Question 1

Which of these is assumed to be constant along an aggregate supply curve?

Accepted Answer

A) The price level in an economy 
B) The exchange rate between the domestic and a foreign currency 
C) The state of technology used in production 
D) The unemployment rate 
E) The real GDP

Question 2

As the price level increases,the amount of goods and services that consumers,businesses,and governments desire to purchase will change.This is depicted by:

Accepted Answer

A) a leftward movement of the aggregate demand curve. 
B) a rightward movement of the aggregate demand curve. 
C) an upward movement along the aggregate demand curve. 
D) a downward movement along the aggregate demand curve. 
E) an increase in the slope of the aggregate demand curve.

Question 3

Which of these partly accounts for the long-term growth in production in the U.S.economy?

Accepted Answer

A) An increase in government spending 
B) An increase in the availability of resources 
C) A reduction in federal taxes 
D) A gradual but consistent increase in the price level 
E) A general optimism about the future and the pioneering spirit of America

Question 4

Stagflation in an economy can be effectively controlled by Keynesian demand management policies.

Accepted Answer

A) True 
 B)False

Question 5

Identify the most likely impact of a decrease in the wealth of consumers in an economy,other things remaining constant.

Accepted Answer

A) A leftward shift of the aggregate supply curve 
B) A leftward shift of the aggregate demand curve 
C) An upward movement along the aggregate demand curve 
D) A downward movement along the aggregate demand curve 
E) A steeper aggregate supply curve

Question 6

Which of the following describes an economy's price level?

Accepted Answer

A) The cost of producing goods and services using domestically owned factors of production 
B) The year-to-year change in nominal GDP 
C) The year-to-year change in the price of consumer goods 
D) The total price of aggregate output 
E) The average price of aggregate output

Question 7

The Reagan administration's 1981 personal income tax changes were designed to:

Accepted Answer

A) stimulate aggregate demand and reduce unemployment. 
B) stimulate aggregate demand and increase economic growth. 
C) stimulate aggregate supply and increase economic growth. 
D) decrease aggregate demand in order to reduce inflation. 
E) increase tax revenues to reduce the federal budget deficit.

Question 8

On a graph showing the aggregate demand and aggregate supply curves,stagflation can be represented by a:

Accepted Answer

A) leftward shift of the aggregate supply curve. 
B) rightward shift of the aggregate supply curve. 
C) upward movement along the aggregate supply curve. 
D) rightward shift of the aggregate demand curve. 
E) upward movement along the aggregate demand curve.

Question 9

Which of these factors can explain the short recession experienced by the U.S.in 2001?

Accepted Answer

A) Terrorist attacks 
B) The stock market crash 
C) Bursting of the real estate bubble 
D) A rise in international oil prices 
E) Expenditure on war

Question 10

Which of the following would indicate the beginning of a recessionary phase in an economy?

Accepted Answer

A) Many new firms starting up 
B) Stock prices improving 
C) Businesses slowing down 
D) Demand for real estate picking up 
E) Orders for new equipment increasing

Question 11

In the 1960s,government policy makers believed that they could:

Accepted Answer

A) stabilize the economy by letting the market system solve all problems. 
B) reduce unemployment by running federal budget surpluses. 
C) eliminate government's role in stabilization policy. 
D) use changes in the money supply to virtually eliminate business cycles. 
E) use taxation and government spending to fine-tune the economy.

Question 12

Which of these is true of the mercantilism policy?

Accepted Answer

A) It accepts gold as a medium of exchange. 
B) It encourages free movement of labor and capital resources between nations. 
C) It emphasizes government control over the production of important goods and services. 
D) It emphasizes the importance of trade restrictions in achieving economic growth. 
E) It believes that a nation's economic vitality depends on its unemployment level.

Question 13

The demand for _____ is most severely affected by a recession.

Accepted Answer

A) medicines 
B) automobiles 
C) breakfast cereals 
D) haircuts 
E) gasoline

Question 14

Macroeconomics simply focuses on the annual performance of a particular national economy and ignores its interactions with other national economies around the world.

Accepted Answer

A) True 
 B)False

Question 15

Which of these signifies the role of money in any economy?

Accepted Answer

A) It acts as a tool for poverty alleviation in an economy. 
B) It serves as a medium of exchange in an economy. 
C) It indicates the economic wellbeing of a nation. 
D) It helps to differentiate between the nominal and real income of a nation. 
E) It is a clear indicator of the growth in national income.

Question 16

Economic fluctuations or business cycles:

Accepted Answer

A) measure changes in the total number of new businesses started during a year. 
B) are fluctuations in the Dow Jones industrial average relative to a long-term growth trend. 
C) look at the role played by business on the level of unemployment. 
D) are fluctuations in the level of economic activity relative to a long-term growth trend. 
E) are changes in government spending that occur over a period of time.

Question 17

Which of the following was true of the United States before 1970?

Accepted Answer

A) The government was not responsible for promoting employment,output,and purchasing power. 
B) Most macroeconomic instability was caused by changes in international oil prices. 
C) Most macroeconomic instability was caused by shifts of aggregate demand. 
D) Most macroeconomic instability was caused by the depreciation of the dollar. 
E) The government was responsible for using monetary policy to correct a depression.

Question 18

Which of the following variables is measured only at a particular point in time and not over different time periods?

Accepted Answer

A) The unemployment rate 
B) Consumer income 
C) The federal government's debt 
D) The federal government's budget deficit 
E) Total expenditure

Question 19

Which of the following is a flow variable?

Accepted Answer

A) Price level 
B) U.S.population 
C) Money supply 
D) Investment spending 
E) Household debt

Question 20

A fall in the price level will:

Accepted Answer

A) cause an upward movement upward along the aggregate demand curve. 
B) cause a downward movement along the aggregate demand curve. 
C) cause a leftward shift of the aggregate demand curve. 
D) cause a rightward shift of the aggregate demand curve. 
E) have no impact on the aggregate demand curve.

Exam 5: Introduction to Macroeconomics