Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

If the U.S.price level increases,the aggregate quantity of U.S.output demanded

Accepted Answer

A)  decreases because U.S.products become cheaper relative to foreign products 
B)  decreases because U.S.products become more expensive relative to foreign products 
C)  increases because U.S.products become cheaper relative to foreign products 
D)  increases because U.S.products become more expensive relative to foreign products 
A)  decreases because U.S.products become cheaper relative to foreign products 
B)  decreases because U.S.products become more expensive relative to foreign products 
C)  increases because U.S.products become cheaper relative to foreign products 
D)  increases because U.S.products become more expensive relative to foreign products

Question 3

Long-term growth in production can be partially explained by

Accepted Answer

A)  increases in government spending 
B)  increases in availability of resources 
C)  reductions in federal taxes 
D)  a gradual but consistent increase in the price level 
E)  general optimism about the future and the pioneering spirit of America 
A)  increases in government spending 
B)  increases in availability of resources 
C)  reductions in federal taxes 
D)  a gradual but consistent increase in the price level 
E)  general optimism about the future and the pioneering spirit of America

Question 4

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 5

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 6

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 7

The Employment Act of 1946

Accepted Answer

A)  guaranteed full employment 
B)  obliged the federal government to hire as many people as it could to achieve full employment 
C)  gave the federal government the power to levy an income tax 
D)  imposed a responsibility on the federal government to foster full employment 
E)  obligated the federal government to run budget surpluses to achieve full employment 
A)  guaranteed full employment 
B)  obliged the federal government to hire as many people as it could to achieve full employment 
C)  gave the federal government the power to levy an income tax 
D)  imposed a responsibility on the federal government to foster full employment 
E)  obligated the federal government to run budget surpluses to achieve full employment

Question 8

Adam Smith's "invisible hand" explains

Accepted Answer

A)  why people act in their own best interests 
B)  why the government intervenes to overcome failures in private markets. 
C)  how people,acting out of self-interest,unintentionally promote the general good 
D)  how comparative advantage and specialization promote international trade 
E)  how the creation of goods and services (supply)generates its own demand by creating employment and income 
A)  why people act in their own best interests 
B)  why the government intervenes to overcome failures in private markets. 
C)  how people,acting out of self-interest,unintentionally promote the general good 
D)  how comparative advantage and specialization promote international trade 
E)  how the creation of goods and services (supply)generates its own demand by creating employment and income

Question 9

Which of the following is a stock variable?

Accepted Answer

A)  Gross Domestic Product 
B)  consumption spending 
C)  the federal government's spending on Social Security 
D)  the money supply 
E)  Federal income tax revenue 
A)  Gross Domestic Product 
B)  consumption spending 
C)  the federal government's spending on Social Security 
D)  the money supply 
E)  Federal income tax revenue

Question 10

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 11

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

Question 12

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Accepted Answer

A) True 
 B)False

Question 13

As the price level rises,individuals feel richer.Therefore,they will spend more.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 5-2  
-Refer to Exhibit 5-2.Which line or point represents the price level?

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 15

The Reagan administration's 1981 investment tax changes were designed to

Accepted Answer

A)  stimulate aggregate demand and thereby reduce unemployment 
B)  stimulate aggregate demand and thereby increase economic growth 
C)  stimulate aggregate supply and thereby increase economic growth 
D)  decrease aggregate demand in order to reduce inflation 
E)  increase tax revenues to reduce the federal budget deficit 
A)  stimulate aggregate demand and thereby reduce unemployment 
B)  stimulate aggregate demand and thereby increase economic growth 
C)  stimulate aggregate supply and thereby increase economic growth 
D)  decrease aggregate demand in order to reduce inflation 
E)  increase tax revenues to reduce the federal budget deficit

Question 16

If the economy experiences stagflation,

Accepted Answer

A)  government can quickly restore full employment by doing nothing to interfere with the economy's natural self-correcting forces 
B)  only Keynesian policies can remedy the situation 
C)  only anti-unemployment policies can remedy the situation 
D)  Keynesian anti-inflation policies will raise the inflation rate 
E)  increasing a federal budget surplus will worsen inflation 
A)  government can quickly restore full employment by doing nothing to interfere with the economy's natural self-correcting forces 
B)  only Keynesian policies can remedy the situation 
C)  only anti-unemployment policies can remedy the situation 
D)  Keynesian anti-inflation policies will raise the inflation rate 
E)  increasing a federal budget surplus will worsen inflation

Question 17

Inflation is

Accepted Answer

A)  a rise in the value of money 
B)  a decline in nominal income 
C)  a sustained increase in the price level 
D)  a general reduction in prices 
E)  an economic problem only for the retired population 
A)  a rise in the value of money 
B)  a decline in nominal income 
C)  a sustained increase in the price level 
D)  a general reduction in prices 
E)  an economic problem only for the retired population

Question 18

President Nixon fought the inflation of the early 1970s with

Accepted Answer

A)  increased taxes 
B)  increased government spending 
C)  decreased taxes 
D)  decreased government spending 
E)  wage and price controls 
A)  increased taxes 
B)  increased government spending 
C)  decreased taxes 
D)  decreased government spending 
E)  wage and price controls

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

According to Keynes,the policy of incurring budget surpluses will cause the equilibrium price level to __________ and equilibrium output to __________.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
E)  remain the same; remain the same 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
E)  remain the same; remain the same

Exam 5: Introduction to Macroeconomics

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

If the U.S.price level increases,the aggregate quantity of U.S.output demanded

Long-term growth in production can be partially explained by

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

The largest and most complex economy in world history is

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

The Employment Act of 1946

Adam Smith's "invisible hand" explains

Which of the following is a stock variable?

In the United States before 1970,

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

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

As the price level rises,individuals feel richer.Therefore,they will spend more.

Exhibit 5-2 -Refer to Exhibit 5-2.Which line or point represents the price level?

The Reagan administration's 1981 investment tax changes were designed to

If the economy experiences stagflation,

Inflation is

President Nixon fought the inflation of the early 1970s with

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

According to Keynes,the policy of incurring budget surpluses will cause the equilibrium price level to __________ and equilibrium output to __________.

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

According to Keynes,the policy of incurring budget surpluses will cause the equilibrium price level to and equilibrium output to .