Question 1

The election campaign of George Bush to succeed Ronald Reagan as president was

Accepted Answer

A)  hindered due to high levels of unemployment in 1988. 
B)  hindered by the increasing inflationary problems of the late 1980s. 
C)  helped by the budget surpluses generated in the last years of the Reagan administration. 
D)  helped by the continuing low levels of unemployment and inflation in 1988.

Question 2

Two of the most important macroeconomic issues are unemployment and inflation.

Accepted Answer

A) True 
 B)False

Question 3

In contrast to the typical Republican Party laissez-faire policies,President Richard Nixon in 1971 introduced

Accepted Answer

A)  mandatory drug testing of cabinet officers. 
B)  monetary targets for the Federal Reserve Board. 
C)  wage and price controls. 
D)  mandatory gold purchases by the U.S. Treasury.

Question 4

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

Accepted Answer

A)  inward shift of the aggregate demand curve. 
B)  outward shift of the aggregate supply curve. 
C)  inward shift of the aggregate supply curve. 
D)  outward shift of the aggregate demand curve.

Question 5

A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?

Accepted Answer

A)  Half the value in 2009 and half the value in 2010 
B)  In 2010 GDP 
C)  In both 2009 and 2010 GDP 
D)  In 2009 GDP

Question 6

"Underground" economic activity can best be described as

Accepted Answer

A)  the construction of subway transportation. 
B)  the building of foundation structures for skyscrapers. 
C)  the mining and oil industries. 
D)  barter or cash activity that is not reported as income.

Question 7

Is GDP an accurate measure of a country's well being?

Accepted Answer

A)  Yes, it is the best measure of national well being. 
B)  Yes, provided we use real GDP and not nominal GDP. 
C)  The answer is uncertain, depending on whether GDP is rising or falling. 
D)  No, it is not.

Question 8

Before the Great Depression of the 1930s,most economists believed that

Accepted Answer

A)  only active government policy could prevent recessions or inflation. 
B)  a capitalist economy had a natural tendency to cure recessions or inflation. 
C)  a capitalist economy had a natural tendency to inflation. 
D)  recessions and depressions were inevitable until the economy broke down completely.

Question 9

Usually,increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence,during World War II,of

Accepted Answer

A)  full employment. 
B)  government ownership of factories. 
C)  full production. 
D)  wage and price controls. 
E)  high levels of patriotism.

Question 10

An economist who studies the sales and profits of a large corporation would be classified as a(n)

Accepted Answer

A)  macroeconomist. 
B)  equity analyst. 
C)  stock broker. 
D)  microeconomist. 
E)  social economist.

Question 11

Growth in GDP systematically understates the growth in national well being because

Accepted Answer

A)  ecological costs are netted out of GDP. 
B)  "bads" as well as "goods" get included in GDP. 
C)  investment is not included in GDP. 
D)  as a country gets richer, leisure time increases.

Question 12

Gross Domestic Product is a dollar measure of

Accepted Answer

A)  total gross investment in an economy. 
B)  total industrial sales in a particular time period. 
C)  the total physical product of the economy. 
D)  the value of all final goods and services produced in one time period.

Question 13

Macroeconomic models use abstract concepts such as "price level" and "national income" that are calculated by combining many markets into one.This process is known as

Accepted Answer

A)  analysis and synthesis. 
B)  integration and derivation. 
C)  conceptualization. 
D)  aggregation.

Question 14

Production for war and environmental clean-up services are not included in GDP.

Accepted Answer

A) True 
 B)False

Question 15

A recession is a period during which

Accepted Answer

A)  aggregate demand, production, and unemployment rises. 
B)  aggregate demand, production, and unemployment falls. 
C)  aggregate demand, production, and unemployment remain the same. 
D)  aggregate demand and production rises while unemployment remains the same. 
E)  aggregate demand and production falls while unemployment rises.

Question 16

The stagflation in the United States during the 1974-1975 period can be attributed to

Accepted Answer

A)  increases in real GDP due to high levels of defense spending. 
B)  tight monetary and fiscal policies of the Nixon-Ford administrations. 
C)  rapid increases in petroleum prices, poor harvests, and the removal of wage and price controls. 
D)  budget deficits by the federal government and increasing trade deficits by the United States.

Question 17

If Honda (a Japan-based firm)produces a car in Ohio and exports it to Japan,in which country's GDP will the car be counted?

Accepted Answer

A)  Japan's, because Honda is a Japanese company 
B)  Japan's because that is where the car is purchased 
C)  The GDP of the United States because that is where it was built 
D)  Both Japan and the United States

Question 18

Intermediate goods,like milk sold by a farmer to a supermarket,are

Accepted Answer

A)  included in GDP. 
B)  included in GDP at market value. 
C)  included if it is imported. 
D)  are not included in GDP.

Question 19

Economic fluctuations in the United States have been less extreme since the 1950s.

Accepted Answer

A) True 
 B)False

Question 20

The clearest sign of economic growth is a(n)

Accepted Answer

A)  increase in nominal GDP. 
B)  increase in real GDP. 
C)  decrease in nominal GDP.

Exam 5: An Introduction to Macroeconomics

The election campaign of George Bush to succeed Ronald Reagan as president was

Two of the most important macroeconomic issues are unemployment and inflation.

In contrast to the typical Republican Party laissez-faire policies,President Richard Nixon in 1971 introduced

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?

"Underground" economic activity can best be described as

Is GDP an accurate measure of a country's well being?

Before the Great Depression of the 1930s,most economists believed that

Usually,increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence,during World War II,of

An economist who studies the sales and profits of a large corporation would be classified as a(n)

Growth in GDP systematically understates the growth in national well being because

Gross Domestic Product is a dollar measure of

Macroeconomic models use abstract concepts such as "price level" and "national income" that are calculated by combining many markets into one.This process is known as

Production for war and environmental clean-up services are not included in GDP.

A recession is a period during which

The stagflation in the United States during the 1974-1975 period can be attributed to

If Honda (a Japan-based firm) produces a car in Ohio and exports it to Japan,in which country's GDP will the car be counted?

Intermediate goods,like milk sold by a farmer to a supermarket,are

Economic fluctuations in the United States have been less extreme since the 1950s.

The clearest sign of economic growth is a(n)