Question 1

Real GDP

Accepted Answer

A) is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B) measures economic activity and income. 
C) is used primarily to measure long-run changes rather than short-run fluctuations. 
D) All of the above are correct. 
A) is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B) measures economic activity and income. 
C) is used primarily to measure long-run changes rather than short-run fluctuations. 
D) All of the above are correct. B

Question 2

Investment is a

Accepted Answer

A) small part of real GDP,so it accounts for a small share of the fluctuation in real GDP. 
B) small part of real GDP,yet it accounts for a large share of the fluctuation in real GDP. 
C) large part of real GDP,so it accounts for a large share of the fluctuation in real GDP. 
D) large part of real GDP,yet it accounts for a small share of the fluctuation in real GDP. 
A) small part of real GDP,so it accounts for a small share of the fluctuation in real GDP. 
B) small part of real GDP,yet it accounts for a large share of the fluctuation in real GDP. 
C) large part of real GDP,so it accounts for a large share of the fluctuation in real GDP. 
D) large part of real GDP,yet it accounts for a small share of the fluctuation in real GDP. B

Question 3

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A) the inflation rate. 
B) real GDP. 
C) interest rates. 
D) value of the U.S.dollar in the foreign exchange market. 
A) the inflation rate. 
B) real GDP. 
C) interest rates. 
D) value of the U.S.dollar in the foreign exchange market. B

Question 4

The best example of recessions being close to each other in the United States can be found in the ​

Accepted Answer

A) ​1980s. 
B) ​1970s. 
C) ​1990s. 
D) ​2000s. 
A) ​1980s. 
B) ​1970s. 
C) ​1990s. 
D) ​2000s.

Question 5

During recessions declines in investment account for about

Accepted Answer

A) 1/6 of the decline in real GDP. 
B) 1/7 of the decline in real GDP. 
C) 1/3 of the decline in real GDP. 
D) 2/3 of the decline in real GDP. 
A) 1/6 of the decline in real GDP. 
B) 1/7 of the decline in real GDP. 
C) 1/3 of the decline in real GDP. 
D) 2/3 of the decline in real GDP.

Question 6

Which of the following typically rises during a recession?

Accepted Answer

A) investment. 
B) unemployment. 
C) tax revenues. 
D) new home construction. 
A) investment. 
B) unemployment. 
C) tax revenues. 
D) new home construction.

Question 7

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A) 5 percent,1 percent 
B) 3 percent,5 percent 
C) -1 percent,3 percent 
D) -2 percent,4 percent 
A) 5 percent,1 percent 
B) 3 percent,5 percent 
C) -1 percent,3 percent 
D) -2 percent,4 percent

Question 8

During the last half of 2012,the U.S.unemployment rate was just under 8 percent.Historical experience suggests that this is

Accepted Answer

A) above the natural rate,so real GDP growth was likely low. 
B) above the natural rate,so real GDP growth was likely high. 
C) below the natural rate,so real GDP growth was likely low. 
D) below the natural rate,so real GDP growth was likely high. 
A) above the natural rate,so real GDP growth was likely low. 
B) above the natural rate,so real GDP growth was likely high. 
C) below the natural rate,so real GDP growth was likely low. 
D) below the natural rate,so real GDP growth was likely high.

Question 9

Historical evidence for the U.S.economy indicates that

Accepted Answer

A) recessions have occurred roughly once every six years since the 1960s. 
B) the unemployment rate usually decreases during a recession and increases shortly after the recession ends. 
C) real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends. 
D) changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle. 
A) recessions have occurred roughly once every six years since the 1960s. 
B) the unemployment rate usually decreases during a recession and increases shortly after the recession ends. 
C) real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends. 
D) changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle.

Question 10

Historically,as recessions have ended the unemployment rate declined

Accepted Answer

A) gradually to near zero. 
B) rapidly to near zero. 
C) gradually to a rate of about 5%-6%. 
D) rapidly to a rate of about 5%-6%. 
A) gradually to near zero. 
B) rapidly to near zero. 
C) gradually to a rate of about 5%-6%. 
D) rapidly to a rate of about 5%-6%.

Question 11

In 2008,the United States was in recession.Which of the following things would you not expect to have happened?

Accepted Answer

A) increased layoffs and firings. 
B) a higher rate of bankruptcy. 
C) increased claims for unemployment insurance. 
D) increased real GDP. 
A) increased layoffs and firings. 
B) a higher rate of bankruptcy. 
C) increased claims for unemployment insurance. 
D) increased real GDP.

Question 12

During recessions which type of spending falls?

Accepted Answer

A) consumption and investment 
B) investment but not consumption 
C) consumption but not investment 
D) neither consumption nor investment 
A) consumption and investment 
B) investment but not consumption 
C) consumption but not investment 
D) neither consumption nor investment

Question 13

Historically,the change in real GDP during recessions has been

Accepted Answer

A) mostly a change in investment spending. 
B) mostly a change in consumption spending. 
C) about equally divided between consumption and investment spending. 
D) sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A) mostly a change in investment spending. 
B) mostly a change in consumption spending. 
C) about equally divided between consumption and investment spending. 
D) sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 14

Recession come at

Accepted Answer

A) regular intervals.During recessions consumption spending falls relatively more than investment spending. 
B) regular intervals.During recessions investment spending falls relatively more than consumption spending. 
C) irregular intervals.During recessions consumption spending falls relatively more than investment spending. 
D) irregular intervals.During recessions investment spending falls relatively more than consumption spending. 
A) regular intervals.During recessions consumption spending falls relatively more than investment spending. 
B) regular intervals.During recessions investment spending falls relatively more than consumption spending. 
C) irregular intervals.During recessions consumption spending falls relatively more than investment spending. 
D) irregular intervals.During recessions investment spending falls relatively more than consumption spending.

Question 15

During recessions

Accepted Answer

A) sales and profits fall. 
B) sales and profits rise. 
C) sales rise,profits fall. 
D) profits fall,sales rise. 
A) sales and profits fall. 
B) sales and profits rise. 
C) sales rise,profits fall. 
D) profits fall,sales rise.

Question 16

Which of the following is correct?

Accepted Answer

A) Real GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with a much accuracy. 
B) Real GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy. 
C) Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with some accuracy. 
D) Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy. 
A) Real GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with a much accuracy. 
B) Real GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy. 
C) Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with some accuracy. 
D) Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy.

Question 17

In the last half of 1999,the U.S.unemployment rate was about 4 percent.Historical experience suggests that this is

Accepted Answer

A) above the natural rate,so real GDP growth was likely low. 
B) above the natural rate,so real GDP growth was likely high. 
C) below the natural rate,so real GDP growth was likely low. 
D) below the natural rate,so real GDP growth was likely high. 
A) above the natural rate,so real GDP growth was likely low. 
B) above the natural rate,so real GDP growth was likely high. 
C) below the natural rate,so real GDP growth was likely low. 
D) below the natural rate,so real GDP growth was likely high.

Question 18

The investment component of GDP measures spending on

Accepted Answer

A) financial assets such as stocks and bonds.During recessions it declines by a relatively large amount. 
B) residential construction,business equipment,business structures,and changes in inventory.During recessions it declines by a relatively large amount. 
C) financial assets such as stocks and bonds.During recessions it declines by a relatively small amount. 
D) residential construction,business equipment,business structures,and changes in inventory.During recessions it declines by a relatively small amount. 
A) financial assets such as stocks and bonds.During recessions it declines by a relatively large amount. 
B) residential construction,business equipment,business structures,and changes in inventory.During recessions it declines by a relatively large amount. 
C) financial assets such as stocks and bonds.During recessions it declines by a relatively small amount. 
D) residential construction,business equipment,business structures,and changes in inventory.During recessions it declines by a relatively small amount.

Question 19

Which of the following fall during a recession?

Accepted Answer

A) both retail sales and employment 
B) retail sales but not employment 
C) employment but not retail sales 
D) neither employment nor retail sales 
A) both retail sales and employment 
B) retail sales but not employment 
C) employment but not retail sales 
D) neither employment nor retail sales

Question 20

Which of the following rises during recessions?

Accepted Answer

A) layoffs and consumer spending 
B) layoffs but not consumer spending 
C) consumer spending but not layoffs 
D) neither layoffs nor consumer spending 
A) layoffs and consumer spending 
B) layoffs but not consumer spending 
C) consumer spending but not layoffs 
D) neither layoffs nor consumer spending

Exam 20: Aggregate Demand and Aggregate Supply: Three Key Facts About Economic Fluctuations

Real GDP

Investment is a

Which of the following is most commonly used to monitor short-run changes in economic activity?

The best example of recessions being close to each other in the United States can be found in the ​

During recessions declines in investment account for about

Which of the following typically rises during a recession?

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

During the last half of 2012,the U.S.unemployment rate was just under 8 percent.Historical experience suggests that this is

Historical evidence for the U.S.economy indicates that

Historically,as recessions have ended the unemployment rate declined

In 2008,the United States was in recession.Which of the following things would you not expect to have happened?

During recessions which type of spending falls?

Historically,the change in real GDP during recessions has been

Recession come at

During recessions

Which of the following is correct?

In the last half of 1999,the U.S.unemployment rate was about 4 percent.Historical experience suggests that this is

The investment component of GDP measures spending on

Which of the following fall during a recession?

Which of the following rises during recessions?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

The best example of recessions being close to each other in the United States can be found in the