Question 1

Which of the following is an example of an economic investment?

Accepted Answer

A)  building a new sales force training facility 
B)  putting funds in a certificate of deposit 
C)  purchasing a share of Google stock 
D)  trading a bond certificate

Question 2

The National Activity Index was developed by:

Accepted Answer

A)  the National Bureau of Economic Research. 
B)  the Federal Reserve Bank of Chicago. 
C)  the U.S. Treasury. 
D)  the Conference Board.

Question 3

Which of the following is a nondurable good?

Accepted Answer

A)  a Toyota sedan 
B)  a movie ticket 
C)  a six-pack of beer 
D)  an hour with a masseuse

Question 4

Which of the following explains why the size and the direction of the gap between long- and short-term interest rates is a predictor of stages in the business cycle?

Accepted Answer

A)  The time period with higher rates is likely to have higher economic activity than the time period with lower rates. 
B)  The time period with higher rates is likely to have slower economic activity than the time period with lower rates. 
C)  When the rates are unequal, the economy is in expansion or contraction; when the rates are equal, the economy is in a peak or trough. 
D)  When the rates are equal, the economy is in expansion or contraction; when the rates are unequal, the economy is in a peak or trough.

Question 5

When the National Activity Index is at zero, the economy is growing at _____ rates. Negative values imply _____ trends. Positive values imply that growth is _____ the long-term trend.

Accepted Answer

A)  rapid; slowing; equal to 
B)  slow; accelerating; equal to 
C)  historical; slowing; faster than 
D)  historical; accelerating; slower than

Question 6

The field of macroeconomics was considered an extension of microeconomics prior to the Great Depression.

Accepted Answer

A) True 
 B)False

Question 7

The National Activity Index:

Accepted Answer

A)  is a weighted average of 85 indicators of national economic activity. 
B)  is a weighted average of estimates of economic activity by the National Bureau of Economic Research (NBER) and the Bureau of Economic Activity (BE
A) . 
C)  is produced by the NBER. 
D)  is a measure of unemployment and participation in the labor force.

Question 8

Which one of the following would be included in GDP calculations?

Accepted Answer

A)  a windshield purchased by General Motors 
B)  a hamburger purchased by a hungry restaurant patron 
C)  petroleum purchased by a refiner from the company that drilled it 
D)  nails purchased by a building contractor

Question 9

Compensation of employees in the income approach to calculating GDP includes many benefits, such as employers' contributions to unemployment compensation.

Accepted Answer

A) True 
 B)False

Question 10

In the formula for GDP (GDP = C + I + G + (X - M)), what does X represent?

Accepted Answer

A)  exports 
B)  imports 
C)  net exports 
D)  government spending

Question 11

Which of the following two things can people do with money received as disposable personal income?

Accepted Answer

A)  pay taxes or save money 
B)  pay taxes or spend money 
C)  spend money or put it into savings 
D)  pay taxes or buy government bonds

Question 12

The yield curve shows the interest rates for bonds with different maturities.

Accepted Answer

A) True 
 B)False

Question 13

The idea that all income ultimately goes to households, which then use it to buy goods and services from firms, is a central idea of the:

Accepted Answer

A)  production possibilities frontier. 
B)  supply and demand model. 
C)  circular flow diagram. 
D)  classical model.

Question 14

Econoland and Macroland are neighboring countries. Which of the following would NOT be included in the GDP of Econoland?

Accepted Answer

A)  the value of the output of a factory in Econoland that is owned by a company whose headquarters are located in Macroland 
B)  the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland 
C)  the value of output produced by a factory in Econland that was sold in Macroland 
D)  the value of output produced in Econoland that remained unsold the year it was produced

Question 15

The U.S. gross domestic product is equal to the total market value of all:

Accepted Answer

A)  intermediate goods and services produced by resources in the United States. 
B)  final goods and services produced by resources in the United States. 
C)  final goods and services produced by U.S. citizens in the United States. 
D)  intermediate goods and services produced by citizens in the United States.

Question 16

Suppose the yield on a three-month Treasury bill is 0.04% and the 10-year Treasury note yields 2.74%. This yield curve suggests the economy is headed for a recession.

Accepted Answer

A) True 
 B)False

Question 17

A trough in the business cycle usually means that the economy is operating at its capacity.

Accepted Answer

A) True 
 B)False

Question 18

If an index of well-being were included in the national income and product accounts, information on life expectancy, the stock of human capital, income distributions, poverty rates, and unemployment rates might be collected.

Accepted Answer

A) True 
 B)False

Question 19

Which is NOT a criticism of the National Bureau of Economic Research's recession dating?

Accepted Answer

A)  Dates are announced long after the economy turned. 
B)  Deliberations are not made public. 
C)  Its use of revised data introduces errors in dating. 
D)  There is no single consistent methodology used in dating.

Question 20

In the national income and product accounts, "disposable personal income" and "personal income" are synonymous.

Accepted Answer

A) True 
 B)False

Exam 5: Introduction to Macroeconomics

Which of the following is an example of an economic investment?

The National Activity Index was developed by:

Which of the following is a nondurable good?

Which of the following explains why the size and the direction of the gap between long- and short-term interest rates is a predictor of stages in the business cycle?

When the National Activity Index is at zero, the economy is growing at ___ rates. Negative values imply _ trends. Positive values imply that growth is ___ the long-term trend.

The field of macroeconomics was considered an extension of microeconomics prior to the Great Depression.

The National Activity Index:

Which one of the following would be included in GDP calculations?

Compensation of employees in the income approach to calculating GDP includes many benefits, such as employers' contributions to unemployment compensation.

In the formula for GDP (GDP = C + I + G + (X - M) ) , what does X represent?

Which of the following two things can people do with money received as disposable personal income?

The yield curve shows the interest rates for bonds with different maturities.

The idea that all income ultimately goes to households, which then use it to buy goods and services from firms, is a central idea of the:

Econoland and Macroland are neighboring countries. Which of the following would NOT be included in the GDP of Econoland?

The U.S. gross domestic product is equal to the total market value of all:

Suppose the yield on a three-month Treasury bill is 0.04% and the 10-year Treasury note yields 2.74%. This yield curve suggests the economy is headed for a recession.

A trough in the business cycle usually means that the economy is operating at its capacity.

If an index of well-being were included in the national income and product accounts, information on life expectancy, the stock of human capital, income distributions, poverty rates, and unemployment rates might be collected.

Which is NOT a criticism of the National Bureau of Economic Research's recession dating?

In the national income and product accounts, "disposable personal income" and "personal income" are synonymous.