Question 1

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

Question 2

Stagflation is best described as

Accepted Answer

A)  increasing output and decreasing prices 
B)  increasing output and increasing prices 
C)  no change in output or prices 
D)  decreasing output and decreasing prices 
E)  decreasing output and increasing prices 
A)  increasing output and decreasing prices 
B)  increasing output and increasing prices 
C)  no change in output or prices 
D)  decreasing output and decreasing prices 
E)  decreasing output and increasing prices

Question 3

A period of sustained decline of output in the economy is known as a(n)

Accepted Answer

A)  expansion 
B)  growth phase 
C)  peak 
D)  trough 
E)  contraction 
A)  expansion 
B)  growth phase 
C)  peak 
D)  trough 
E)  contraction

Question 4

An increase in wage rates,other things constant,would shift the aggregate supply curve upward.

Accepted Answer

A) True 
 B)False

Question 5

If the U.S.price level decreases,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 
E)  decreases because household wealth and spending decrease 
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 
E)  decreases because household wealth and spending decrease

Question 6

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 7

Which of the following would indicate the beginnings of an expansion of the economy?

Accepted Answer

A)  fewer new firms are started 
B)  stock market prices decline 
C)  consumer confidence improves 
D)  housing construction slows 
E)  orders for new equipment decrease 
A)  fewer new firms are started 
B)  stock market prices decline 
C)  consumer confidence improves 
D)  housing construction slows 
E)  orders for new equipment decrease

Question 8

The word stagflation describes a situation in which a higher price level occurs simultaneously with

Accepted Answer

A)  higher employment 
B)  economic growth 
C)  lower aggregate output 
D)  federal budget deficits 
E)  federal budget surpluses 
A)  higher employment 
B)  economic growth 
C)  lower aggregate output 
D)  federal budget deficits 
E)  federal budget surpluses

Question 9

Economic fluctuations (or business cycles)

Accepted Answer

A)  are changes in the number of businesses started 
B)  are fluctuations in the Dow Jones industrial average relative to a long-term growth trend 
C)  look at the role of business in the hiring resources 
D)  are fluctuations in the level of economic activity,relative to a long-term growth trend 
E)  are changes in government spending that occur over a period of years 
A)  are changes in the number of businesses started 
B)  are fluctuations in the Dow Jones industrial average relative to a long-term growth trend 
C)  look at the role of business in the hiring resources 
D)  are fluctuations in the level of economic activity,relative to a long-term growth trend 
E)  are changes in government spending that occur over a period of years

Question 10

The aggregate demand curve reflects the direct relationship between the price level and the quantity of aggregate output demanded.

Accepted Answer

A) True 
 B)False

Question 11

The aggregate demand curve slopes downward because

Accepted Answer

A)  a decrease in the price level decreases the real value of household wealth 
B)  a decrease in the domestic price level increases imports 
C)  an increase in the price level leads to a decrease in demand for money,which decreases interest rates 
D)  a decrease in the domestic price level increases exports 
E)  none of the above 
A)  a decrease in the price level decreases the real value of household wealth 
B)  a decrease in the domestic price level increases imports 
C)  an increase in the price level leads to a decrease in demand for money,which decreases interest rates 
D)  a decrease in the domestic price level increases exports 
E)  none of the above

Question 12

An increase in the price level

Accepted Answer

A)  means that the aggregate demand curve has shifted leftward 
B)  means that inflation occurred 
C)  means the employment level has decreased 
D)  will shift both the aggregate supply curve and the aggregate demand curve leftward 
E)  will shift both the aggregate supply curve and the aggregate demand curve rightward 
A)  means that the aggregate demand curve has shifted leftward 
B)  means that inflation occurred 
C)  means the employment level has decreased 
D)  will shift both the aggregate supply curve and the aggregate demand curve leftward 
E)  will shift both the aggregate supply curve and the aggregate demand curve rightward

Question 13

According to Keynes,if private-sector demand is insufficient to maintain full employment,the government should

Accepted Answer

A)  act to make the economy's natural transition to the lower level of employment as easy as possible 
B)  shock the economy with an increase in aggregate demand 
C)  reduce aggregate supply to reduce inflation 
D)  print money to promote consumer spending 
E)  act to make the economy's natural transition back to full employment as easy as possible 
A)  act to make the economy's natural transition to the lower level of employment as easy as possible 
B)  shock the economy with an increase in aggregate demand 
C)  reduce aggregate supply to reduce inflation 
D)  print money to promote consumer spending 
E)  act to make the economy's natural transition back to full employment as easy as possible

Question 14

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 15

Which of the following best describes a stock (rather than a flow)?

Accepted Answer

A)  each week you save $100 
B)  each week you buy $10 worth of gasoline 
C)  each week you buy $50 worth of groceries 
D)  you earn $500 per week at your job 
E)  you own $5,000 worth of government bonds 
A)  each week you save $100 
B)  each week you buy $10 worth of gasoline 
C)  each week you buy $50 worth of groceries 
D)  you earn $500 per week at your job 
E)  you own $5,000 worth of government bonds

Question 16

An increase in aggregate supply will result in

Accepted Answer

A)  lower levels of employment 
B)  a rightward shift of the aggregate demand curve 
C)  a higher price level 
D)  a leftward shift of the aggregate demand curve 
E)  an economic expansion 
A)  lower levels of employment 
B)  a rightward shift of the aggregate demand curve 
C)  a higher price level 
D)  a leftward shift of the aggregate demand curve 
E)  an economic expansion

Question 17

Keynes was in favor of a federal budget __________ to cure __________.

Accepted Answer

A)  deficit; inflation 
B)  surplus; unemployment 
C)  deficit; a depression 
D)  deficit; a trade deficit 
E)  surplus; low aggregate output 
A)  deficit; inflation 
B)  surplus; unemployment 
C)  deficit; a depression 
D)  deficit; a trade deficit 
E)  surplus; low aggregate output

Question 18

Which of the following statements regarding Gross Domestic Product is not true?

Accepted Answer

A)  It is a stock variable. 
B)  It is measured for a particular time period,usually one year. 
C)  It is perhaps the most effective means of viewing the same economy over time. 
D)  It is a measure of the economy's performance. 
E)  It is a flow variable,not a stock variable. 
A)  It is a stock variable. 
B)  It is measured for a particular time period,usually one year. 
C)  It is perhaps the most effective means of viewing the same economy over time. 
D)  It is a measure of the economy's performance. 
E)  It is a flow variable,not a stock variable.

Question 19

All of the following would be considered supply-side approaches to increasing growth except one.Which is the exception?

Accepted Answer

A)  improving the quality of human capital 
B)  developing an interstate highway system 
C)  investing in research and development 
D)  replacing obsolete plants with new ones 
E)  increasing transfer payments to retirees 
A)  improving the quality of human capital 
B)  developing an interstate highway system 
C)  investing in research and development 
D)  replacing obsolete plants with new ones 
E)  increasing transfer payments to retirees

Question 20

Suppose the economy is initially in equilibrium and then an energy shock occurs,such as when OPEC raised oil prices.Which of the following is likely to result?

Accepted Answer

A)  Both the price level and aggregate output will rise. 
B)  Both aggregate output and the price level will fall. 
C)  Employment will rise. 
D)  Stagflation. 
E)  The price level will fall. 
A)  Both the price level and aggregate output will rise. 
B)  Both aggregate output and the price level will fall. 
C)  Employment will rise. 
D)  Stagflation. 
E)  The price level will fall.

Exam 5: Introduction to Macroeconomics

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

Stagflation is best described as

A period of sustained decline of output in the economy is known as a(n)

An increase in wage rates,other things constant,would shift the aggregate supply curve upward.

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

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

Which of the following would indicate the beginnings of an expansion of the economy?

The word stagflation describes a situation in which a higher price level occurs simultaneously with

Economic fluctuations (or business cycles)

The aggregate demand curve reflects the direct relationship between the price level and the quantity of aggregate output demanded.

The aggregate demand curve slopes downward because

An increase in the price level

According to Keynes,if private-sector demand is insufficient to maintain full employment,the government should

The tax cuts passed during the Reagan administration were designed primarily

Which of the following best describes a stock (rather than a flow)?

An increase in aggregate supply will result in

Keynes was in favor of a federal budget __________ to cure __________.

Which of the following statements regarding Gross Domestic Product is not true?

All of the following would be considered supply-side approaches to increasing growth except one.Which is the exception?

Suppose the economy is initially in equilibrium and then an energy shock occurs,such as when OPEC raised oil prices.Which of the following is likely to result?

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

Keynes was in favor of a federal budget to cure .