Question 1

Certain economic activities signal forthcoming changes in the economy. These are known as the

Accepted Answer

A) coincidental economic indicators 
B) GDP implicit price deflator 
C) lagging economic indicators 
D) composite of economic activities 
E) leading economic indicators 
A) coincidental economic indicators 
B) GDP implicit price deflator 
C) lagging economic indicators 
D) composite of economic activities 
E) leading economic indicators

Question 2

Exhibit 5-2
  
-Refer to Exhibit 5-2. Which line or point represents equilibrium?

Accepted Answer

A) line a 
B) line b 
C) line c 
D) line d 
E) point e 
A) line a 
B) line b 
C) line c 
D) line d 
E) point e

Question 3

Capital is a stock variable.

Accepted Answer

A) True 
 B)False

Question 4

According to Keynes, in order to get the economy out of a recession, the government should

Accepted Answer

A) plan for a budget deficit 
B) encourage firms to export to other nations, thereby jump-starting the economy 
C) follow an expansionary monetary policy 
D) follow a contractionary monetary policy 
E) do nothing and rely on the market system to heal itself 
A) plan for a budget deficit 
B) encourage firms to export to other nations, thereby jump-starting the economy 
C) follow an expansionary monetary policy 
D) follow a contractionary monetary policy 
E) do nothing and rely on the market system to heal itself

Question 5

According to Keynes, the policy of incurring budget surpluses will cause the equilibrium price level to __________ and equilibrium output to __________.

Accepted Answer

A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall 
E) remain the same; remain the same 
A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall 
E) remain the same; remain the same

Question 6

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 7

Between 1929 and the depth of the Great Depression in 1933, the United States encountered the following:

Accepted Answer

A) the aggregate supply curve shifted inward with no change in the aggregate demand curve 
B) the aggregate demand curve shifted inward with no change in the aggregate supply curve 
C) the aggregate demand curve shifted outward with no change in the aggregate supply curve 
D) the aggregate supply curve shifted outward with no change in the aggregate demand curve 
E) the aggregate supply and demand curves both shifted outward 
A) the aggregate supply curve shifted inward with no change in the aggregate demand curve 
B) the aggregate demand curve shifted inward with no change in the aggregate supply curve 
C) the aggregate demand curve shifted outward with no change in the aggregate supply curve 
D) the aggregate supply curve shifted outward with no change in the aggregate demand curve 
E) the aggregate supply and demand curves both shifted outward

Question 8

Since 1929,

Accepted Answer

A) the U.S. price level has fallen while real GDP rose 
B) U.S. real GDP has grown at about the same rate as nominal GDP 
C) U.S. employment increased while utilization of capital declined 
D) the U.S. price level has doubled, despite eight recessions 
E) real GDP per capita jumped sixfold 
A) the U.S. price level has fallen while real GDP rose 
B) U.S. real GDP has grown at about the same rate as nominal GDP 
C) U.S. employment increased while utilization of capital declined 
D) the U.S. price level has doubled, despite eight recessions 
E) real GDP per capita jumped sixfold

Question 9

Economic fluctuations

Accepted Answer

A) are linked, but not perfectly synchronized, across countries 
B) are perfectly synchronized across countries 
C) in one country are independent of fluctuations in other countries 
D) in the United States always lag behind fluctuations in other developed economies 
E) in the United States usually occur before fluctuations in other developed economies 
A) are linked, but not perfectly synchronized, across countries 
B) are perfectly synchronized across countries 
C) in one country are independent of fluctuations in other countries 
D) in the United States always lag behind fluctuations in other developed economies 
E) in the United States usually occur before fluctuations in other developed economies

Question 10

The Keynesian approach to fiscal policy calls for

Accepted Answer

A) budget deficits during periods of inflationary pressure 
B) budget surpluses during periods of high unemployment 
C) a balanced budget despite the state of the economy 
D) tax cuts during recession 
E) spending increases during inflation 
A) budget deficits during periods of inflationary pressure 
B) budget surpluses during periods of high unemployment 
C) a balanced budget despite the state of the economy 
D) tax cuts during recession 
E) spending increases during inflation

Question 11

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 12

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 13

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 14

Which of the following is a reason why the aggregate demand curve slopes downward?

Accepted Answer

A) At a higher price level, fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S. price level rises, foreigners will buy more U.S. goods, leaving fewer U.S. goods for domestic consumers. 
E) As the price level rises, business leaders become pessimistic about the future and reduce production. 
A) At a higher price level, fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S. price level rises, foreigners will buy more U.S. goods, leaving fewer U.S. goods for domestic consumers. 
E) As the price level rises, business leaders become pessimistic about the future and reduce production.

Question 15

Which of the following is true about U.S. business cycle activity since 1933?

Accepted Answer

A) There has been only one business cycle in the last 30 years. 
B) There have been only two or three complete cycles. 
C) There have been no recessions since 1979. 
D) Expansions have generally lasted longer than contractions. 
E) Each cycle has lasted longer than the previous one. 
A) There has been only one business cycle in the last 30 years. 
B) There have been only two or three complete cycles. 
C) There have been no recessions since 1979. 
D) Expansions have generally lasted longer than contractions. 
E) Each cycle has lasted longer than the previous one.

Question 16

Exhibit 5-1
    
-In Exhibit 5-1, what happens to the equilibrium price level in period 1 as the aggregate demand curve shifts from AD to AD'

Accepted Answer

A) nothing 
B) falls from 4 to 3 
C) falls from 4 to 1 
D) rises from 1 to 4 
E) falls from 4 to 2 
A) nothing 
B) falls from 4 to 3 
C) falls from 4 to 1 
D) rises from 1 to 4 
E) falls from 4 to 2

Question 17

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 18

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 19

Adam Smith's "invisible hand" explains

Accepted Answer

A) why people act in their own best interests 
B) why the government intervenes to overcome failures in private markets. 
C) how people, acting out of self-interest, unintentionally promote the general good 
D) how comparative advantage and specialization promote international trade 
E) how the creation of goods and services (supply) generates its own demand by creating employment and income 
A) why people act in their own best interests 
B) why the government intervenes to overcome failures in private markets. 
C) how people, acting out of self-interest, unintentionally promote the general good 
D) how comparative advantage and specialization promote international trade 
E) how the creation of goods and services (supply) generates its own demand by creating employment and income

Question 20

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

Exam 6: Introduction to Macroeconomics

Certain economic activities signal forthcoming changes in the economy. These are known as the

Exhibit 5-2 -Refer to Exhibit 5-2. Which line or point represents equilibrium?

Capital is a stock variable.

According to Keynes, in order to get the economy out of a recession, the government should

According to Keynes, the policy of incurring budget surpluses will cause the equilibrium price level to __________ and equilibrium output to __________.

An increase in aggregate supply will result in

Between 1929 and the depth of the Great Depression in 1933, the United States encountered the following:

Since 1929,

Economic fluctuations

The Keynesian approach to fiscal policy calls for

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

The aggregate demand curve is best defined as depicting the

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

Which of the following is a reason why the aggregate demand curve slopes downward?

Which of the following is true about U.S. business cycle activity since 1933?

Exhibit 5-1 -In Exhibit 5-1, what happens to the equilibrium price level in period 1 as the aggregate demand curve shifts from AD to AD'

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

An increase in the price level

Adam Smith's "invisible hand" explains

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

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

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

Economic Development

Filters

According to Keynes, the policy of incurring budget surpluses will cause the equilibrium price level to and equilibrium output to .