Question 1

If the central bank decreases the money supply,it is conducting

Accepted Answer

A) monetary policy. 
B) supply-side policy. 
C) fiscal policy. 
D) incomes policy. 
A) monetary policy. 
B) supply-side policy. 
C) fiscal policy. 
D) incomes policy.

Question 2

Deflation occurs when

Accepted Answer

A) the average price level declines. 
B) economic activity declines. 
C) the economic growth rate declines. 
D) the unemployment rate declines. 
A) the average price level declines. 
B) economic activity declines. 
C) the economic growth rate declines. 
D) the unemployment rate declines.

Question 3

According to Keynes,the government's role during periods when private demand is low is to stimulate aggregate demand and,by so doing,lift the economy out of recession.

Accepted Answer

A) True 
 B)False

Question 4

A promissory note issued by a corporation when it borrows money is a

Accepted Answer

A) share. 
B) corporate bond. 
C) corporate dividend. 
D) stock. 
A) share. 
B) corporate bond. 
C) corporate dividend. 
D) stock.

Question 5

Since 1970,the annual inflation rate in the U.S.has been about 9.7 percent or more.

Accepted Answer

A) True 
 B)False

Question 6

According to Keynes,the level of employment is determined by

Accepted Answer

A) flexible wages and prices. 
B) interest rates. 
C) price and wages. 
D) the level of aggregate demand for goods and services. 
A) flexible wages and prices. 
B) interest rates. 
C) price and wages. 
D) the level of aggregate demand for goods and services.

Question 7

Aggregate behavior is

Accepted Answer

A) the behavior of each household and firm. 
B) the behavior of each individual. 
C) the behavior of all households and firms together. 
D) none of the above. 
A) the behavior of each household and firm. 
B) the behavior of each individual. 
C) the behavior of all households and firms together. 
D) none of the above.

Question 8

Rapid increases in the price level during periods of recession or high unemployment are known as

Accepted Answer

A) stagflation. 
B) stagnation. 
C) depression. 
D) inflation. 
A) stagflation. 
B) stagnation. 
C) depression. 
D) inflation.

Question 9

Wayne purchased 10 autographed Eli Manning football cards when he was 15 years old for a total cost of $50 and then sold those football cards 4 years later for $800.Due to these transactions

Accepted Answer

A) Wayne earned a capital gain of $800. 
B) Wayne earned a capital gain of $750. 
C) Wayne earned a dividend of $800. 
D) Wayne earned a dividend of $750. 
A) Wayne earned a capital gain of $800. 
B) Wayne earned a capital gain of $750. 
C) Wayne earned a dividend of $800. 
D) Wayne earned a dividend of $750.

Question 10

The major lesson of the circular flow diagram is that

Accepted Answer

A) saving must always be less than investment. 
B) taxes must always be greater than government expenditures. 
C) total income in the economy must always equal total spending. 
D) tax receipts must be equal to transfer payments. 
A) saving must always be less than investment. 
B) taxes must always be greater than government expenditures. 
C) total income in the economy must always equal total spending. 
D) tax receipts must be equal to transfer payments.

Question 11

The ________ can change the quantity of money in the economy.

Accepted Answer

A) Treasury Department 
B) Federal Reserve 
C) Congress 
D) Office of the Comptroller of the Currency 
A) Treasury Department 
B) Federal Reserve 
C) Congress 
D) Office of the Comptroller of the Currency

Question 12

Monetary policy includes changing the level of household taxes.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an assumption used by Classical economists?

Accepted Answer

A) Wages adjust downward but not upward. 
B) Wages adjust upward but not downward. 
C) Wages are inflexible. 
D) Wages adjust both upward and downward. 
A) Wages adjust downward but not upward. 
B) Wages adjust upward but not downward. 
C) Wages are inflexible. 
D) Wages adjust both upward and downward.

Question 14

Policies designed to affect the quantity of money are

Accepted Answer

A) fiscal policies. 
B) supply side or growth policies. 
C) government spending policies. 
D) monetary policies. 
A) fiscal policies. 
B) supply side or growth policies. 
C) government spending policies. 
D) monetary policies.

Question 15

The government wants to encourage consumer spending through cutting income taxes.This is an example of

Accepted Answer

A) an incomes policy. 
B) a fiscal policy. 
C) a supply-side policy. 
D) a monetary policy. 
A) an incomes policy. 
B) a fiscal policy. 
C) a supply-side policy. 
D) a monetary policy.

Question 16

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are

Accepted Answer

A) administered prices. 
B) sticky prices. 
C) regulatory prices. 
D) market prices. 
A) administered prices. 
B) sticky prices. 
C) regulatory prices. 
D) market prices.

Question 17

Which of the following would be an example of fine tuning?

Accepted Answer

A) Firms increase wages to attract high-quality workers. 
B) Firms increase employment benefits to increase workers' productivity. 
C) The federal government enacts legislation to increase spending to try to stimulate the economy. 
D) The federal government passes legislation that would require that the government's budget always be balanced. 
A) Firms increase wages to attract high-quality workers. 
B) Firms increase employment benefits to increase workers' productivity. 
C) The federal government enacts legislation to increase spending to try to stimulate the economy. 
D) The federal government passes legislation that would require that the government's budget always be balanced.

Question 18

According to the Classical model,unemployment

Accepted Answer

A) could not persist because wages would rise to eliminate the excess supply of labor. 
B) could not persist because wages would fall to eliminate the excess supply of labor. 
C) could be eliminated through fiscal and monetary policies. 
D) could be eliminated only through government intervention. 
A) could not persist because wages would rise to eliminate the excess supply of labor. 
B) could not persist because wages would fall to eliminate the excess supply of labor. 
C) could be eliminated through fiscal and monetary policies. 
D) could be eliminated only through government intervention.

Question 19

Which of the following is NOT a topic studied in Macroeconomics?

Accepted Answer

A) gross domestic product 
B) the unemployment rate 
C) the price of Dell computers 
D) the inflation rate 
A) gross domestic product 
B) the unemployment rate 
C) the price of Dell computers 
D) the inflation rate

Question 20

John Maynard Keynes sought to solve the economic paradox of the Great Depression,which was the coexistence of

Accepted Answer

A) low production and low unemployment. 
B) high production and low inflation. 
C) high production and high inflation. 
D) low production and high unemployment. 
A) low production and low unemployment. 
B) high production and low inflation. 
C) high production and high inflation. 
D) low production and high unemployment.

Exam 5: Introduction to Macroeconomics

If the central bank decreases the money supply,it is conducting

Deflation occurs when

According to Keynes,the government's role during periods when private demand is low is to stimulate aggregate demand and,by so doing,lift the economy out of recession.

A promissory note issued by a corporation when it borrows money is a

Since 1970,the annual inflation rate in the U.S.has been about 9.7 percent or more.

According to Keynes,the level of employment is determined by

Aggregate behavior is

Rapid increases in the price level during periods of recession or high unemployment are known as

Wayne purchased 10 autographed Eli Manning football cards when he was 15 years old for a total cost of $50 and then sold those football cards 4 years later for $800.Due to these transactions

The major lesson of the circular flow diagram is that

The ________ can change the quantity of money in the economy.

Monetary policy includes changing the level of household taxes.

Which of the following is an assumption used by Classical economists?

Policies designed to affect the quantity of money are

The government wants to encourage consumer spending through cutting income taxes.This is an example of

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are

Which of the following would be an example of fine tuning?

According to the Classical model,unemployment

Which of the following is NOT a topic studied in Macroeconomics?

John Maynard Keynes sought to solve the economic paradox of the Great Depression,which was the coexistence of

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

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