Question 1

Exhibit 5-1
    
-Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

Accepted Answer

A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1 
A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1

Question 2

Given the following aggregate demand and aggregate supply schedules, determine the equilibrium level of prices and output.

Accepted Answer

A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75 
A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75

Question 3

Which of the following is not a flow variable?

Accepted Answer

A) the amount of spending by consumers this holiday season 
B) the number of times a dollar bill is spent in a day 
C) the amount of sales taxes collected in a state per year 
D) the number of shares of stock traded on Wall Street per week 
E) the $100 Susan keeps in her purse, in case an emergency arises 
A) the amount of spending by consumers this holiday season 
B) the number of times a dollar bill is spent in a day 
C) the amount of sales taxes collected in a state per year 
D) the number of shares of stock traded on Wall Street per week 
E) the $100 Susan keeps in her purse, in case an emergency arises

Question 4

One explanation of why the aggregate demand curve is downward sloping is that

Accepted Answer

A) as prices fall, nominal income rises and so does the demand for real goods and services 
B) rising prices reduce people's wealth and thereby reduce spending 
C) with falling prices, government decides to spend less to increase the price level 
D) businesses increase investment spending in response to higher interest rates caused by inflation 
E) as prices fall, domestically produced goods become more expensive relative to foreign-produced products, which increases production 
A) as prices fall, nominal income rises and so does the demand for real goods and services 
B) rising prices reduce people's wealth and thereby reduce spending 
C) with falling prices, government decides to spend less to increase the price level 
D) businesses increase investment spending in response to higher interest rates caused by inflation 
E) as prices fall, domestically produced goods become more expensive relative to foreign-produced products, which increases production

Question 5

Keynesian demand management policies are not effective in fighting stagflation.

Accepted Answer

A) True 
 B)False

Question 6

If the U.S. price level increases, 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 
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

Question 7

To control inflation, President Nixon

Accepted Answer

A) ordered wage and salary reductions for all government employees 
B) increased government spending 
C) dramatically reduced transfer payments such as Social Security 
D) applied price floors to all goods and services 
E) froze wages and prices 
A) ordered wage and salary reductions for all government employees 
B) increased government spending 
C) dramatically reduced transfer payments such as Social Security 
D) applied price floors to all goods and services 
E) froze wages and prices

Question 8

Given the aggregate demand curve, an increase in aggregate supply would raise real GDP and reduce the price level.

Accepted Answer

A) True 
 B)False

Question 9

If spending by the federal government exceeds revenue,

Accepted Answer

A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit 
A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit

Question 10

According to Keynes, if private-sector demand is insufficient to maintain full employment, the government should

Accepted Answer

A) act to make the economy's natural transition to the lower level of employment as easy as possible 
B) shock the economy with an increase in aggregate demand 
C) reduce aggregate supply to reduce inflation 
D) print money to promote consumer spending 
E) act to make the economy's natural transition back to full employment as easy as possible 
A) act to make the economy's natural transition to the lower level of employment as easy as possible 
B) shock the economy with an increase in aggregate demand 
C) reduce aggregate supply to reduce inflation 
D) print money to promote consumer spending 
E) act to make the economy's natural transition back to full employment as easy as possible

Question 11

Which of the following best describes a flow (rather than a stock)?

Accepted Answer

A) you own $5,000 worth of government bonds 
B) you own a $100,000 house 
C) you own a coin collection valued at $10,000 
D) you earn $500 per week 
E) you own a $45,000 automobile 
A) you own $5,000 worth of government bonds 
B) you own a $100,000 house 
C) you own a coin collection valued at $10,000 
D) you earn $500 per week 
E) you own a $45,000 automobile

Question 12

Which of the following best describes the Keynesian approach to economic policy?

Accepted Answer

A) supply-side 
B) classical 
C) demand-side 
D) mercantilist 
E) laissez-faire 
A) supply-side 
B) classical 
C) demand-side 
D) mercantilist 
E) laissez-faire

Question 13

For a fixed aggregate supply curve, decreases in aggregate demand increase real GDP.

Accepted Answer

A) True 
 B)False

Question 14

While economic expansions average about three and one half years in duration, economic contractions average about

Accepted Answer

A) one year in duration 
B) two years in duration 
C) three years in duration 
D) four years in duration 
E) five years in duration 
A) one year in duration 
B) two years in duration 
C) three years in duration 
D) four years in duration 
E) five years in duration

Question 15

A decrease 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 16

The longest U.S. expansion on record lasted ten years, from

Accepted Answer

A) April 1854 to April 1864 
B) March 1991 to March 2001 
C) December 1997 to December 2007 
D) September 1929 to September 1939 
E) February 1961 to February 1971 
A) April 1854 to April 1864 
B) March 1991 to March 2001 
C) December 1997 to December 2007 
D) September 1929 to September 1939 
E) February 1961 to February 1971

Question 17

A recession is a period during which

Accepted Answer

A) employment, production, and income decrease 
B) the price level is increasing 
C) inventories are falling dramatically 
D) the unemployment rate is falling while the price level is rising 
E) the government attempts to reduce a budget deficit by reducing taxes and increasing government spending 
A) employment, production, and income decrease 
B) the price level is increasing 
C) inventories are falling dramatically 
D) the unemployment rate is falling while the price level is rising 
E) the government attempts to reduce a budget deficit by reducing taxes and increasing government spending

Question 18

As the price level rises, individuals feel richer. Therefore, they will spend more.

Accepted Answer

A) True 
 B)False

Question 19

During the Great Depression, President Hoover

Accepted Answer

A) correctly called for an increase in taxes 
B) incorrectly called for an increase in taxes 
C) incorrectly called for a decrease in taxes 
D) correctly called for a decrease in government spending 
E) incorrectly called for an increase in government spending 
A) correctly called for an increase in taxes 
B) incorrectly called for an increase in taxes 
C) incorrectly called for a decrease in taxes 
D) correctly called for a decrease in government spending 
E) incorrectly called for an increase in government spending

Question 20

Which of the following was a central argument of Keynes's General Theory?

Accepted Answer

A) Competition does not allocate resources efficiently in a modern industrial economy. 
B) Full employment can be maintained even during a major recession if wage rates are lowered far enough. 
C) Modern industrial economies do not tend automatically toward full employment rates of output. 
D) Money does not play an important role in either causing or curing recession. 
E) Government can best stabilize the economy by letting the market system automatically adjust toward full employment. 
A) Competition does not allocate resources efficiently in a modern industrial economy. 
B) Full employment can be maintained even during a major recession if wage rates are lowered far enough. 
C) Modern industrial economies do not tend automatically toward full employment rates of output. 
D) Money does not play an important role in either causing or curing recession. 
E) Government can best stabilize the economy by letting the market system automatically adjust toward full employment.

Exam 6: Introduction to Macroeconomics

Exhibit 5-1 -Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

Given the following aggregate demand and aggregate supply schedules, determine the equilibrium level of prices and output.

Which of the following is not a flow variable?

One explanation of why the aggregate demand curve is downward sloping is that

Keynesian demand management policies are not effective in fighting stagflation.

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

To control inflation, President Nixon

Given the aggregate demand curve, an increase in aggregate supply would raise real GDP and reduce the price level.

If spending by the federal government exceeds revenue,

According to Keynes, if private-sector demand is insufficient to maintain full employment, the government should

Which of the following best describes a flow (rather than a stock)?

Which of the following best describes the Keynesian approach to economic policy?

For a fixed aggregate supply curve, decreases in aggregate demand increase real GDP.

While economic expansions average about three and one half years in duration, economic contractions average about

A decrease in the price level will cause

The longest U.S. expansion on record lasted ten years, from

A recession is a period during which

As the price level rises, individuals feel richer. Therefore, they will spend more.

During the Great Depression, President Hoover

Which of the following was a central argument of Keynes's General Theory?

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