow a contractionary monetary policy

Question 2

Which of the following occurs simultaneously with a higher price level to create stagflation?

Accepted Answer

A)  higher employment 
B)  economic growth 
C)  lower aggregate output 
D)  federal budget deficits 
A)  higher employment 
B)  economic growth 
C)  lower aggregate output 
D)  federal budget deficits

Question 3

Which statement best characterizes how economic fluctuations affect the global economy?

Accepted Answer

A)  Economic fluctuations can be experienced by the world economy as well as by a single nation. 
B)  Economic fluctuations tend to be equal in length and intensity regardless of country. 
C)  Economic fluctuations have become more severe since the government has attempted to stabilize the economy. 
D)  Economic fluctuations have been completely offset by appropriate government policy during the last 40 years. 
A)  Economic fluctuations can be experienced by the world economy as well as by a single nation. 
B)  Economic fluctuations tend to be equal in length and intensity regardless of country. 
C)  Economic fluctuations have become more severe since the government has attempted to stabilize the economy. 
D)  Economic fluctuations have been completely offset by appropriate government policy during the last 40 years.

Question 4

In terms of growth rates in output, what do the data from 1978 until 2011 illustrate about the relationship between Canada and the United States?

Accepted Answer

A)  Canadian real GDP grew faster than U.S. real GDP despite similar patterns of economic fluctuations. 
B)  U.S. real GDP doubled while Canadian GDP was stagnant. 
C)  The United States and Canada experienced recession in roughly the same years. 
D)  Canada experienced only one recession while the United States experienced three. 
A)  Canadian real GDP grew faster than U.S. real GDP despite similar patterns of economic fluctuations. 
B)  U.S. real GDP doubled while Canadian GDP was stagnant. 
C)  The United States and Canada experienced recession in roughly the same years. 
D)  Canada experienced only one recession while the United States experienced three.

Question 5

Which statement best characterizes Canadian business cycle activity since 1980?

Accepted Answer

A)  Only one business cycle has occurred. 
B)  No recessions have occurred. 
C)  Expansions have generally lasted longer than contractions. 
D)  Each cycle has lasted longer than the previous one. 
A)  Only one business cycle has occurred. 
B)  No recessions have occurred. 
C)  Expansions have generally lasted longer than contractions. 
D)  Each cycle has lasted longer than the previous one.

Question 6

$$\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Aggregate demand } \
\text { (quantity demanded, } \
\text { in billions of dollars) }
\end{array} & \text { Price level } & \begin{array} { c } 
\text { Aggregate supply } \
\text { (quantity supplied, } \
\text { in billions of dollars) }
\end{array} \
\hline \$ 100 & 150 & \$ 1,200 \
200 & 125 & 1,000 \
400 & 100 & 800 \
600 & 75 & 600 \
800 & 50 & 400 \
1,000 & 25 & 200 \
\hline
\end{array}$$
-Refer to the aggregate demand and aggregate supply schedules in the exhibit.What is the equilibrium price level?

Accepted Answer

A)  25 
B)  50 
C)  75 
D)  100 
A)  25 
B)  50 
C)  75 
D)  100

Question 7

Which term refers to a period of sustained decline of output in the economy?

Accepted Answer

A)  expansion 
B)  peak 
C)  trough 
D)  contraction 
A)  expansion 
B)  peak 
C)  trough 
D)  contraction

Question 8

What is the definition of a recession?

Accepted Answer

A)  a period during which employment, production, and income are decreasing 
B)  a period during which the price level is increasing 
C)  a period during which inventories are falling dramatically 
D)  a period during which the unemployment rate is falling while the price level is rising 
A)  a period during which employment, production, and income are decreasing 
B)  a period during which the price level is increasing 
C)  a period during which inventories are falling dramatically 
D)  a period during which the unemployment rate is falling while the price level is rising

Question 9

Which of the following policy prescriptions for overcoming a depression is most closely associated with John Maynard Keynes?

Accepted Answer

A)  He believed that a serious economic contraction is a natural phase in an otherwise healthy system, and thus no intervention is needed during a depression. 
B)  He advocated for tax increases in order to balance the federal government's budget during the Great Depression. 
C)  He advocated for a decrease in the money supply to stabilize the economy during the Great Depression. 
D)  He argued that increased government demand should offset reduced private sector demand in order to prevent depression. 
A)  He believed that a serious economic contraction is a natural phase in an otherwise healthy system, and thus no intervention is needed during a depression. 
B)  He advocated for tax increases in order to balance the federal government's budget during the Great Depression. 
C)  He advocated for a decrease in the money supply to stabilize the economy during the Great Depression. 
D)  He argued that increased government demand should offset reduced private sector demand in order to prevent depression.

Question 10

Which country has the largest and most complex economy in world history?

Accepted Answer

A)  China 
B)  the United States 
C)  Mexico 
D)  Germany 
A)  China 
B)  the United States 
C)  Mexico 
D)  Germany

Question 11

What is the outcome if spending by the federal government exceeds revenue?

Accepted Answer

A)  The price level tends to fall. 
B)  The aggregate demand curve shifts leftward. 
C)  The aggregate supply curve shifts rightward. 
D)  A federal budget deficit occurs. 
A)  The price level tends to fall. 
B)  The aggregate demand curve shifts leftward. 
C)  The aggregate supply curve shifts rightward. 
D)  A federal budget deficit occurs.

Question 12

On an aggregate demand and aggregate supply graph, how can the stagflation of the 1970s be represented?

Accepted Answer

A)  as a leftward shift of the aggregate supply curve 
B)  as a rightward shift of the aggregate supply curve 
C)  as a rise in the price level that caused an excess demand for output 
D)  as a rightward shift of the aggregate demand curve 
A)  as a leftward shift of the aggregate supply curve 
B)  as a rightward shift of the aggregate supply curve 
C)  as a rise in the price level that caused an excess demand for output 
D)  as a rightward shift of the aggregate demand curve

Question 13

A laissez-faire doctrine was in vogue before the Great Depression of the 1930s.How did this perspective influence the Canadian government's view of business downturns?

Accepted Answer

A)  The Canadian government viewed business downturns as natural phases in an otherwise healthy system, and therefore it took short-term deficit spending measures to help recovery. 
B)  The Canadian government viewed business downturns as natural phases in an otherwise healthy system, and therefore it waited for recovery to occur naturally. 
C)  The Canadian government viewed business downturns as serious maladies in an otherwise healthy system, and therefore it worked to redesign the system to avoid such failure in the future. 
D)  The Canadian government viewed business downturns as failures of the type of system Adam Smith envisaged, and therefore it worked to move toward a modern, more managed economy. 
A)  The Canadian government viewed business downturns as natural phases in an otherwise healthy system, and therefore it took short-term deficit spending measures to help recovery. 
B)  The Canadian government viewed business downturns as natural phases in an otherwise healthy system, and therefore it waited for recovery to occur naturally. 
C)  The Canadian government viewed business downturns as serious maladies in an otherwise healthy system, and therefore it worked to redesign the system to avoid such failure in the future. 
D)  The Canadian government viewed business downturns as failures of the type of system Adam Smith envisaged, and therefore it worked to move toward a modern, more managed economy.

Question 14

Which decade is known as the golden age of Keynesian economics?

Accepted Answer

A)  the 1930s 
B)  the 1950s 
C)  the 1960s 
D)  the 1970s 
A)  the 1930s 
B)  the 1950s 
C)  the 1960s 
D)  the 1970s

Question 15

-Refer to the graph in the exhibit.Which line represents the price level?

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 16

In the history of the Canadian economy, which economic era saw both high unemployment and high inflation at the same time?

Accepted Answer

A)  before and during the Great Depression 
B)  from after the Great Depression to the early 1970s 
C)  from the early 1970s to the early 1980s 
D)  since the early 1980s 
A)  before and during the Great Depression 
B)  from after the Great Depression to the early 1970s 
C)  from the early 1970s to the early 1980s 
D)  since the early 1980s

Question 17

What does stagflation refer to?

Accepted Answer

A)  a simultaneous reduction in output and the price level 
B)  a simultaneous increase in output and the price level 
C)  a decline in the price level accompanied by increases in real output and employment 
D)  an increase in the price level accompanied by decreases in real output and employment 
A)  a simultaneous reduction in output and the price level 
B)  a simultaneous increase in output and the price level 
C)  a decline in the price level accompanied by increases in real output and employment 
D)  an increase in the price level accompanied by decreases in real output and employment

Question 18

What did the Keynesian approach to fiscal policy call for?

Accepted Answer

A)  budget deficits during periods of inflationary pressure 
B)  budget surpluses during periods of high unemployment 
C)  a balanced budget despite the state of the economy 
D)  tax cuts during recession 
A)  budget deficits during periods of inflationary pressure 
B)  budget surpluses during periods of high unemployment 
C)  a balanced budget despite the state of the economy 
D)  tax cuts during recession

Question 19

Which of the following would NOT be considered a supply-side approach to increasing growth?

Accepted Answer

A)  improving the quality of human capital 
B)  investing in research and development 
C)  replacing obsolete plants with new ones 
D)  increasing transfer payments to retirees 
A)  improving the quality of human capital 
B)  investing in research and development 
C)  replacing obsolete plants with new ones 
D)  increasing transfer payments to retirees

Question 20

Which statement best characterizes what happens to the aggregate demand curve when the price level falls?

Accepted Answer

A)  A fall in the price level moves the economy rightward along the aggregate demand curve. 
B)  A fall in the price level moves the economy leftward along the aggregate demand curve. 
C)  A fall in the price level shifts the aggregate demand curve to the left. 
D)  A fall in the price level shifts the aggregate demand curve to the right. 
A)  A fall in the price level moves the economy rightward along the aggregate demand curve. 
B)  A fall in the price level moves the economy leftward along the aggregate demand curve. 
C)  A fall in the price level shifts the aggregate demand curve to the left. 
D)  A fall in the price level shifts the aggregate demand curve to the right.

According to Keynes, what should the government do in order to get the economy out of a recession?

Which of the following occurs simultaneously with a higher price level to create stagflation?

Which statement best characterizes how economic fluctuations affect the global economy?

In terms of growth rates in output, what do the data from 1978 until 2011 illustrate about the relationship between Canada and the United States?

Which statement best characterizes Canadian business cycle activity since 1980?

Which term refers to a period of sustained decline of output in the economy?

What is the definition of a recession?

Which of the following policy prescriptions for overcoming a depression is most closely associated with John Maynard Keynes?

Which country has the largest and most complex economy in world history?

What is the outcome if spending by the federal government exceeds revenue?

On an aggregate demand and aggregate supply graph, how can the stagflation of the 1970s be represented?

A laissez-faire doctrine was in vogue before the Great Depression of the 1930s.How did this perspective influence the Canadian government's view of business downturns?

Which decade is known as the golden age of Keynesian economics?

-Refer to the graph in the exhibit.Which line represents the price level?

In the history of the Canadian economy, which economic era saw both high unemployment and high inflation at the same time?

What does stagflation refer to?

What did the Keynesian approach to fiscal policy call for?

Which of the following would NOT be considered a supply-side approach to increasing growth?

Which statement best characterizes what happens to the aggregate demand curve when the price level falls?

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

According to Keynes, what should the government do in order to get the economy out of a recession?

Which of the following occurs simultaneously with a higher price level to create stagflation?

Which statement best characterizes how economic fluctuations affect the global economy?

In terms of growth rates in output, what do the data from 1978 until 2011 illustrate about the relationship between Canada and the United States?

Which statement best characterizes Canadian business cycle activity since 1980?

Which term refers to a period of sustained decline of output in the economy?

What is the definition of a recession?

Which of the following policy prescriptions for overcoming a depression is most closely associated with John Maynard Keynes?

Which country has the largest and most complex economy in world history?

What is the outcome if spending by the federal government exceeds revenue?

On an aggregate demand and aggregate supply graph, how can the stagflation of the 1970s be represented?

A laissez-faire doctrine was in vogue before the Great Depression of the 1930s.How did this perspective influence the Canadian government's view of business downturns?

Which decade is known as the golden age of Keynesian economics?

-Refer to the graph in the exhibit.Which line represents the price level?

In the history of the Canadian economy, which economic era saw both high unemployment and high inflation at the same time?

What does stagflation refer to?

What did the Keynesian approach to fiscal policy call for?

Which of the following would NOT be considered a supply-side approach to increasing growth?

Which statement best characterizes what happens to the aggregate demand curve when the price level falls?

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