Deck 20: Introduction to Macroeconomics

Question 1

The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a

A) price floor.
B) price control.
C) sticky price.
D) macroeconomic price.

Answer 1

sticky price.

Question 2

An increase in the overall price level is known as

A) deflation.
B) recession.
C) inflation.
D) stagflation.

Answer 2

inflation.

Question 3

It has become conventional to classify an economic downturn as a recession when aggregate output declines for

A) three consecutive quarters.
B) two consecutive quarters.
C) a year.
D) six consecutive quarters.

Answer 3

two consecutive quarters.

Question 4

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

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

Question 5

If the labor force is 500 and employment is 450, then the unemployment rate is

A) 100%.
B) 90%.
C) 10%.
D) 0%.

Question 6

In a business cycle, a peak represents the end of

A) an expansion.
B) a depression.
C) a trough.
D) a recession.

Question 7

Which of the following is a topic studied in Macroeconomics?

A) the functioning of individual industries
B) aggregate behavior of households and industries
C) the behavior of individual households
D) the decision-making behavior of individual business firms

Question 8

Which of the following is a topic studied in Macroeconomics?

A) gross domestic product
B) the wage of auto workers
C) the price of Dell computers
D) the amount of pizza produced

Question 9

A period of very rapid increase in the overall price level is known as

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

Question 10

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

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

Question 11

Aggregate behavior is

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 12

The term business cycle refers to the

A) short-term ups and downs in the price level.
B) long-term trends in the price level.
C) short-term ups and downs in the level of economic activity.
D) long-term trends in the level of economic activity.

Question 13

The trend of the economy is

A) the long run growth path of the economy.
B) the long run inflation rate.
C) the long run unemployment rate.
D) the short run production capacity of an economy.

Question 14

In a business cycle, a trough represents the end of

A) an expansion.
B) an inflation.
C) a peak
D) a recession.

Question 15

In a business cycle, a peak represents the end of ________ and a trough represents the end of ________.

A) an expansion; a recession
B) a depression; an expansion
C) a trough; a peak
D) a recession; an expansion

Question 16

The demand for massage therapists declined in the spring of 2016, but the starting wages paid to massage therapists was still the same at the end of 2016. This is an example of a

A) sticky price.
B) flexible price.
C) highly regulated market.
D) price control.

Question 17

Deflation occurs when

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

Question 18

Inflation is a(n)

A) decrease in the overall price level.
B) decrease in the overall level of economic activity.
C) increase in the overall price level.
D) increase in the overall level of economic activity.

Question 19

A period when the economy shrinks is known as

A) a recession.
B) a contraction.
C) a slump.
D) all of the above.

Question 20

A period during which aggregate output rises is known as a(n)

A) recession.
B) inflation.
C) hyperinflation.
D) expansion.

Question 21

If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is

A) 10%.
B) 11.1%.
C) 18%.
D) 80%.

Question 22

The demand for steel has decreased in July without any change in supply. Six months later there still has been no change in steel prices. This is an example of a

A) price floor.
B) price control.
C) macroeconomic price.
D) sticky price.

Question 23

The unemployment rate equals

A) labor force/population.
B) unemployed/employed.
C) (employed - unemployed)/labor force.
D) (labor force - employed)/labor force.

Question 24

The mechanism that normally coordinates what goes on in an economy is the

A) stock market.
B) price system.
C) government.
D) Federal Reserve.

Question 25

Microeconomics is best described as the study of

A) the relationship between inflation and wage inequality.
B) very large issues.
C) the choices made by individual households, firms, and governments.
D) the nation's economy as a whole.

Question 26

If output is rising and unemployment is falling, the economy must be in a(n)

A) contraction.
B) expansion.
C) depression.
D) hyperinflationary period.

Question 27

The demand for auto mechanics increased in the summer of 2016, but the starting wages paid to auto mechanics was still the same at the end of 2016. This is an example of a

A) price control.
B) flexible price.
C) sticky price.
D) highly regulated market.

Question 28

Between a peak and a trough, the economy goes through a(n)

A) expansion.
B) inflation.
C) recession.
D) boom.

Question 29

Between a trough and a peak, the economy goes through a(n)

A) recession.
B) bust.
C) expansion.
D) hyperinflation.

Question 30

If the labor force is 50 million and 48 million are employed then the unemployment rate is

A) 2%.
B) 4%.
C) 5%.
D) 52%.

Question 31

A prolonged and deep recession is called

A) a business cycle.
B) a depression.
C) a stagflation.
D) hyperinflation.

Question 32

Unemployment means that

A) at the going wage rate, there are people who want to work but cannot find work.
B) people are not willing to work at the going wage rate.
C) there are some people who will not work at the going wage rate.
D) there is excess demand in the labor market.

Question 33

We can use macroeconomic analysis to

A) study the choices made by households.
B) understand marginal changes in the macroeconomy.
C) understand why economies grow.
D) learn how to balance a checkbook.

Question 34

Which of the following statements is false?

A) The rate of change in economic activity is used to assess whether an economy is expanding or contracting.
B) Short-term ups and downs in the economy are known as business cycles.
C) During a recession, output and employment are falling.
D) Business cycles are always symmetric-the length of an expansion is the same as the length of a contraction.

Question 35

The unemployment rate equals

A) labor force/population.
B) unemployed/employed.
C) (employed - unemployed)/labor force.
D) unemployed/labor force.

Question 36

Macroeconomics

A) studies the behavior of individual consumers, firms and markets.
B) involves the interaction between different countries in specific markets.
C) studies the behavior of the economy as a whole.
D) deals with both individual decisions and the sum of those individual decisions.

Question 37

Unemployment implies that in the labor market

A) there is an excess supply of labor.
B) there is an excess demand for labor.
C) there are too few workers for the jobs available.
D) quantity demanded of labor exceeds quantity supplied.

Question 38

The period in the business cycle from a peak to a trough is a

A) recession.
B) slump.
C) contraction.
D) All of the above are correct.

Question 39

In the United States between 1933 and 1937, aggregate output

A) increased since the economy was finally out of the Great Depression.
B) increased even though this was during the Great Depression.
C) decreased even though the economy was finally out of the Great Depression.
D) decreased as this was during the Great Depression.

Question 40

Unemployment generally ________ during recessions and ________ during expansions.

A) falls; rises
B) falls; falls
C) rises; falls
D) rises; rises

Question 41

In a business cycle, a peak occurs before the beginning of a(n) ________ and a trough occurs before the beginning of a(n) ________.

A) expansion; recession
B) depression; expansion
C) trough; peak
D) recession; expansion

Question 42

In a business cycle, the end of a recession is represented by

A) a peak.
B) a trough.
C) a depression.
D) an inflation.

Question 43

The employment rate equals

A) labor force/population.
B) (labor force - unemployed)/labor force.
C) (employed - unemployed)/labor force.
D) unemployed/employed.

Question 44

Unemployment implies that in the labor market there is

A) an excess supply of available jobs.
B) a shortage in the demand for labor.
C) a shortage in the supply of labor.
D) an excess demand for labor.

Question 45

A period during which aggregate output falls is known as a(n)

A) recession.
B) inflation.
C) hyperinflation.
D) expansion.

Question 46

If the labor force is 400 and employment is 380, then the unemployment rate is

A) 90%.
B) 38%.
C) 20%.
D) 5%.

Question 47

A depression is a

A) recession combined with hyperinflation.
B) period of decreasing unemployment and decreasing price levels.
C) period of economic growth which is offset by stagflation.
D) prolonged and deep recession.

Question 48

It has become conventional to classify an economic downturn as a ________ when aggregate ________ declines for two consecutive quarters.

A) depression; supply
B) deflation; spending
C) recession; output
D) trough; demand

Question 49

The short-term ups and downs in the level of economic activity is known as a(n)

A) recovery model.
B) business cycle.
C) unemployment trend.
D) circular flow model.

Question 50

A decrease in the overall price level is known as

A) recession.
B) inflation.
C) economic growth.
D) deflation.

Question 51

Inflation refers to a(n) ________ in the overall ________.

A) increase; price level
B) increase; unemployment rate
C) decrease; price level
D) decrease; unemployment rate

Question 52

The behavior of all households and firms together is known as

A) synchronized behavior.
B) synergy behavior.
C) aggregate behavior.
D) conglomerate behavior.

Question 53

In a business cycle, the end of an expansion is represented by

A) a peak.
B) a trough.
C) a depression.
D) an inflation.

Question 54

Compared to the period after World War II, business cycles in the United States before World War II were

A) less severe.
B) of equal severity.
C) more severe.
D) nonexistent.

Question 55

Hyperinflation refers to a(n)

A) increase in both price level and output.
B) very rapid increase in the overall price level.
C) very rapid decrease in the overall price level.
D) decrease in unemployment which is accompanied by a rapid increase in wages.

Question 56

Slump, downturn and contraction are all words for a(n)

A) hyperinflation.
B) stagflation.
C) expansion.
D) recession.

Question 57

Since most economies, on average, ________ over time, business cycles show a ________ trend.

A) sow down; negative
B) suffer recessions; negative
C) grow; positive
D) remain stable; zero

Question 58

Economists define the unemployed as individuals who are

A) working less than their desired amount of time.
B) not currently working.
C) working but looking for a different job.
D) not currently working but are actively looking for work.

Question 59

The employment rate equals

A) employed/labor force.
B) unemployed/employed.
C) (employed - unemployed)/labor force.
D) labor force/population.

Question 60

Government policymakers would like to have high ________ and low ________.

A) output growth; unemployment and inflation
B) unemployment and output growth; inflation
C) output growth and inflation; unemployment
D) inflation; unemployment and output growth

Question 61

Macroeconomic behavior is the sum of all the microeconomic decisions made by individual households and firms.

Question 62

If 5 million workers are unemployed and 45 million workers are employed, then the unemployment rate is

A) 5%.
B) 10%.
C) 11.1%.
D) 40%.

Question 63

A recession is associated with a negative rate of growth of the economy.

Question 64

The following is a correct order in a business cycle: recession, trough, peak, expansion.

Question 65

An expansion is usually associated with rising price levels.

Question 66

If output is falling and unemployment is rising, the economy must be in a(n)

A) contraction.
B) expansion.
C) depression.
D) hyperinflationary period.

Question 67

Microeconomics is concerned with the market price and equilibrium quantity of each good or service.

Question 68

Microeconomics is concerned with

A) price level stability.
B) economic growth.
C) unemployment.
D) individual prices.

Question 69

Macroeconomics is concerned with the market price and equilibrium quantity of each good or service.

Question 70

Microeconomics is concerned with inflation or deflation, output growth and unemployment.

Question 71

The period in the business cycle from a ________ to a ________ is called an expansion.

A) peak; trough
B) trough; peak
C) peak; new peak
D) trough; new trough

Question 72

Macroeconomics is concerned with inflation or deflation, output growth and unemployment.

Question 73

The employment rate is the number of people employed divided by number of people in the labor force.

Question 74

Unemployment generally rises during ________ and falls during ________.

A) inflation; deflation
B) recession; expansion
C) peaks; troughs
D) booms; busts

Question 75

The employment rate is the number of people employed divided by number of people in the population.

Question 76

The period in the business cycle from a ________ to a ________ is called a recession.

A) peak; trough
B) trough; peak
C) peak; new peak
D) trough; new trough

Question 77

Hyperinflation and stagflation are two different names which refer to identical economic conditions.

Question 78

A recession is usually associated with increasing unemployment.

Question 79

The behavior of all households and firms together is called the business cycle.

Question 80

If the labor force is 200 million and 4 million are unemployed then the employment rate is

A) 4%.
B) 6%.
C) 96%.
D) 98%.