Question 1

Which of the following statements about leading economic indicators is true?

Accepted Answer

A)  Most people refer to them before making any important spending decision. 
B)  They are the only economic indicators available to economists. 
C)  They indicate when the economy is in a recession or an expansion. 
D)  They foreshadow turning points in the business cycle. 
E)  They can predict precisely when turning points in the economy will occur. 
A)  Most people refer to them before making any important spending decision. 
B)  They are the only economic indicators available to economists. 
C)  They indicate when the economy is in a recession or an expansion. 
D)  They foreshadow turning points in the business cycle. 
E)  They can predict precisely when turning points in the economy will occur. D

Question 2

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 D

Question 3

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 B

Question 4

As the price level increases,the amount of goods and services that consumers,businesses,and governments desire to purchase will change.How will this be illustrated?

Accepted Answer

A)  a leftward movement of the aggregate demand curve 
B)  a rightward movement of the aggregate demand curve 
C)  a movement upward along the aggregate demand curve 
D)  a movement downward along the aggregate demand curve 
E)  the price level change causes the aggregate supply curve to shift,bringing the economy back into equilibrium 
A)  a leftward movement of the aggregate demand curve 
B)  a rightward movement of the aggregate demand curve 
C)  a movement upward along the aggregate demand curve 
D)  a movement downward along the aggregate demand curve 
E)  the price level change causes the aggregate supply curve to shift,bringing the economy back into equilibrium

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

On an aggregate demand and aggregate supply graph,the Great Depression can be pictured as

Accepted Answer

A)  a leftward shift of the aggregate supply curve 
B)  a rightward shift of the aggregate supply curve 
C)  a leftward shift of the aggregate demand curve 
D)  an increase in the price level caused by a movement along the aggregate demand curve 
E)  a decrease in the price level caused by a movement along the aggregate supply curve 
A)  a leftward shift of the aggregate supply curve 
B)  a rightward shift of the aggregate supply curve 
C)  a leftward shift of the aggregate demand curve 
D)  an increase in the price level caused by a movement along the aggregate demand curve 
E)  a decrease in the price level caused by a movement along the aggregate supply curve

Question 7

The policy that a nation's economic vitality would spring from the stock of precious metals accumulated in the public treasury is called monetarism.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not true about recessions?

Accepted Answer

A)  They are milder than depressions. 
B)  They last less than six months on average. 
C)  They typically are shorter than periods of expansion. 
D)  They begin after an expansion has peaked. 
E)  They continue until the economy reaches a trough. 
A)  They are milder than depressions. 
B)  They last less than six months on average. 
C)  They typically are shorter than periods of expansion. 
D)  They begin after an expansion has peaked. 
E)  They continue until the economy reaches a trough.

Question 9

If all firms expect greater demand for their products or services,they will hire __________ resources (e.g.,labor and capital)and the economy will experience __________.

Accepted Answer

A)  fewer; recession 
B)  fewer; growth 
C)  more; federal budget deficits 
D)  more; recession 
E)  more; growth 
A)  fewer; recession 
B)  fewer; growth 
C)  more; federal budget deficits 
D)  more; recession 
E)  more; growth

Question 10

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 11

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 12

Which of the following is true of the aggregate supply curve?

Accepted Answer

A)  It portrays an inverse relationship between the price level and quantity of aggregate output. 
B)  Resource utilization is constant along the curve. 
C)  A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D)  The curve is upward-sloping. 
E)  As average prices in the United States rise relative to average prices in other countries,U.S.producers find export markets more attractive than domestic markets. 
A)  It portrays an inverse relationship between the price level and quantity of aggregate output. 
B)  Resource utilization is constant along the curve. 
C)  A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D)  The curve is upward-sloping. 
E)  As average prices in the United States rise relative to average prices in other countries,U.S.producers find export markets more attractive than domestic markets.

Question 13

Confidence in Keynesian economics

Accepted Answer

A)  diminished in the 1960s as the unemployment rate fell 
B)  flourished in the 1960s despite two major recessions 
C)  diminished in the 1960s as unemployment increased 
D)  diminished in the 1970s as inflation occurred simultaneously with two recessions 
E)  flourished through the 1980s despite Reagan's supply-side policies 
A)  diminished in the 1960s as the unemployment rate fell 
B)  flourished in the 1960s despite two major recessions 
C)  diminished in the 1960s as unemployment increased 
D)  diminished in the 1970s as inflation occurred simultaneously with two recessions 
E)  flourished through the 1980s despite Reagan's supply-side policies

Question 14

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 15

If the economy were initially in equilibrium and the aggregate demand curve shifted to the left,

Accepted Answer

A)  employment would fall 
B)  the price level would rise 
C)  the aggregate supply curve would shift rightward 
D)  the aggregate supply curve would shift leftward 
E)  the economy would experience an expansion period 
A)  employment would fall 
B)  the price level would rise 
C)  the aggregate supply curve would shift rightward 
D)  the aggregate supply curve would shift leftward 
E)  the economy would experience an expansion period

Question 16

A depression can be defined as

Accepted Answer

A)  a mild reduction in total production coupled with a rising unemployment rate that lasts for several years 
B)  a decline in total production that lasts less than six months 
C)  a severe fall in stock prices that causes financial panic and lasts several years 
D)  a severe reduction in total production coupled with high unemployment that lasts several years 
E)  a decline in government spending and taxes that lasts for several months 
A)  a mild reduction in total production coupled with a rising unemployment rate that lasts for several years 
B)  a decline in total production that lasts less than six months 
C)  a severe fall in stock prices that causes financial panic and lasts several years 
D)  a severe reduction in total production coupled with high unemployment that lasts several years 
E)  a decline in government spending and taxes that lasts for several months

Question 17

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 18

Which is true of John Maynard Keynes?

Accepted Answer

A)  He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B)  He provided a model that closely resembled that of Adam Smith. 
C)  He advocated a decrease in the money supply to stabilize the economy. 
D)  He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E)  He advocated tax increases to balance the federal government's budget during the Great Depression. 
A)  He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B)  He provided a model that closely resembled that of Adam Smith. 
C)  He advocated a decrease in the money supply to stabilize the economy. 
D)  He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E)  He advocated tax increases to balance the federal government's budget during the Great Depression.

Question 19

A fall 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 20

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

Accepted Answer

A) True 
 B)False

Exam 5: Introduction to Macroeconomics

Which of the following statements about leading economic indicators is true?

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

A recession is best defined as a period during which

As the price level increases,the amount of goods and services that consumers,businesses,and governments desire to purchase will change.How will this be illustrated?

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

On an aggregate demand and aggregate supply graph,the Great Depression can be pictured as

The policy that a nation's economic vitality would spring from the stock of precious metals accumulated in the public treasury is called monetarism.

Which of the following is not true about recessions?

If all firms expect greater demand for their products or services,they will hire __________ resources (e.g.,labor and capital)and the economy will experience __________.

Gross world product is

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

Which of the following is true of the aggregate supply curve?

Confidence in Keynesian economics

To control inflation,President Nixon

If the economy were initially in equilibrium and the aggregate demand curve shifted to the left,

A depression can be defined as

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

Which is true of John Maynard Keynes?

A fall in the price level

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

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Productivity and Growth

Tracking the US Economy

Unemployment and Inflation

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

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Developing and Transitional Economies

Understanding Graphs

National Income Accounts

Variable Net Exports

Variable Net Exports Revisited

The Algebra of Income and Expenditure

The Algebra of Demand-Side Equilibrium

Filters

The economy is so that we need to matters.

If all firms expect greater demand for their products or services,they will hire resources (e.g.,labor and capital)and the economy will experience .