Question 1

The two phases of the business cycle are

Accepted Answer

A)  high economic growth and low economic growth 
B)  expansion and contraction 
C)  expansion and depression 
D)  high inflation and low inflation 
E)  potential economic growth and actual economic growth 
A)  high economic growth and low economic growth 
B)  expansion and contraction 
C)  expansion and depression 
D)  high inflation and low inflation 
E)  potential economic growth and actual economic growth

Question 2

A laissez faire policy is one in which

Accepted Answer

A)  the government plays a major role in guiding economic activity 
B)  the government prefers to control taxes rather than spending 
C)  the government leaves things alone 
D)  individuals rely on the government for guidance but not for active intervention in the economy 
E)  businesses rely on the government for guidance but not for active intervention in the economy 
A)  the government plays a major role in guiding economic activity 
B)  the government prefers to control taxes rather than spending 
C)  the government leaves things alone 
D)  individuals rely on the government for guidance but not for active intervention in the economy 
E)  businesses rely on the government for guidance but not for active intervention in the economy

Question 3

-Refer to Figure 5-2 above.When moving from point B to C on the graph,the economy is going through a(n)

Accepted Answer

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

Question 4

In the Full Employment and Balanced Growth Act of 1978,Congress set a target rate of unemployment.The nation achieves this target rate

Accepted Answer

A)  in most years 
B)  at least once a year 
C)  only rarely 
D)  in election years 
E)  at least once every five years 
A)  in most years 
B)  at least once a year 
C)  only rarely 
D)  in election years 
E)  at least once every five years

Question 5

Which of the following is a normative macroeconomic statement?

Accepted Answer

A)  An increase in government spending will reduce unemployment. 
B)  An active government policy should be employed to maintain a healthy economy. 
C)  The unemployment rate is 10 percent. 
D)  There is a positive relationship between inflation and the rate of growth of money 
E)  Gross domestic product grew 3 percent this year. 
A)  An increase in government spending will reduce unemployment. 
B)  An active government policy should be employed to maintain a healthy economy. 
C)  The unemployment rate is 10 percent. 
D)  There is a positive relationship between inflation and the rate of growth of money 
E)  Gross domestic product grew 3 percent this year.

Question 6

The United States has never experienced double-digit inflation.

Accepted Answer

A) True 
 B)False

Question 7

For the average living standard of a nation to rise,the only thing that needs to happen is for nominal GDP to increase faster than the price level.

Accepted Answer

A) True 
 B)False

Question 8

The country that suffered an extreme inflation rate of 89,700,000,000,000,000,000,000 percent in November 2008 was

Accepted Answer

A)  England 
B)  Zimbabwe 
C)  Germany 
D)  Egypt 
E)  the former Soviet Union 
A)  England 
B)  Zimbabwe 
C)  Germany 
D)  Egypt 
E)  the former Soviet Union

Question 9

Recessions can sometimes last less than a single year.

Accepted Answer

A) True 
 B)False

Question 10

The unemployment rate is usually zero except during recessions.

Accepted Answer

A) True 
 B)False

Question 11

Rapid economic growth,stable prices and __________ are the three important macroeconomic goals about which most economists agree.

Accepted Answer

A)  an unemployment rate of zero 
B)  zero inflation 
C)  full employment 
D)  a high exchange rate 
E)  low interest rates 
A)  an unemployment rate of zero 
B)  zero inflation 
C)  full employment 
D)  a high exchange rate 
E)  low interest rates

Question 12

Aggregation is important because it allows many individual variables to be combined into one larger whole.

Accepted Answer

A) True 
 B)False

Question 13

Rapid economic growth is important because it

Accepted Answer

A)  makes some people richer 
B)  eliminates scarcity 
C)  makes the unemployment rate zero 
D)  allows the average person to consume more goods and services 
E)  reduces interest rates 
A)  makes some people richer 
B)  eliminates scarcity 
C)  makes the unemployment rate zero 
D)  allows the average person to consume more goods and services 
E)  reduces interest rates

Question 14

Macroeconomics studies the behavior of aggregates while microeconomics studies the behavior of individual decision-making units.

Accepted Answer

A) True 
 B)False

Question 15

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

Accepted Answer

A) True 
 B)False

Question 16

The group of economists who believed that the macroeconomy worked very well on its own were

Accepted Answer

A)  microeconomists 
B)  macroeconomists 
C)  classical economists 
D)  Keynesian economists 
E)  Marxist economists 
A)  microeconomists 
B)  macroeconomists 
C)  classical economists 
D)  Keynesian economists 
E)  Marxist economists

Question 17

Why is inflation considered a problem?

Accepted Answer

A)  Firms gain too much economic power. 
B)  It is always very high when it exists. 
C)  People prefer falling prices. 
D)  It is costly for society. 
E)  Government gains too much economic power.. 
A)  Firms gain too much economic power. 
B)  It is always very high when it exists. 
C)  People prefer falling prices. 
D)  It is costly for society. 
E)  Government gains too much economic power..

Question 18

Who was the economist that began modern macroeconomics?

Accepted Answer

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

Question 19

One macroeconomic goal is to achieve an unemployment rate of zero.

Accepted Answer

A) True 
 B)False

Question 20

What are the three important macroeconomic goals about which most economists,and society at large,agree?

Accepted Answer

A)  economic growth,full employment,and low interest rates 
B)  economic growth,full employment,and stable prices 
C)  economic growth,zero unemployment,and falling prices 
D)  economic growth,low unemployment,and a balanced budget 
E)  economic growth,a balanced budget,and balanced international trade 
A)  economic growth,full employment,and low interest rates 
B)  economic growth,full employment,and stable prices 
C)  economic growth,zero unemployment,and falling prices 
D)  economic growth,low unemployment,and a balanced budget 
E)  economic growth,a balanced budget,and balanced international trade

Exam 17: What Macroeconomics Tries to Explain

The two phases of the business cycle are

A laissez faire policy is one in which

-Refer to Figure 5-2 above.When moving from point B to C on the graph,the economy is going through a(n)

In the Full Employment and Balanced Growth Act of 1978,Congress set a target rate of unemployment.The nation achieves this target rate

Which of the following is a normative macroeconomic statement?

The United States has never experienced double-digit inflation.

For the average living standard of a nation to rise,the only thing that needs to happen is for nominal GDP to increase faster than the price level.

The country that suffered an extreme inflation rate of 89,700,000,000,000,000,000,000 percent in November 2008 was

Recessions can sometimes last less than a single year.

The unemployment rate is usually zero except during recessions.

Rapid economic growth,stable prices and __________ are the three important macroeconomic goals about which most economists agree.

Aggregation is important because it allows many individual variables to be combined into one larger whole.

Rapid economic growth is important because it

Macroeconomics studies the behavior of aggregates while microeconomics studies the behavior of individual decision-making units.

The United States economy has achieved the target rate of unemployment,as set by the Full Employment and Balanced Growth Act (1978),for most years over the last few decades.

The group of economists who believed that the macroeconomy worked very well on its own were

Why is inflation considered a problem?

Who was the economist that began modern macroeconomics?

One macroeconomic goal is to achieve an unemployment rate of zero.

What are the three important macroeconomic goals about which most economists,and society at large,agree?

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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