Question 1

Using the CPI measure of the price level,which is 100 in the base year of 2007,calculate the annual inflation rates for
(a)2008,when the index is 103.7.
(b)2009,when the index is 105.5.
(c)2010,when the index is 107.7.

Accepted Answer

The answer of Using the CPI measure of the price...

Question 2

What are the major factors affecting the long-term growth of the economy's output?

Accepted Answer

The answer of What are the major factors affecting the...

Question 3

Critics of the government's fiscal policies argued that government deficits

Accepted Answer

A) prevented capital from flowing into the United States. 
B) were linked to the excess of imports over exports that occurred in the 1980s. 
C) caused the level of unemployment in the United States to increase during the 1980s. 
D) had directly contributed to a decline in the level of demand in the American economy.

Question 4

The unemployment rate is the

Accepted Answer

A) number of unemployed divided by the number of employed. 
B) number of employed divided by the number of unemployed. 
C) number of unemployed divided by the labor force. 
D) labor force divided by the number of unemployed.

Question 5

The two most comprehensive,widely accepted macroeconomic models are

Accepted Answer

A) the classical model and the supply-side model. 
B) the supply-side model and the real business cycle model. 
C) the classical model and the Keynesian model. 
D) the Austrian model and the Keynesian model.

Question 6

In which of the following periods did average labor productivity in the United States grow the fastest?

Accepted Answer

A) 1929 to 1935 
B) 1949 to 1973 
C) 1973 to 1995 
D) 1995 to 2008

Question 7

Adam Smith's idea of the "invisible hand" says that given a country's resources and its initial distribution of wealth,the use of markets will

Accepted Answer

A) insulate a nation from the effects of political instability. 
B) eliminate problems of hunger and dissatisfaction. 
C) eliminate inequalities between the rich and the poor. 
D) make people as economically well off as possible.

Question 8

Compare and contrast the classical and Keynesian schools of thought for the following economic issues.
(a)The flexibility of wages and prices.
(b)The importance of macroeconomic policies.

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The answer of Compare and contrast the classical and Keynesian...

Question 9

When national output rises,the economy is said to be in

Accepted Answer

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

Question 10

Why is wage and price flexibility crucial to the idea of the "invisible hand?"

Accepted Answer

The answer of Why is wage and price flexibility crucial...

Question 11

The peak in U.S.government spending as a percent of GDP occurred during

Accepted Answer

A) World War II. 
B) the 1960s war on poverty. 
C) the Great Depression. 
D) the war against Iraq in the 2000s.

Question 12

A country has a trade surplus when

Accepted Answer

A) imports exceed exports. 
B) imports equal exports. 
C) exports exceed imports. 
D) imports equal zero.

Question 13

Classical economists argue that

Accepted Answer

A) the government should have an active role in the economy. 
B) government policies will be ineffective and counterproductive. 
C) the government should actively intervene in the economy to eliminate business cycles. 
D) wages and prices don't adjust quickly,so the economy is slow to return to equilibrium.

Question 14

Match each of the following jobs to its major area: forecasting,analysis,research,or data development.Explain your answers.
(a)Economist at university,testing theories about the efficient allocation of resources in the foreign exchange market
(b)Economist at Wall Street firm trying to predict the rate of inflation next year using past data
(c)Economist at auto firm looking at demand for new automobiles
(d)Economist at the International Trade Commission trying to determine whether foreign firms are dumping goods in the United States
(e)Economist at the Commerce Department developing new methods for calculating price indexes
(f)Economist consulting in Eastern Europe about how to set up free-market financial systems.

Accepted Answer

The answer of Match each of the following jobs to...

Question 15

An economy that doesn't interact economically with the rest of the world is called ________ economy.

Accepted Answer

A) a closed 
B) an open 
C) a surplus 
D) an authoritarian

Question 16

The main reason that the United States has such a high standard of living is

Accepted Answer

A) low unemployment. 
B) high average labor productivity. 
C) low inflation. 
D) high government budget deficits.

Question 17

During the Great Depression,the unemployment rate for the United States peaked at approximately

Accepted Answer

A) 10%. 
B) 70%. 
C) 45%. 
D) 25%.

Question 18

Positive analysis of economic policy

Accepted Answer

A) examines the economic consequences of policies but does not address the question of whether those consequences are desirable. 
B) examines the economic consequences of policies and addresses the question of whether those consequences are desirable. 
C) generates less agreement among economists than normative analysis. 
D) is rare in questions of economic policy.

Question 19

Average labor productivity is the

Accepted Answer

A) amount of workers per machine. 
B) amount of machines per worker. 
C) ratio of employed to unemployed workers. 
D) amount of output per worker.

Question 20

Why were the U.S.government budget deficits of the 1980s and early 1990s so unusual from a historical point of view?

Accepted Answer

A) It was the first time the U.S.government had ever run deficits. 
B) In the past,deficits were usually that large only in wartime. 
C) It was the first time that deficits were accompanied by very high rates of inflation. 
D) It was the first time that deficits diverted funds from other productive uses,such as investment in modern equipment.

Exam 1: Introduction to Macroeconomics

Using the CPI measure of the price level,which is 100 in the base year of 2007,calculate the annual inflation rates for (a)2008,when the index is 103.7. (b)2009,when the index is 105.5. (c)2010,when the index is 107.7.