Question 1

If the prices of all goods and services rose,but the quantity produced remained unchanged,what would happen to nominal and real GDP?

Accepted Answer

A)  Nominal and real GDP would both rise. 
B)  Nominal and real GDP would both be unchanged. 
C)  Real GDP would rise,but nominal GDP would be unchanged. 
D)  Nominal GDP would rise,but real GDP would be unchanged. 
A)  Nominal and real GDP would both rise. 
B)  Nominal and real GDP would both be unchanged. 
C)  Real GDP would rise,but nominal GDP would be unchanged. 
D)  Nominal GDP would rise,but real GDP would be unchanged.

Question 2

The "sticky price" model is the only one used by macroeconomists.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an example of a supply shock?

Accepted Answer

A)  A surge in consumer optimism prompts increased buying of goods and services. 
B)  A surprise tax rebate from the government gives people more money to spend. 
C)  A dramatic increase in energy prices increases production costs for firms in the economy. 
D)  Government increases spending on education. 
A)  A surge in consumer optimism prompts increased buying of goods and services. 
B)  A surprise tax rebate from the government gives people more money to spend. 
C)  A dramatic increase in energy prices increases production costs for firms in the economy. 
D)  Government increases spending on education.

Question 4

In 2008-2009,the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Accepted Answer

A) True 
 B)False

Question 5

In situations of sticky prices and negative demand shocks,we would expect firms to:

Accepted Answer

A)  deplete inventories before increasing production. 
B)  reduce production before building up inventories. 
C)  build up inventories before reducing production. 
D)  lower prices before reducing production or building up inventories. 
A)  deplete inventories before increasing production. 
B)  reduce production before building up inventories. 
C)  build up inventories before reducing production. 
D)  lower prices before reducing production or building up inventories.

Question 6

Modern economic growth refers to any situation where a nation's output increases.

Accepted Answer

A) True 
 B)False

Question 7

Before the period of modern economic growth:

Accepted Answer

A)  only civilizations such as the Roman Empire experienced economic growth. 
B)  rates of population growth virtually matched rates of output growth. 
C)  most economies realized high rates of growth in output per person. 
D)  output and population growth were stagnant. 
A)  only civilizations such as the Roman Empire experienced economic growth. 
B)  rates of population growth virtually matched rates of output growth. 
C)  most economies realized high rates of growth in output per person. 
D)  output and population growth were stagnant.

Question 8

A nation that wants to invest in more newly created capital in the present must be willing to forgo present consumption.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following results from firms holding inventories?

Accepted Answer

A)  The economy is much more susceptible to business cycle fluctuations. 
B)  Demand shocks occur with greater frequency. 
C)  Demand shocks occur less frequently. 
D)  Firms can maintain production levels and adjust inventories in response to demand shocks. 
A)  The economy is much more susceptible to business cycle fluctuations. 
B)  Demand shocks occur with greater frequency. 
C)  Demand shocks occur less frequently. 
D)  Firms can maintain production levels and adjust inventories in response to demand shocks.

Question 10

Which of the following is most closely related to recessions?

Accepted Answer

A)  Positive long-run economic growth. 
B)  Rapid growth in the price level. 
C)  Falling rates of unemployment. 
D)  Negative real growth in output. 
A)  Positive long-run economic growth. 
B)  Rapid growth in the price level. 
C)  Falling rates of unemployment. 
D)  Negative real growth in output.

Question 11

Unemployment describes the condition where:

Accepted Answer

A)  equipment and machinery are going unused. 
B)  a person cannot get a job but is willing to work and is actively seeking work. 
C)  a person does not have a job,regardless of whether or not he or she wants one. 
D)  any resource sits idle. 
A)  equipment and machinery are going unused. 
B)  a person cannot get a job but is willing to work and is actively seeking work. 
C)  a person does not have a job,regardless of whether or not he or she wants one. 
D)  any resource sits idle.

Question 12

Which of the following would an economist consider to be investment?

Accepted Answer

A)  Boeing building a new factory. 
B)  Oprah buying a $10 million home from a fellow celebrity. 
C)  A stockbroker buying 10,000 shares of Starbucks stock. 
D)  All of these. 
A)  Boeing building a new factory. 
B)  Oprah buying a $10 million home from a fellow celebrity. 
C)  A stockbroker buying 10,000 shares of Starbucks stock. 
D)  All of these.

Question 13

Any person without a job is considered to be unemployed.

Accepted Answer

A) True 
 B)False

Question 14

(Consider This)The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories,tools,and warehouses.

Accepted Answer

A) True 
 B)False

Question 15

In the very short run,demand shocks will tend to change the level of output but have little effect on prices.

Accepted Answer

A) True 
 B)False

Question 16

(Consider This)If Ford Motor Company purchases factory equipment previously used by General Motors,this would be considered an economic investment.

Accepted Answer

A) True 
 B)False

Question 17

(Consider This)Which of the following is an example of economic investment?

Accepted Answer

A)  Volvo buys an old factory building from General Motors. 
B)  Nike buys a new machine that increases shoe production. 
C)  Bill Gates buys shares of stock in IBM. 
D)  Warren Buffet buys U.S.savings bonds. 
A)  Volvo buys an old factory building from General Motors. 
B)  Nike buys a new machine that increases shoe production. 
C)  Bill Gates buys shares of stock in IBM. 
D)  Warren Buffet buys U.S.savings bonds.

Question 18

Why are economists concerned about inflation?

Accepted Answer

A)  Inflation generally causes unemployment rates to rise. 
B)  Real GDP is necessarily falling when there is inflation. 
C)  Inflation lowers the standard of living for people whose income does not increase as fast as the price level. 
D)  Inflation increases the value of peoples' saving and encourages overspending on goods and services. 
A)  Inflation generally causes unemployment rates to rise. 
B)  Real GDP is necessarily falling when there is inflation. 
C)  Inflation lowers the standard of living for people whose income does not increase as fast as the price level. 
D)  Inflation increases the value of peoples' saving and encourages overspending on goods and services.

Question 19

When demand shocks lead to recessions,it is mainly due to:

Accepted Answer

A)  price inflexibility. 
B)  the inability of government policy to affect demand. 
C)  unexpected changes in the supply of goods and services. 
D)  government regulations that prevent firms from adjusting output in response to the shocks. 
A)  price inflexibility. 
B)  the inability of government policy to affect demand. 
C)  unexpected changes in the supply of goods and services. 
D)  government regulations that prevent firms from adjusting output in response to the shocks.

Question 20

"Supply shocks" occur any time there is a change in the supply of goods and services.

Accepted Answer

A) True 
 B)False

Exam 25: An Introduction to Macroeconomics

If the prices of all goods and services rose,but the quantity produced remained unchanged,what would happen to nominal and real GDP?

The "sticky price" model is the only one used by macroeconomists.

Which of the following is an example of a supply shock?

In 2008-2009,the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

In situations of sticky prices and negative demand shocks,we would expect firms to:

Modern economic growth refers to any situation where a nation's output increases.

Before the period of modern economic growth:

A nation that wants to invest in more newly created capital in the present must be willing to forgo present consumption.

Which of the following results from firms holding inventories?

Which of the following is most closely related to recessions?

Unemployment describes the condition where:

Which of the following would an economist consider to be investment?

Any person without a job is considered to be unemployed.

(Consider This)The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories,tools,and warehouses.

In the very short run,demand shocks will tend to change the level of output but have little effect on prices.

(Consider This)If Ford Motor Company purchases factory equipment previously used by General Motors,this would be considered an economic investment.

(Consider This)Which of the following is an example of economic investment?

Why are economists concerned about inflation?

When demand shocks lead to recessions,it is mainly due to:

"Supply shocks" occur any time there is a change in the supply of goods and services.

Income Inequality Poverty and Discrimination

Health Care

Immigration

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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