Question 1

The aim of supply-side economics is to

Accepted Answer

A) increase government spending to stimulate aggregate supply 
B) stimulate exports to increase the balance of payments 
C) decrease wages to make production cheaper 
D) lower taxes to increase the supply of resources 
E) reduce both the inflation and unemployment problems through an increase in taxes 
A) increase government spending to stimulate aggregate supply 
B) stimulate exports to increase the balance of payments 
C) decrease wages to make production cheaper 
D) lower taxes to increase the supply of resources 
E) reduce both the inflation and unemployment problems through an increase in taxes

Question 2

If the government owes $3,500 billion and then borrows $300 billion more this year,

Accepted Answer

A) the debt is $300 billion and the deficit is $3.8 trillion 
B) the debt is $3,800 billion and the deficit is $300 billion 
C) the debt is $4,100 billion 
D) the deficit is $3,800 billion 
E) both the debt and the deficit are $3.8 trillion 
A) the debt is $300 billion and the deficit is $3.8 trillion 
B) the debt is $3,800 billion and the deficit is $300 billion 
C) the debt is $4,100 billion 
D) the deficit is $3,800 billion 
E) both the debt and the deficit are $3.8 trillion

Question 3

If spending by the federal government exceeds revenue,

Accepted Answer

A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit 
A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit

Question 4

While economic expansions average about three and one half years in duration, economic contractions average about

Accepted Answer

A) one year in duration 
B) two years in duration 
C) three years in duration 
D) four years in duration 
E) five years in duration 
A) one year in duration 
B) two years in duration 
C) three years in duration 
D) four years in duration 
E) five years in duration

Question 5

Gross Domestic Product measures the value of all final goods and services produced within a nation's borders.

Accepted Answer

A) True 
 B)False

Question 6

The Reagan administration's policies were aimed at managing aggregate demand.

Accepted Answer

A) True 
 B)False

Question 7

An increase in the price level will cause

Accepted Answer

A) an increase in the quantity of aggregate output supplied 
B) a decrease in the quantity of aggregate output supplied 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate supply curve 
E) a leftward or rightward shift of the aggregate supply curve, depending on the reason for the price change 
A) an increase in the quantity of aggregate output supplied 
B) a decrease in the quantity of aggregate output supplied 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate supply curve 
E) a leftward or rightward shift of the aggregate supply curve, depending on the reason for the price change

Question 8

When economists refer to the economy's price level, they mean

Accepted Answer

A) the rate of inflation 
B) the price of goods and services relative to consumers' incomes 
C) a general measure of prices of all goods and services 
D) a period of level, or steady, prices 
E) the prices of a specific consumer good 
A) the rate of inflation 
B) the price of goods and services relative to consumers' incomes 
C) a general measure of prices of all goods and services 
D) a period of level, or steady, prices 
E) the prices of a specific consumer good

Question 9

Which of the following is a reason why the aggregate demand curve slopes downward?

Accepted Answer

A) At a higher price level, fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S. price level rises, foreigners will buy more U.S. goods, leaving fewer U.S. goods for domestic consumers. 
E) As the price level rises, business leaders become pessimistic about the future and reduce production. 
A) At a higher price level, fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S. price level rises, foreigners will buy more U.S. goods, leaving fewer U.S. goods for domestic consumers. 
E) As the price level rises, business leaders become pessimistic about the future and reduce production.

Question 10

Which of the following is true about U.S. business cycle activity since 1933?

Accepted Answer

A) There has been only one business cycle in the last 30 years. 
B) There have been only two or three complete cycles. 
C) There have been no recessions since 1979. 
D) Expansions have generally lasted longer than contractions. 
E) Each cycle has lasted longer than the previous one. 
A) There has been only one business cycle in the last 30 years. 
B) There have been only two or three complete cycles. 
C) There have been no recessions since 1979. 
D) Expansions have generally lasted longer than contractions. 
E) Each cycle has lasted longer than the previous one.

Question 11

The tax cuts passed during the Reagan administration were designed primarily

Accepted Answer

A) to make it easier for consumers to spend 
B) to shift the aggregate demand curve rightward 
C) to reduce the balance-of-payments deficit 
D) to increase the supply of productive resources 
E) to make filling out tax returns easier for the average taxpayer 
A) to make it easier for consumers to spend 
B) to shift the aggregate demand curve rightward 
C) to reduce the balance-of-payments deficit 
D) to increase the supply of productive resources 
E) to make filling out tax returns easier for the average taxpayer

Question 12

Since about 1980,

Accepted Answer

A) British real GDP has grown, on average, faster than U.S. real GDP grew 
B) U.S. and British real GDPs have grown at almost exactly the same rates 
C) the U.S. and the United Kingdom experienced recessions in roughly the same years 
D) recessions in the U.S. have triggered recessions in the United Kingdom 
E) recessions in the United Kingdom have triggered recessions in the U.S. 
A) British real GDP has grown, on average, faster than U.S. real GDP grew 
B) U.S. and British real GDPs have grown at almost exactly the same rates 
C) the U.S. and the United Kingdom experienced recessions in roughly the same years 
D) recessions in the U.S. have triggered recessions in the United Kingdom 
E) recessions in the United Kingdom have triggered recessions in the U.S.

Question 13

To control inflation, President Nixon

Accepted Answer

A) ordered wage and salary reductions for all government employees 
B) increased government spending 
C) dramatically reduced transfer payments such as Social Security 
D) applied price floors to all goods and services 
E) froze wages and prices 
A) ordered wage and salary reductions for all government employees 
B) increased government spending 
C) dramatically reduced transfer payments such as Social Security 
D) applied price floors to all goods and services 
E) froze wages and prices

Question 14

Supply-side economists argue that a cut in personal income tax rates would

Accepted Answer

A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth 
A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth

Question 15

Exhibit 5-1    
-In Exhibit 5-1 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) a decrease in resource prices, improved technology, or a shortening of patent protection 
D) an appreciation of the dollar, higher inflation in Europe, a decrease in resource prices 
E) a depreciation of the doller, higher inflation in Asia, 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) a decrease in resource prices, improved technology, or a shortening of patent protection 
D) an appreciation of the dollar, higher inflation in Europe, a decrease in resource prices 
E) a depreciation of the doller, higher inflation in Asia, improved technology

Question 16

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 
E) the 1980s 
A) the 1930s 
B) the 1950s 
C) the 1960s 
D) the 1970s 
E) the 1980s

Question 17

Equilibrium of aggregate supply and aggregate demand is best described as a situation in which

Accepted Answer

A) the slope of aggregate demand equals the slope of aggregate supply 
B) quantity demanded exceeds quantity supplied 
C) quantity demanded equals quantity supplied at a unique price level 
D) quantity supplied exceeds quantity demanded at a unique price level 
E) quantity supplied equals quantity demanded at all price levels 
A) the slope of aggregate demand equals the slope of aggregate supply 
B) quantity demanded exceeds quantity supplied 
C) quantity demanded equals quantity supplied at a unique price level 
D) quantity supplied exceeds quantity demanded at a unique price level 
E) quantity supplied equals quantity demanded at all price levels

Question 18

The Keynesian approach to fiscal policy calls 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 
E) spending increases during inflation 
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 
E) spending increases during inflation

Question 19

Since the Great Depression, business fluctuations have become more severe and longer in duration.

Accepted Answer

A) True 
 B)False

Question 20

Keynesian policies are ineffective at combating stagflation because stagflation is caused by

Accepted Answer

A) budget surpluses 
B) decreases in aggregate supply 
C) trade deficits 
D) trade surpluses 
E) budget deficits 
A) budget surpluses 
B) decreases in aggregate supply 
C) trade deficits 
D) trade surpluses 
E) budget deficits

Exam 5: Introduction to Macroeconomics

The aim of supply-side economics is to

If the government owes $3,500 billion and then borrows $300 billion more this year,

If spending by the federal government exceeds revenue,

While economic expansions average about three and one half years in duration, economic contractions average about

Gross Domestic Product measures the value of all final goods and services produced within a nation's borders.

The Reagan administration's policies were aimed at managing aggregate demand.

An increase in the price level will cause

When economists refer to the economy's price level, they mean

Which of the following is a reason why the aggregate demand curve slopes downward?

Which of the following is true about U.S. business cycle activity since 1933?

The tax cuts passed during the Reagan administration were designed primarily

Since about 1980,

To control inflation, President Nixon

Supply-side economists argue that a cut in personal income tax rates would

Exhibit 5-1 -In Exhibit 5-1 in period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'.

Which decade is known as the "Golden Age of Keynesian Economics"?

Equilibrium of aggregate supply and aggregate demand is best described as a situation in which

The Keynesian approach to fiscal policy calls for

Since the Great Depression, business fluctuations have become more severe and longer in duration.

Keynesian policies are ineffective at combating stagflation because stagflation is caused by

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

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