Question 1

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 2

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 3

The longest U.S.expansion on record lasted ten years,from

Accepted Answer

A)  April 1854 to April 1864 
B)  March 1991 to March 2001 
C)  December 1997 to December 2007 
D)  September 1929 to September 1939 
E)  February 1961 to February 1971 
A)  April 1854 to April 1864 
B)  March 1991 to March 2001 
C)  December 1997 to December 2007 
D)  September 1929 to September 1939 
E)  February 1961 to February 1971

Question 4

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 5

The aggregate supply curve reflects the direct relationship between the price level and the quantity of aggregate output supplied.

Accepted Answer

A) True 
 B)False

Question 6

Keynesian demand management policies are not effective in fighting stagflation.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

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

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 10

If the U.S.price level increased relative to price levels in foreign countries,what would be the impact on domestic aggregate supply and aggregate demand curves?

Accepted Answer

A)  the aggregate supply curve would shift outward and the aggregate demand curve would remain unchanged 
B)  the aggregate supply curve would shift inward and the aggregate demand curve would remain unchanged 
C)  the aggregate demand curve would shift outward and the aggregate supply curve would remain unchanged 
D)  the aggregate demand curve would shift inward and the aggregate supply curve would remain unchanged 
E)  the domestic aggregate demand and supply curves would remain unchanged 
A)  the aggregate supply curve would shift outward and the aggregate demand curve would remain unchanged 
B)  the aggregate supply curve would shift inward and the aggregate demand curve would remain unchanged 
C)  the aggregate demand curve would shift outward and the aggregate supply curve would remain unchanged 
D)  the aggregate demand curve would shift inward and the aggregate supply curve would remain unchanged 
E)  the domestic aggregate demand and supply curves would remain unchanged

Question 11

Capital is a stock variable.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

The Reagan tax cut of 1981 was an attempt at supply-side economics.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

If firms expect greater demand for their products,invest in more capital and hire more labor,

Accepted Answer

A)  there will likely be an increase in inflation and a rise in taxation 
B)  the business cycle is likely to be moving from peak to trough 
C)  their behavior may encourage the very prosperity that they expect 
D)  government will probably have to spend more and tax less to offset the economic impacts of these business decisions 
E)  consumers will probably spend less in anticipation of a decline in economic activity 
A)  there will likely be an increase in inflation and a rise in taxation 
B)  the business cycle is likely to be moving from peak to trough 
C)  their behavior may encourage the very prosperity that they expect 
D)  government will probably have to spend more and tax less to offset the economic impacts of these business decisions 
E)  consumers will probably spend less in anticipation of a decline in economic activity

Question 18

The aggregate demand curve is best defined as depicting the

Accepted Answer

A)  quantity of goods and services demanded during a given time period at different interest rates 
B)  quantity of goods and services demanded at different price levels during different time periods 
C)  quantity of goods and services demanded at different price levels during a given time period,other things held constant 
D)  quantity of goods and services that the economy is capable of producing during a given time period 
E)  final quantity of goods and services actually produced by the economy during a given time period 
A)  quantity of goods and services demanded during a given time period at different interest rates 
B)  quantity of goods and services demanded at different price levels during different time periods 
C)  quantity of goods and services demanded at different price levels during a given time period,other things held constant 
D)  quantity of goods and services that the economy is capable of producing during a given time period 
E)  final quantity of goods and services actually produced by the economy during a given time period

Question 19

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 20

Which of the following is a stock variable?

Accepted Answer

A)  U.S.exports 
B)  sales by corporations 
C)  borrowing by the federal government 
D)  household wealth 
E)  net exports 
A)  U.S.exports 
B)  sales by corporations 
C)  borrowing by the federal government 
D)  household wealth 
E)  net exports

Exam 5: Introduction to Macroeconomics

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

If spending by the federal government exceeds revenue,

The longest U.S.expansion on record lasted ten years,from

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

The aggregate supply curve reflects the direct relationship between the price level and the quantity of aggregate output supplied.

Keynesian demand management policies are not effective in fighting stagflation.

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

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

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

If the U.S.price level increased relative to price levels in foreign countries,what would be the impact on domestic aggregate supply and aggregate demand curves?

Capital is a stock variable.

If the wealth of consumers increases substantially,this would shift

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

The Reagan tax cut of 1981 was an attempt at supply-side economics.

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

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

If firms expect greater demand for their products,invest in more capital and hire more labor,

The aggregate demand curve is best defined as depicting the

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

Which of the following is a stock variable?

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

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