Question 1

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 2

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 3

Economic fluctuations

Accepted Answer

A) in one nation are usually independent of economic fluctuations in its major trading partner nations 
B) in one nation are usually independent of economic fluctuations in bordering nations 
C) in one developed nation are often linked to economic fluctuations in other developed economies 
D) are linked internationally so that a recession in one nation means an expansion in the economy of its major trading partner 
E) are linked internationally so that an economic expansion in one nation means a recession in the economy of its major trading partner 
A) in one nation are usually independent of economic fluctuations in its major trading partner nations 
B) in one nation are usually independent of economic fluctuations in bordering nations 
C) in one developed nation are often linked to economic fluctuations in other developed economies 
D) are linked internationally so that a recession in one nation means an expansion in the economy of its major trading partner 
E) are linked internationally so that an economic expansion in one nation means a recession in the economy of its major trading partner

Question 4

Long-term growth in production can be partially explained by

Accepted Answer

A) improvements in the "rules of the game" that facilitate production and exchange 
B) the peaks and troughs of the business cycle (or economic fluctuations) 
C) trade surpluses that lead to accumulations of precious metals 
D) federal government budget deficits 
E) a gradual but consistent increase in the price level 
A) improvements in the "rules of the game" that facilitate production and exchange 
B) the peaks and troughs of the business cycle (or economic fluctuations) 
C) trade surpluses that lead to accumulations of precious metals 
D) federal government budget deficits 
E) a gradual but consistent increase in the price level

Question 5

Stagflation refers to

Accepted Answer

A) a simultaneous reduction in output and the price level 
B) a simultaneous increase in output and the price level 
C) a decline in the price level accompanied by increases in real output and employment 
D) an increase in the price level accompanied by decreases in real output and employment 
E) a simultaneous increase in both the trade deficit and the budget deficit 
A) a simultaneous reduction in output and the price level 
B) a simultaneous increase in output and the price level 
C) a decline in the price level accompanied by increases in real output and employment 
D) an increase in the price level accompanied by decreases in real output and employment 
E) a simultaneous increase in both the trade deficit and the budget deficit

Question 6

Which decade is known as the "Golden Age of Keynesian Economics"?

Accepted Answer

A) the 1930s 
B) the 1950s 
C) the 1960s 
D) the 1970s 
E) the 1980s 
A) the 1930s 
B) the 1950s 
C) the 1960s 
D) the 1970s 
E) the 1980s

Question 7

An increase in the price level will cause

Accepted Answer

A) an increase in the quantity of aggregate output supplied 
B) a decrease in the quantity of aggregate output supplied 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate supply curve 
E) a leftward or rightward shift of the aggregate supply curve, depending on the reason for the price change 
A) an increase in the quantity of aggregate output supplied 
B) a decrease in the quantity of aggregate output supplied 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate supply curve 
E) a leftward or rightward shift of the aggregate supply curve, depending on the reason for the price change

Question 8

Exhibit 5-1
    
-In Exhibit 5-1, which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Accepted Answer

A) an increase in household wealth 
B) a fall in domestic interest rates 
C) an increase in government spending 
D) an appreciation of the dollar relative to other currencies 
E) a decrease in the nation's money supply 
A) an increase in household wealth 
B) a fall in domestic interest rates 
C) an increase in government spending 
D) an appreciation of the dollar relative to other currencies 
E) a decrease in the nation's money supply

Question 9

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 10

According to Keynes, the policy of incurring budget deficits 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 11

Which of the following is not the proper subject matter for macroeconomics?

Accepted Answer

A) unemployment levels 
B) inflation rates 
C) levels of national output 
D) the price of corn 
E) the role of government 
A) unemployment levels 
B) inflation rates 
C) levels of national output 
D) the price of corn 
E) the role of government

Question 12

A rise in the price level

Accepted Answer

A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based 
A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based

Question 13

Who wrote The General Theory of Employment, Interest, and Money?

Accepted Answer

A) Adam Smith 
B) Jean Baptiste Say 
C) François Quesnay 
D) John Maynard Keynes 
E) Alfred Marshall 
A) Adam Smith 
B) Jean Baptiste Say 
C) François Quesnay 
D) John Maynard Keynes 
E) Alfred Marshall

Question 14

On an aggregate demand and aggregate supply graph, the Great Depression can be pictured as

Accepted Answer

A) a leftward shift of the aggregate supply curve 
B) a rightward shift of the aggregate supply curve 
C) a leftward shift of the aggregate demand curve 
D) an increase in the price level caused by a movement along the aggregate demand curve 
E) a decrease in the price level caused by a movement along the aggregate supply curve 
A) a leftward shift of the aggregate supply curve 
B) a rightward shift of the aggregate supply curve 
C) a leftward shift of the aggregate demand curve 
D) an increase in the price level caused by a movement along the aggregate demand curve 
E) a decrease in the price level caused by a movement along the aggregate supply curve

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

The Keynesian approach to government economic policy

Accepted Answer

A) has emphasized the role of individual self-interest as a powerful stabilizing force 
B) has consistently failed to reduce fluctuations in economic activity 
C) was ineffective during the 1960s 
D) highlighted the role of aggregate demand 
E) was rechristened supply-side economics around 1980 
A) has emphasized the role of individual self-interest as a powerful stabilizing force 
B) has consistently failed to reduce fluctuations in economic activity 
C) was ineffective during the 1960s 
D) highlighted the role of aggregate demand 
E) was rechristened supply-side economics around 1980

Question 18

A period of sustained growth of output in the economy is referred to as a(n)

Accepted Answer

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

Question 19

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 20

The Reagan administration's policies were aimed at managing aggregate demand.

Accepted Answer

A) True 
 B)False

Exam 6: Introduction to Macroeconomics

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

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

Economic fluctuations

Long-term growth in production can be partially explained by

Stagflation refers to

Which decade is known as the "Golden Age of Keynesian Economics"?

An increase in the price level will cause

Exhibit 5-1 -In Exhibit 5-1, which of the following might cause a shift in the aggregate demand curve from AD to AD'?

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

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

Which of the following is not the proper subject matter for macroeconomics?

A rise in the price level

Who wrote The General Theory of Employment, Interest, and Money?

On an aggregate demand and aggregate supply graph, the Great Depression can be pictured as

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

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

The Keynesian approach to government economic policy

A period of sustained growth of output in the economy is referred to as a(n)

Economic fluctuations (or business cycles)

The Reagan administration's policies were aimed at managing aggregate demand.

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 deficits will cause the equilibrium price level to and equilibrium output to .