Question 1

A period of sustained decline of output in the economy is known as a(n)

Accepted Answer

A) expansion 
B) growth phase 
C) peak 
D) trough 
E) contraction 
A) expansion 
B) growth phase 
C) peak 
D) trough 
E) contraction

Question 2

A rise in the price level

Accepted Answer

A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based 
A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based

Question 3

Exhibit 5-1    
-Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

Accepted Answer

A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1 
A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1

Question 4

Which of the following would indicate the beginnings of an expansion of the economy?

Accepted Answer

A) fewer new firms are started 
B) stock market prices decline 
C) consumer confidence improves 
D) housing construction slows 
E) orders for new equipment decrease 
A) fewer new firms are started 
B) stock market prices decline 
C) consumer confidence improves 
D) housing construction slows 
E) orders for new equipment decrease

Question 5

During the Great Depression,

Accepted Answer

A) unemployment and prices increased while output decreased 
B) unemployment increased while output and prices decreased 
C) unemployment and prices decreased while output increased 
D) unemployment and output decreased while prices increased 
E) unemployment and output increased while prices decreased 
A) unemployment and prices increased while output decreased 
B) unemployment increased while output and prices decreased 
C) unemployment and prices decreased while output increased 
D) unemployment and output decreased while prices increased 
E) unemployment and output increased while prices decreased

Question 6

The aggregate supply curve indicates

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 
E) the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP 
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 
E) the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP

Question 7

Keynes believed that the best method for ending the Great Depression was to

Accepted Answer

A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy 
A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy

Question 8

If the wealth of consumers increases substantially, this would shift

Accepted Answer

A) the aggregate supply curve outward 
B) the aggregate demand curve outward 
C) the aggregate demand curve inward 
D) the aggregate supply curve inward 
E) both the aggregate demand and supply curves inward 
A) the aggregate supply curve outward 
B) the aggregate demand curve outward 
C) the aggregate demand curve inward 
D) the aggregate supply curve inward 
E) both the aggregate demand and supply curves inward

Question 9

The aggregate demand curve slopes downward because

Accepted Answer

A) a decrease in the price level decreases the real value of household wealth 
B) a decrease in the domestic price level increases imports 
C) an increase in the price level leads to a decrease in demand for money, which decreases interest rates 
D) a decrease in the domestic price level increases exports 
E) none of the above 
A) a decrease in the price level decreases the real value of household wealth 
B) a decrease in the domestic price level increases imports 
C) an increase in the price level leads to a decrease in demand for money, which decreases interest rates 
D) a decrease in the domestic price level increases exports 
E) none of the above

Question 10

Capital is a stock variable.

Accepted Answer

A) True 
 B)False

Question 11

Keynes was in favor of a federal budget __________ to cure __________.

Accepted Answer

A) deficit; inflation 
B) surplus; unemployment 
C) deficit; a depression 
D) deficit; a trade deficit 
E) surplus; low aggregate output 
A) deficit; inflation 
B) surplus; unemployment 
C) deficit; a depression 
D) deficit; a trade deficit 
E) surplus; low aggregate output

Question 12

An increase in aggregate supply will result in

Accepted Answer

A) lower levels of employment 
B) a rightward shift of the aggregate demand curve 
C) a higher price level 
D) a leftward shift of the aggregate demand curve 
E) an economic expansion 
A) lower levels of employment 
B) a rightward shift of the aggregate demand curve 
C) a higher price level 
D) a leftward shift of the aggregate demand curve 
E) an economic expansion

Question 13

The U.S. economy has experienced alternating periods of expansion and contraction in economic activity relative to its long-term growth trend in the economy. These are called economic fluctuations or business cycles.

Accepted Answer

A) True 
 B)False

Question 14

For a given aggregate supply curve, the price level and output both rise when aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following best describes a flow (rather than a stock)?

Accepted Answer

A) you own $5,000 worth of government bonds 
B) you own a $100,000 house 
C) you own a coin collection valued at $10,000 
D) you earn $500 per week 
E) you own a $45,000 automobile 
A) you own $5,000 worth of government bonds 
B) you own a $100,000 house 
C) you own a coin collection valued at $10,000 
D) you earn $500 per week 
E) you own a $45,000 automobile

Question 16

The ultimate objective of macroeconomics is to

Accepted Answer

A) reduce the unemployment rate 
B) stabilize the economy's growth rate 
C) develop and test theories about how the overall economy works 
D) improve the international competitiveness of the U.S. financial markets 
E) maximize the efficiency of government intervention in the marketplace 
A) reduce the unemployment rate 
B) stabilize the economy's growth rate 
C) develop and test theories about how the overall economy works 
D) improve the international competitiveness of the U.S. financial markets 
E) maximize the efficiency of government intervention in the marketplace

Question 17

Given an aggregate supply curve that slopes upward, an increase in aggregate demand would decrease real GDP.

Accepted Answer

A) True 
 B)False

Question 18

A recession is best defined as a period during which

Accepted Answer

A) the percentage of the population employed is declining 
B) employment, output, and income decline 
C) the price level is declining 
D) more resources are used 
E) the budget deficit and trade deficit are both growing 
A) the percentage of the population employed is declining 
B) employment, output, and income decline 
C) the price level is declining 
D) more resources are used 
E) the budget deficit and trade deficit are both growing

Question 19

Exhibit 5-1    
-In Exhibit 5-1 in period 4, the price level starts at ______ and ends up at ______ when the aggregate supply curve shifts from AS' to AS''.

Accepted Answer

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

Question 20

Since about 1980,

Accepted Answer

A) the U.S. and U.K. economies have been even more closely synchronized 
B) British real GDP has grown faster than U.S. real GDP despite their similar patterns of economic fluctuations 
C) U.S. real GDP has doubled while British GDP has been stagnant 
D) the U.S. and the United Kingdom have experienced recession in roughly the same years 
E) the United Kingdom has experienced only one recession while the U.S. has experienced three 
A) the U.S. and U.K. economies have been even more closely synchronized 
B) British real GDP has grown faster than U.S. real GDP despite their similar patterns of economic fluctuations 
C) U.S. real GDP has doubled while British GDP has been stagnant 
D) the U.S. and the United Kingdom have experienced recession in roughly the same years 
E) the United Kingdom has experienced only one recession while the U.S. has experienced three

Exam 5: Introduction to Macroeconomics

A period of sustained decline of output in the economy is known as a(n)

A rise in the price level

Exhibit 5-1 -Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

Which of the following would indicate the beginnings of an expansion of the economy?

During the Great Depression,

The aggregate supply curve indicates

Keynes believed that the best method for ending the Great Depression was to

If the wealth of consumers increases substantially, this would shift

The aggregate demand curve slopes downward because

Capital is a stock variable.

Keynes was in favor of a federal budget __________ to cure __________.

An increase in aggregate supply will result in

The U.S. economy has experienced alternating periods of expansion and contraction in economic activity relative to its long-term growth trend in the economy. These are called economic fluctuations or business cycles.

For a given aggregate supply curve, the price level and output both rise when aggregate demand decreases.

Which of the following best describes a flow (rather than a stock)?

The ultimate objective of macroeconomics is to

Given an aggregate supply curve that slopes upward, an increase in aggregate demand would decrease real GDP.

A recession is best defined as a period during which

Exhibit 5-1 -In Exhibit 5-1 in period 4, the price level starts at ______ and ends up at ______ when the aggregate supply curve shifts from AS' to AS''.

Since about 1980,

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

Filters

Keynes was in favor of a federal budget to cure .

Exhibit 5-1 -In Exhibit 5-1 in period 4, the price level starts at and ends up at when the aggregate supply curve shifts from AS' to AS''.