Question 1

Aggregation is the process of combining different things into a single category.

Accepted Answer

A) True 
 B)False

Question 2

Over the past 90 years or so,the inflation rate has

Accepted Answer

A)  generally increased 
B)  been positive in most years 
C)  stayed low 
D)  been negative in most years 
E)  dramatically increased 
A)  generally increased 
B)  been positive in most years 
C)  stayed low 
D)  been negative in most years 
E)  dramatically increased

Question 3

-Refer to Figure 5-1 above.If the economy moves from point A to B on the graph,it is going through a(n)

Accepted Answer

A)  peak 
B)  trough 
C)  expansion 
D)  boom 
E)  recession 
A)  peak 
B)  trough 
C)  expansion 
D)  boom 
E)  recession

Question 4

During which decade were John Maynard Keynes' ideas challenged?

Accepted Answer

A)  1930s 
B)  1940s 
C)  1960s 
D)  1970s 
E)  1980s 
A)  1930s 
B)  1940s 
C)  1960s 
D)  1970s 
E)  1980s

Question 5

During the Great Depression,the economist who raised the loudest objections against the classical model was

Accepted Answer

A)  Milton Friedman 
B)  John Nash 
C)  Adam Smith 
D)  Ben Bernanke 
E)  John Maynard Keynes 
A)  Milton Friedman 
B)  John Nash 
C)  Adam Smith 
D)  Ben Bernanke 
E)  John Maynard Keynes

Question 6

If the unemployment rate is 6 percent,that means that 6 percent of

Accepted Answer

A)  the population is not working 
B)  potential workers do not have jobs 
C)  the workforce is searching for work but has not found a job at that time 
D)  the individuals who are looking for work cannot find jobs 
E)  the population is not looking for a job 
A)  the population is not working 
B)  potential workers do not have jobs 
C)  the workforce is searching for work but has not found a job at that time 
D)  the individuals who are looking for work cannot find jobs 
E)  the population is not looking for a job

Question 7

Periodic fluctuations in GDP are called business cycles.

Accepted Answer

A) True 
 B)False

Question 8

Economists regard some inflation as good for the economy.

Accepted Answer

A) True 
 B)False

Question 9

What is the difference in the concepts of economic growth and economic expansion?

Accepted Answer

A)  Both terms are used interchangeably and refer to quarterly increases in output. 
B)  Economic growth refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.An expansion refers to a shorter time period during which output increases quarter by quarter or year by year. 
C)  An expansion refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.Economic growth refers to a shorter time period during which output increases quarter by quarter or year by year. 
D)  Both terms are used interchangeably and refer to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period. 
E)  Economic growth is the term reserved for periods of prosperity in less developed countries while expansion is the term reserved for developed industrial countries. 
A)  Both terms are used interchangeably and refer to quarterly increases in output. 
B)  Economic growth refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.An expansion refers to a shorter time period during which output increases quarter by quarter or year by year. 
C)  An expansion refers to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period.Economic growth refers to a shorter time period during which output increases quarter by quarter or year by year. 
D)  Both terms are used interchangeably and refer to the long-tun upward trend in output over a longer period of time,usually more than a decade,which is measured as the average annual change in output over the period. 
E)  Economic growth is the term reserved for periods of prosperity in less developed countries while expansion is the term reserved for developed industrial countries.

Question 10

The inflation rate in the United States has always been positive.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a major macroeconomic goal?

Accepted Answer

A)  Low prices 
B)  Declining prices 
C)  Pure competition 
D)  Stable prices 
E)  High prices 
A)  Low prices 
B)  Declining prices 
C)  Pure competition 
D)  Stable prices 
E)  High prices

Question 12

Since the late 1970s which of the following groups has become worse off?

Accepted Answer

A)  Highly-skilled workers 
B)  Technical workers 
C)  Less-skilled workers 
D)  Scientists and other workers who require a lot of education 
E)  All types of workers 
A)  Highly-skilled workers 
B)  Technical workers 
C)  Less-skilled workers 
D)  Scientists and other workers who require a lot of education 
E)  All types of workers

Question 13

During the contraction phase of the business cycle

Accepted Answer

A)  employment and output are both rising 
B)  employment and output are both at a peak 
C)  employment and output are both at their lowest 
D)  employment and output are both falling 
E)  employment is falling and output is rising 
A)  employment and output are both rising 
B)  employment and output are both at a peak 
C)  employment and output are both at their lowest 
D)  employment and output are both falling 
E)  employment is falling and output is rising

Question 14

Since the late 1970s,economic growth has

Accepted Answer

A)  occurred at a rapid pace compared to the period 1950-1973 
B)  improved living standards across the entire population 
C)  maintained approximately constant living standards across the entire population 
D)  improved the living standards of less-skilled workers while highly skilled workers have become worse off 
E)  improved the living standards of highly skilled workers while less-skilled workers have become worse off 
A)  occurred at a rapid pace compared to the period 1950-1973 
B)  improved living standards across the entire population 
C)  maintained approximately constant living standards across the entire population 
D)  improved the living standards of less-skilled workers while highly skilled workers have become worse off 
E)  improved the living standards of highly skilled workers while less-skilled workers have become worse off

Question 15

The equilibrium price of automobiles is a primarily macroeconomic issue.

Accepted Answer

A) True 
 B)False

Question 16

The phase of the business cycle characterized by rising output is called a(n)

Accepted Answer

A)  peak 
B)  recession 
C)  depression 
D)  trough 
E)  expansion 
A)  peak 
B)  recession 
C)  depression 
D)  trough 
E)  expansion

Question 17

During the Great Depression of the 1930s,the unemployment rate in the United States peaked at around

Accepted Answer

A)  5 percent 
B)  10 percent 
C)  12 percent 
D)  25 percent 
E)  50 percent 
A)  5 percent 
B)  10 percent 
C)  12 percent 
D)  25 percent 
E)  50 percent

Question 18

Aggregation is important because it allows macroeconomists to divide a whole into its individual components.

Accepted Answer

A) True 
 B)False

Question 19

John Maynard Keynes,author of The General Theory of Employment,Interest,and Money,argued that

Accepted Answer

A)  classical economic theory was correct 
B)  the government should follow a policy of laissez faire 
C)  the critiques of classical economics were flawed 
D)  the economy does not always perform well in the absence of government guidance 
E)  instead of focusing on money,the government should control interest rates 
A)  classical economic theory was correct 
B)  the government should follow a policy of laissez faire 
C)  the critiques of classical economics were flawed 
D)  the economy does not always perform well in the absence of government guidance 
E)  instead of focusing on money,the government should control interest rates

Question 20

In the 1980s,several ________________ countries experienced inflation rates of thousands of percent per year.

Accepted Answer

A)  Asian 
B)  Southern European 
C)  Eastern European 
D)  Latin American 
E)  African 
A)  Asian 
B)  Southern European 
C)  Eastern European 
D)  Latin American 
E)  African

Exam 17: What Macroeconomics Tries to Explain

Aggregation is the process of combining different things into a single category.

Over the past 90 years or so,the inflation rate has

-Refer to Figure 5-1 above.If the economy moves from point A to B on the graph,it is going through a(n)

During which decade were John Maynard Keynes' ideas challenged?

During the Great Depression,the economist who raised the loudest objections against the classical model was

If the unemployment rate is 6 percent,that means that 6 percent of

Periodic fluctuations in GDP are called business cycles.

Economists regard some inflation as good for the economy.

What is the difference in the concepts of economic growth and economic expansion?

The inflation rate in the United States has always been positive.

Which of the following is a major macroeconomic goal?

Since the late 1970s which of the following groups has become worse off?

During the contraction phase of the business cycle

Since the late 1970s,economic growth has

The equilibrium price of automobiles is a primarily macroeconomic issue.

The phase of the business cycle characterized by rising output is called a(n)

During the Great Depression of the 1930s,the unemployment rate in the United States peaked at around

Aggregation is important because it allows macroeconomists to divide a whole into its individual components.

John Maynard Keynes,author of The General Theory of Employment,Interest,and Money,argued that

In the 1980s,several ________________ countries experienced inflation rates of thousands of percent per year.

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Production, income, and Employment

The Price Level and Inflation

The Classical Long-Run Model

Part A: The Classical Model in an Open Economy

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-Run Macro Model

Fiscal Policy

Money,banks,and the Federal Reserve

The Money Market and Monetary Policy

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

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