Question 1

The ultimate objective of macroeconomics is to

Accepted Answer

A) reduce the unemployment rate 
B) stabilize the economy's growth rate 
C) develop and test theories about how the overall economy works 
D) improve the international competitiveness of the U.S. financial markets 
E) maximize the efficiency of government intervention in the marketplace 
A) reduce the unemployment rate 
B) stabilize the economy's growth rate 
C) develop and test theories about how the overall economy works 
D) improve the international competitiveness of the U.S. financial markets 
E) maximize the efficiency of government intervention in the marketplace

Question 2

Which is true of John Maynard Keynes?

Accepted Answer

A) He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B) He provided a model that closely resembled that of Adam Smith. 
C) He advocated a decrease in the money supply to stabilize the economy. 
D) He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E) He advocated tax increases to balance the federal government's budget during the Great Depression. 
A) He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B) He provided a model that closely resembled that of Adam Smith. 
C) He advocated a decrease in the money supply to stabilize the economy. 
D) He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E) He advocated tax increases to balance the federal government's budget during the Great Depression.

Question 3

For a given aggregate supply curve, the price level and output both rise when aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 4

In the United States before 1970,

Accepted Answer

A) most macroeconomic instability was caused by simultaneous shifts of aggregate demand and aggregate supply 
B) most macroeconomic instability was caused by shifts of aggregate supply 
C) most macroeconomic instability was caused by shifts of aggregate demand 
D) the government assumed no direct responsibility for the level of employment 
E) the government itself was a much less important player in the macroeconomy than it is today 
A) most macroeconomic instability was caused by simultaneous shifts of aggregate demand and aggregate supply 
B) most macroeconomic instability was caused by shifts of aggregate supply 
C) most macroeconomic instability was caused by shifts of aggregate demand 
D) the government assumed no direct responsibility for the level of employment 
E) the government itself was a much less important player in the macroeconomy than it is today

Question 5

An economic variable that is measured per unit of time, such as spending per year, is known as a(n)

Accepted Answer

A) stock variable 
B) periodic variable 
C) expectations variable 
D) flow variable 
E) constant variable 
A) stock variable 
B) periodic variable 
C) expectations variable 
D) flow variable 
E) constant variable

Question 6

Which of the following is a stock variable?

Accepted Answer

A) Gross Domestic Product 
B) consumption spending 
C) the federal government's spending on Social Security 
D) the money supply 
E) Federal income tax revenue 
A) Gross Domestic Product 
B) consumption spending 
C) the federal government's spending on Social Security 
D) the money supply 
E) Federal income tax revenue

Question 7

Suppose the economy is initially in equilibrium and then an energy shock occurs, such as when OPEC raised oil prices. Which of the following is likely to result?

Accepted Answer

A) Both the price level and aggregate output will rise. 
B) Both aggregate output and the price level will fall. 
C) Employment will rise. 
D) Stagflation. 
E) The price level will fall. 
A) Both the price level and aggregate output will rise. 
B) Both aggregate output and the price level will fall. 
C) Employment will rise. 
D) Stagflation. 
E) The price level will fall.

Question 8

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

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 9

The distinction between recessions and depressions is that recessions are

Accepted Answer

A) longer than depressions 
B) more severe than depressions 
C) accompanied by price increases, depressions by price decreases 
D) shorter and less severe than depressions 
E) accompanied by price decreases, depressions by price increases 
A) longer than depressions 
B) more severe than depressions 
C) accompanied by price increases, depressions by price decreases 
D) shorter and less severe than depressions 
E) accompanied by price decreases, depressions by price increases

Question 10

Which of the following is true of the aggregate supply curve?

Accepted Answer

A) It portrays an inverse relationship between the price level and quantity of aggregate output. 
B) Resource utilization is constant along the curve. 
C) A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D) The curve is upward-sloping. 
E) As average prices in the United States rise relative to average prices in other countries, U.S. producers find export markets more attractive than domestic markets. 
A) It portrays an inverse relationship between the price level and quantity of aggregate output. 
B) Resource utilization is constant along the curve. 
C) A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D) The curve is upward-sloping. 
E) As average prices in the United States rise relative to average prices in other countries, U.S. producers find export markets more attractive than domestic markets.

Question 11

The aggregate supply curve indicates

Accepted Answer

A) the quantity of aggregate output that producers are willing and able to supply at each possible price level 
B) the total quantity of a particular good that all producers are willing to supply at each possible price level 
C) the total quantity of a particular good that all producers are willing to supply at the equilibrium price level 
D) the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level 
E) the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP 
A) the quantity of aggregate output that producers are willing and able to supply at each possible price level 
B) the total quantity of a particular good that all producers are willing to supply at each possible price level 
C) the total quantity of a particular good that all producers are willing to supply at the equilibrium price level 
D) the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level 
E) the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP

Question 12

Which of the following is a stock variable?

Accepted Answer

A) U.S. exports 
B) sales by corporations 
C) borrowing by the federal government 
D) household wealth 
E) net exports 
A) U.S. exports 
B) sales by corporations 
C) borrowing by the federal government 
D) household wealth 
E) net exports

Question 13

Keynes was in favor of a federal budget __________ to cure __________.

Accepted Answer

A) deficit; inflation 
B) surplus; unemployment 
C) deficit; a depression 
D) deficit; a trade deficit 
E) surplus; low aggregate output 
A) deficit; inflation 
B) surplus; unemployment 
C) deficit; a depression 
D) deficit; a trade deficit 
E) surplus; low aggregate output

Question 14

In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?

Accepted Answer

A) after the Great Depression to the early 1970s 
B) since the early 1980s 
C) the colonial period 
D) before and during the Great Depression 
E) from the early 1970s to the early 1980s 
A) after the Great Depression to the early 1970s 
B) since the early 1980s 
C) the colonial period 
D) before and during the Great Depression 
E) from the early 1970s to the early 1980s

Question 15

Exhibit 5-1
    
-In Exhibit 5-1, from the beginning of period 1 to the end of period 2, nominal GDP went from

Accepted Answer

A) $40,000 to $18,000 and back again 
B) $40,000 to $18,000 and stayed there 
C) $40,000 to $18,000 in period 1 and to $10,000 in period 2 
D) $40,000 to $18,000 to $10,000 in period 1 and stayed there in period 2 
E) $40,000 to $18,000 to $10,000 in period 1 and then back to $18,000 in period 2 
A) $40,000 to $18,000 and back again 
B) $40,000 to $18,000 and stayed there 
C) $40,000 to $18,000 in period 1 and to $10,000 in period 2 
D) $40,000 to $18,000 to $10,000 in period 1 and stayed there in period 2 
E) $40,000 to $18,000 to $10,000 in period 1 and then back to $18,000 in period 2

Question 16

Government debt is a flow variable; the budget deficit is a stock variable.

Accepted Answer

A) True 
 B)False

Question 17

Keynes proposed that government should shock the economy out of the Great Depression by

Accepted Answer

A) increasing aggregate supply 
B) increasing aggregate demand 
C) raising prices so that firms could earn higher profits and employ more people 
D) reducing prices so that people could afford to buy more goods and services 
E) subsidizing firms that wanted to buy stocks after the crash 
A) increasing aggregate supply 
B) increasing aggregate demand 
C) raising prices so that firms could earn higher profits and employ more people 
D) reducing prices so that people could afford to buy more goods and services 
E) subsidizing firms that wanted to buy stocks after the crash

Question 18

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

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 19

Gross world product is

Accepted Answer

A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage, trash, and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period 
A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage, trash, and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period

Question 20

Since the Great Depression, business fluctuations have become more severe and longer in duration.

Accepted Answer

A) True 
 B)False

Exam 6: Introduction to Macroeconomics

The ultimate objective of macroeconomics is to

Which is true of John Maynard Keynes?

For a given aggregate supply curve, the price level and output both rise when aggregate demand decreases.

In the United States before 1970,

An economic variable that is measured per unit of time, such as spending per year, is known as a(n)

Which of the following is a stock variable?

Suppose the economy is initially in equilibrium and then an energy shock occurs, such as when OPEC raised oil prices. Which of the following is likely to result?

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

The distinction between recessions and depressions is that recessions are

Which of the following is true of the aggregate supply curve?

The aggregate supply curve indicates

Which of the following is a stock variable?

Keynes was in favor of a federal budget __________ to cure __________.

In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?

Exhibit 5-1 -In Exhibit 5-1, from the beginning of period 1 to the end of period 2, nominal GDP went from

Government debt is a flow variable; the budget deficit is a stock variable.

Keynes proposed that government should shock the economy out of the Great Depression by

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

Gross world product is

Since the Great Depression, business fluctuations have become more severe and longer in duration.

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

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Keynes was in favor of a federal budget to cure .