Question 1

Long-term growth in production can be partially explained by

Accepted Answer

A) improvements in the "rules of the game" that facilitate production and exchange 
B) the peaks and troughs of the business cycle (or economic fluctuations) 
C) trade surpluses that lead to accumulations of precious metals 
D) federal government budget deficits 
E) a gradual but consistent increase in the price level 
A) improvements in the "rules of the game" that facilitate production and exchange 
B) the peaks and troughs of the business cycle (or economic fluctuations) 
C) trade surpluses that lead to accumulations of precious metals 
D) federal government budget deficits 
E) a gradual but consistent increase in the price level

Question 2

Gross world product is

Accepted Answer

A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage, trash, and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period 
A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage, trash, and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period

Question 3

An increase in government spending, other things constant, would cause a

Accepted Answer

A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) leftward shift of the aggregate demand curve 
D) rightward shift of the aggregate demand curve 
E) movement toward equilibrium, along curves that do not shift 
A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) leftward shift of the aggregate demand curve 
D) rightward shift of the aggregate demand curve 
E) movement toward equilibrium, along curves that do not shift

Question 4

The largest and most complex economy in world history is

Accepted Answer

A) China 
B) the United States 
C) Mexico 
D) Liechtenstein 
E) None of the answers is correct 
A) China 
B) the United States 
C) Mexico 
D) Liechtenstein 
E) None of the answers is correct

Question 5

Certain economic activities signal forthcoming changes in the economy. These are known as the

Accepted Answer

A) coincidental economic indicators 
B) GDP implicit price deflator 
C) lagging economic indicators 
D) composite of economic activities 
E) leading economic indicators 
A) coincidental economic indicators 
B) GDP implicit price deflator 
C) lagging economic indicators 
D) composite of economic activities 
E) leading economic indicators

Question 6

The economy is so __________ that we need to __________ matters.

Accepted Answer

A) complex, further complicate 
B) simple, further simplify 
C) simple, complicate 
D) complex, simplify 
E) complex, completely ignore 
A) complex, further complicate 
B) simple, further simplify 
C) simple, complicate 
D) complex, simplify 
E) complex, completely ignore

Question 7

Between 1947 and 2003, U.S. real GDP

Accepted Answer

A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased fivefold 
E) grew faster than did nominal GDP 
A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased fivefold 
E) grew faster than did nominal GDP

Question 8

Given the aggregate demand curve, an increase in aggregate supply would raise real GDP and reduce the price level.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

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

Accepted Answer

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

Question 11

Exhibit 5-2  
-Refer to Exhibit 5-2. Which line or point represents aggregate demand?

Accepted Answer

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

Question 12

Economic fluctuations

Accepted Answer

A) in one nation are usually independent of economic fluctuations in its major trading partner nations 
B) in one nation are usually independent of economic fluctuations in bordering nations 
C) in one developed nation are often linked to economic fluctuations in other developed economies 
D) are linked internationally so that a recession in one nation means an expansion in the economy of its major trading partner 
E) are linked internationally so that an economic expansion in one nation means a recession in the economy of its major trading partner 
A) in one nation are usually independent of economic fluctuations in its major trading partner nations 
B) in one nation are usually independent of economic fluctuations in bordering nations 
C) in one developed nation are often linked to economic fluctuations in other developed economies 
D) are linked internationally so that a recession in one nation means an expansion in the economy of its major trading partner 
E) are linked internationally so that an economic expansion in one nation means a recession in the economy of its major trading partner

Question 13

In the United States before 1970,

Accepted Answer

A) most macroeconomic instability was caused by simultaneous shifts of aggregate demand and aggregate supply 
B) most macroeconomic instability was caused by shifts of aggregate supply 
C) most macroeconomic instability was caused by shifts of aggregate demand 
D) the government assumed no direct responsibility for the level of employment 
E) the government itself was a much less important player in the macroeconomy than it is today 
A) most macroeconomic instability was caused by simultaneous shifts of aggregate demand and aggregate supply 
B) most macroeconomic instability was caused by shifts of aggregate supply 
C) most macroeconomic instability was caused by shifts of aggregate demand 
D) the government assumed no direct responsibility for the level of employment 
E) the government itself was a much less important player in the macroeconomy than it is today

Question 14

In U.S. history, recessions have usually lasted longer than expansion periods.

Accepted Answer

A) True 
 B)False

Question 15

By a leading economic indicator, economists mean

Accepted Answer

A) an indicator of future economic activity 
B) an indicator that measures current economic activity 
C) a highly accurate indicator that is easily measured 
D) an indicator that is accurate most of the time 
E) any variable that can measure either past or present economic activity 
A) an indicator of future economic activity 
B) an indicator that measures current economic activity 
C) a highly accurate indicator that is easily measured 
D) an indicator that is accurate most of the time 
E) any variable that can measure either past or present economic activity

Question 16

The laissez-faire approach popular before the Great Depression influenced the U.S. government to see business downturns as

Accepted Answer

A) natural phases in an otherwise healthy system, and therefore to take short-term deficit spending measures to help recovery 
B) natural phases in an otherwise healthy system, and therefore to wait for recovery to occur naturally 
C) serious maladies in an otherwise healthy system, and therefore to work to redesign the system to avoid such failure in the future 
D) failures of the type of system Adam Smith envisaged, and therefore to work to move toward a modern, more managed economy 
E) failures of the system to achieve the form that Adam Smith envisaged, and therefore to work to decrease government interference at the micro level 
A) natural phases in an otherwise healthy system, and therefore to take short-term deficit spending measures to help recovery 
B) natural phases in an otherwise healthy system, and therefore to wait for recovery to occur naturally 
C) serious maladies in an otherwise healthy system, and therefore to work to redesign the system to avoid such failure in the future 
D) failures of the type of system Adam Smith envisaged, and therefore to work to move toward a modern, more managed economy 
E) failures of the system to achieve the form that Adam Smith envisaged, and therefore to work to decrease government interference at the micro level

Question 17

Exhibit 5-1    
-In Exhibit 5-1, from the beginning of period 1 to the end of period 2, nominal GDP went from

Accepted Answer

A) $40,000 to $18,000 and back again 
B) $40,000 to $18,000 and stayed there 
C) $40,000 to $18,000 in period 1 and to $10,000 in period 2 
D) $40,000 to $18,000 to $10,000 in period 1 and stayed there in period 2 
E) $40,000 to $18,000 to $10,000 in period 1 and then back to $18,000 in period 2 
A) $40,000 to $18,000 and back again 
B) $40,000 to $18,000 and stayed there 
C) $40,000 to $18,000 in period 1 and to $10,000 in period 2 
D) $40,000 to $18,000 to $10,000 in period 1 and stayed there in period 2 
E) $40,000 to $18,000 to $10,000 in period 1 and then back to $18,000 in period 2

Question 18

Given the following aggregate demand and aggregate supply schedules, determine the equilibrium level of prices and output.

Accepted Answer

A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75 
A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75

Question 19

One explanation for the negative slope of the aggregate demand curve is that

Accepted Answer

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

Question 20

A period of sustained growth of output in the economy is referred to as a(n)

Accepted Answer

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

Exam 5: Introduction to Macroeconomics

Long-term growth in production can be partially explained by

Gross world product is

An increase in government spending, other things constant, would cause a

The largest and most complex economy in world history is

Certain economic activities signal forthcoming changes in the economy. These are known as the

The economy is so __________ that we need to __________ matters.

Between 1947 and 2003, U.S. real GDP

Given the aggregate demand curve, an increase in aggregate supply would raise real GDP and reduce the price level.

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

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

Exhibit 5-2 -Refer to Exhibit 5-2. Which line or point represents aggregate demand?

Economic fluctuations

In the United States before 1970,

In U.S. history, recessions have usually lasted longer than expansion periods.

By a leading economic indicator, economists mean

The laissez-faire approach popular before the Great Depression influenced the U.S. government to see business downturns as

Exhibit 5-1 -In Exhibit 5-1, from the beginning of period 1 to the end of period 2, nominal GDP went from

Given the following aggregate demand and aggregate supply schedules, determine the equilibrium level of prices and output.

One explanation for the negative slope of the aggregate demand curve is that

A period of sustained growth of output in the economy is referred to as a(n)

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

The economy is so that we need to matters.