Question 1

Exhibit 5-2
  
-Refer to Exhibit 5-2. Which line or point represents the price level?

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 2

By a leading economic indicator, economists mean

Accepted Answer

A) an indicator of future economic activity 
B) an indicator that measures current economic activity 
C) a highly accurate indicator that is easily measured 
D) an indicator that is accurate most of the time 
E) any variable that can measure either past or present economic activity 
A) an indicator of future economic activity 
B) an indicator that measures current economic activity 
C) a highly accurate indicator that is easily measured 
D) an indicator that is accurate most of the time 
E) any variable that can measure either past or present economic activity

Question 3

Supply-side economists argue that a cut in personal income tax rates would

Accepted Answer

A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth 
A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth

Question 4

Stagflation refers to

Accepted Answer

A) a combination of rising unemployment and rising trade deficits 
B) a combination of high unemployment and rising prices 
C) high and rapidly increasing inflation 
D) extremely high unemployment 
E) a combination of rising trade deficits and rising federal government budget deficits 
A) a combination of rising unemployment and rising trade deficits 
B) a combination of high unemployment and rising prices 
C) high and rapidly increasing inflation 
D) extremely high unemployment 
E) a combination of rising trade deficits and rising federal government budget deficits

Question 5

The aggregate demand curve slopes downward because

Accepted Answer

A) a decrease in the price level decreases the real value of household wealth 
B) a decrease in the domestic price level increases imports 
C) an increase in the price level leads to a decrease in demand for money, which decreases interest rates 
D) a decrease in the domestic price level increases exports 
E) none of the above 
A) a decrease in the price level decreases the real value of household wealth 
B) a decrease in the domestic price level increases imports 
C) an increase in the price level leads to a decrease in demand for money, which decreases interest rates 
D) a decrease in the domestic price level increases exports 
E) none of the above

Question 6

The Employment Act of 1946

Accepted Answer

A) guaranteed full employment 
B) obliged the federal government to hire as many people as it could to achieve full employment 
C) gave the federal government the power to levy an income tax 
D) imposed a responsibility on the federal government to foster full employment 
E) obligated the federal government to run budget surpluses to achieve full employment 
A) guaranteed full employment 
B) obliged the federal government to hire as many people as it could to achieve full employment 
C) gave the federal government the power to levy an income tax 
D) imposed a responsibility on the federal government to foster full employment 
E) obligated the federal government to run budget surpluses to achieve full employment

Question 7

One explanation for the negative slope of the aggregate demand curve is that

Accepted Answer

A) as prices rise, nominal income falls and so does the demand for real goods and services 
B) falling prices make people feel poorer and reduce spending 
C) as prices rise, government spends less to drive the price level back down 
D) businesses increase spending when inflation is high and rising 
E) as prices rise, domestic goods become more expensive relative to foreign goods, which reduces exports 
A) as prices rise, nominal income falls and so does the demand for real goods and services 
B) falling prices make people feel poorer and reduce spending 
C) as prices rise, government spends less to drive the price level back down 
D) businesses increase spending when inflation is high and rising 
E) as prices rise, domestic goods become more expensive relative to foreign goods, which reduces exports

Question 8

Which of the following statements regarding Gross Domestic Product is not true?

Accepted Answer

A) It is a stock variable. 
B) It is measured for a particular time period, usually one year. 
C) It is perhaps the most effective means of viewing the same economy over time. 
D) It is a measure of the economy's performance. 
E) It is a flow variable, not a stock variable. 
A) It is a stock variable. 
B) It is measured for a particular time period, usually one year. 
C) It is perhaps the most effective means of viewing the same economy over time. 
D) It is a measure of the economy's performance. 
E) It is a flow variable, not a stock variable.

Question 9

Exhibit 5-1
    
-In Exhibit 5-1 in period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'.

Accepted Answer

A) an increase in resource prices, improved technology, or an extension of patent protection 
B) a decrease in resource prices, improved technology, or an extension of patent protection 
C) a decrease in resource prices, improved technology, or a shortening of patent protection 
D) an appreciation of the dollar, higher inflation in Europe, a decrease in resource prices 
E) a depreciation of the doller, higher inflation in Asia, improved technology 
A) an increase in resource prices, improved technology, or an extension of patent protection 
B) a decrease in resource prices, improved technology, or an extension of patent protection 
C) a decrease in resource prices, improved technology, or a shortening of patent protection 
D) an appreciation of the dollar, higher inflation in Europe, a decrease in resource prices 
E) a depreciation of the doller, higher inflation in Asia, improved technology

Question 10

Keynes believed that the best method for ending the Great Depression was to

Accepted Answer

A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy 
A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy

Question 11

Which of the following statements about leading economic indicators is true?

Accepted Answer

A) Most people refer to them before making any important spending decision. 
B) They are the only economic indicators available to economists. 
C) They indicate when the economy is in a recession or an expansion. 
D) They foreshadow turning points in the business cycle. 
E) They can predict precisely when turning points in the economy will occur. 
A) Most people refer to them before making any important spending decision. 
B) They are the only economic indicators available to economists. 
C) They indicate when the economy is in a recession or an expansion. 
D) They foreshadow turning points in the business cycle. 
E) They can predict precisely when turning points in the economy will occur.

Question 12

Between the Troubled Asset Relief Program and the American Recovery and Reinvestment Act, the Federal budget deficit

Accepted Answer

A) doubled 
B) tripled 
C) stayed the same 
D) was cut in half 
E) quadrupled 
A) doubled 
B) tripled 
C) stayed the same 
D) was cut in half 
E) quadrupled

Question 13

Since 1929, U.S. real GDP

Accepted Answer

A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased thirteenfold 
E) grew faster than did nominal GDP 
A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased thirteenfold 
E) grew faster than did nominal GDP

Question 14

Which of the following events did not occur in the 1970s?

Accepted Answer

A) the U.S. inflation rate soared above 5 percent annually 
B) crop failures in major grain-producing countries 
C) substantial oil price increases 
D) growing confidence that Keynesian policies could stabilize the economy 
E) stagflation 
A) the U.S. inflation rate soared above 5 percent annually 
B) crop failures in major grain-producing countries 
C) substantial oil price increases 
D) growing confidence that Keynesian policies could stabilize the economy 
E) stagflation

Question 15

Confidence in Keynesian economics

Accepted Answer

A) diminished in the 1960s as the unemployment rate fell 
B) flourished in the 1960s despite two major recessions 
C) diminished in the 1960s as unemployment increased 
D) diminished in the 1970s as inflation occurred simultaneously with two recessions 
E) flourished through the 1980s despite Reagan's supply-side policies 
A) diminished in the 1960s as the unemployment rate fell 
B) flourished in the 1960s despite two major recessions 
C) diminished in the 1960s as unemployment increased 
D) diminished in the 1970s as inflation occurred simultaneously with two recessions 
E) flourished through the 1980s despite Reagan's supply-side policies

Question 16

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

Accepted Answer

A) lower employment 
B) lower unemployment 
C) higher aggregate output 
D) federal budget deficits 
E) federal budget surpluses 
A) lower employment 
B) lower unemployment 
C) higher aggregate output 
D) federal budget deficits 
E) federal budget surpluses

Question 17

Since 1929, total U.S. employment

Accepted Answer

A) remained about the same while population increased 
B) increased faster than the U.S. population 
C) grew faster than real GDP so that real GDP per worker fell 
D) grew more slowly than real GDP so that real GDP per worker fell 
E) more than quadrupled 
A) remained about the same while population increased 
B) increased faster than the U.S. population 
C) grew faster than real GDP so that real GDP per worker fell 
D) grew more slowly than real GDP so that real GDP per worker fell 
E) more than quadrupled

Question 18

If business leaders become optimistic about future sales and profits, they will __________ spending on plant and equipment, which __________ employment and income and, therefore, their expectations are __________.

Accepted Answer

A) increase; increases; fulfilled 
B) increase; increases; not met 
C) increase; decreases; fulfilled 
D) decrease; decreases; fulfilled 
E) decrease; increases; not met 
A) increase; increases; fulfilled 
B) increase; increases; not met 
C) increase; decreases; fulfilled 
D) decrease; decreases; fulfilled 
E) decrease; increases; not met

Question 19

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Accepted Answer

A) True 
 B)False

Question 20

According to Keynes, "animal spirits"

Accepted Answer

A) make investment spending unstable 
B) make consumption spending unstable 
C) make government spending inherently stable 
D) guide the economy back to equilibrium after a disruption 
E) create the federal government budget deficits that have become so common today 
A) make investment spending unstable 
B) make consumption spending unstable 
C) make government spending inherently stable 
D) guide the economy back to equilibrium after a disruption 
E) create the federal government budget deficits that have become so common today

Exam 6: Introduction to Macroeconomics

Exhibit 5-2 -Refer to Exhibit 5-2. Which line or point represents the price level?

By a leading economic indicator, economists mean

Supply-side economists argue that a cut in personal income tax rates would

Stagflation refers to

The aggregate demand curve slopes downward because

The Employment Act of 1946

One explanation for the negative slope of the aggregate demand curve is that

Which of the following statements regarding Gross Domestic Product is not true?

Exhibit 5-1 -In Exhibit 5-1 in period 2, which of the following would cause the aggregate supply curve to shift from AS to AS'.

Keynes believed that the best method for ending the Great Depression was to

Which of the following statements about leading economic indicators is true?

Between the Troubled Asset Relief Program and the American Recovery and Reinvestment Act, the Federal budget deficit

Since 1929, U.S. real GDP

Which of the following events did not occur in the 1970s?

Confidence in Keynesian economics

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

Since 1929, total U.S. employment

If business leaders become optimistic about future sales and profits, they will __________ spending on plant and equipment, which __________ employment and income and, therefore, their expectations are __________.

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

According to Keynes, "animal spirits"

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

If business leaders become optimistic about future sales and profits, they will spending on plant and equipment, which employment and income and, therefore, their expectations are __.