Question 1

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Accepted Answer

A)  The rate of inflation for that year is 4 percent. 
B)  The level of consumer demand is higher in that year as compared to the previous year. 
C)  The average unemployment level has increased. 
D)  The output of the economy has fallen by 4 percent in that year. 
A)  The rate of inflation for that year is 4 percent. 
B)  The level of consumer demand is higher in that year as compared to the previous year. 
C)  The average unemployment level has increased. 
D)  The output of the economy has fallen by 4 percent in that year.

Question 2

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions .
Table 5-7
  
-Refer to Table 5-7. Calculate a mechanic's real wage in 2005.

Accepted Answer

A)  $26.25 
B)  $40 
C)  $70 
D)  $100.80 
A)  $26.25 
B)  $40 
C)  $70 
D)  $100.80

Question 3

The Consumer Price Index is NOT used:

Accepted Answer

A)  to determine the purchasing power of people's nominal incomes. 
B)  to measure changes in the cost of living. 
C)  to measure the average price level of all final goods and services produced. 
D)  to compute the U.S. inflation rate. 
A)  to determine the purchasing power of people's nominal incomes. 
B)  to measure changes in the cost of living. 
C)  to measure the average price level of all final goods and services produced. 
D)  to compute the U.S. inflation rate.

Question 4

While calculating real GDP, market prices are held constant at some level.

Accepted Answer

A) True 
 B)False

Question 5

Real GDP is multiplied by _____ to get nominal GDP.

Accepted Answer

A)  the quantity of money supply 
B)  the price index 
C)  the exchange rate 
D)  the nominal interest rate 
A)  the quantity of money supply 
B)  the price index 
C)  the exchange rate 
D)  the nominal interest rate

Question 6

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion. Calculate the value of the implicit price deflator, in the way such numbers are normally published.

Accepted Answer

A)  21.59 
B)  82.24 
C)  121.59 
D)  177.57 
A)  21.59 
B)  82.24 
C)  121.59 
D)  177.57

Question 7

In the Case in Point titled "Take Me Out to the Ball Game . . .", the average price of the baseball fan market basket (based on the cost of the basket for 30 major league baseball teams) was $197.35 in 2011. The cost of attending a Boston Red Sox game was $339.01 in 2011. Calculate the fan price index for the Boston Red Sox using the average price of the market basket as the equivalent of a base year.

Accepted Answer

A)  0.58 
B)  1.67 
C)  1.72 
D)  4.01 
A)  0.58 
B)  1.67 
C)  1.72 
D)  4.01

Question 8

What is hyperinflation?

Accepted Answer

A)  Hyperinflation refers to an inflation rate in excess of 200 percent per year. 
B)  Hyperinflation occurs when the government of a country sells a large number of bonds. 
C)  It refers to a situation where a country's money supply is no longer backed by gold. 
D)  Hyperinflation arises due to a fall in the money supply. 
A)  Hyperinflation refers to an inflation rate in excess of 200 percent per year. 
B)  Hyperinflation occurs when the government of a country sells a large number of bonds. 
C)  It refers to a situation where a country's money supply is no longer backed by gold. 
D)  Hyperinflation arises due to a fall in the money supply.

Question 9

Which of the following would tend to increase the natural rate of unemployment?

Accepted Answer

A)  An increase in the average level of education 
B)  A demographic "bulge" of new entrants into the labor force 
C)  A lower rate of inflation 
D)  A lower level of expenditure on unemployment benefits 
A)  An increase in the average level of education 
B)  A demographic "bulge" of new entrants into the labor force 
C)  A lower rate of inflation 
D)  A lower level of expenditure on unemployment benefits

Question 10

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

Accepted Answer

The difference between a real value and

Question 11

A(n) _____ shows the movement in the average level of prices.

Accepted Answer

A)  interest rate 
B)  GDP growth rate 
C)  price index 
D)  natural rate of unemployment 
A)  interest rate 
B)  GDP growth rate 
C)  price index 
D)  natural rate of unemployment

Question 12

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

Accepted Answer

A)  nominal GDP. 
B)  current GDP. 
C)  real GDP. 
D)  average GDP. 
A)  nominal GDP. 
B)  current GDP. 
C)  real GDP. 
D)  average GDP.

Question 13

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions .
Table 5-4
  
-Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in prices and not due to a change in output.

Accepted Answer

A)  1996 
B)  1999 
C)  1995, 1997, and 1999 
D)  1998 
A)  1996 
B)  1999 
C)  1995, 1997, and 1999 
D)  1998

Question 14

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

Accepted Answer

A) True 
 B)False

Question 15

The trough of the business cycle:

Accepted Answer

A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  occurs when the actual rate of unemployment in the economy is zero. 
D)  is the point where a recession ends and an expansion begins. 
A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  occurs when the actual rate of unemployment in the economy is zero. 
D)  is the point where a recession ends and an expansion begins.

Question 16

The CPI is used for calculating payments from the U.S. government to individuals. To the extent that it is biased upward, which of the following is likely to occur?

Accepted Answer

A)  It leads to the payment of lower nominal benefits than would be the case if the index accurately measures inflation. 
B)  It raises the government's revenue earnings through Social Security taxes. 
C)  It allows retirees to keep their purchasing power constant. 
D)  It raises government expenditure on programs such as Social Security. 
A)  It leads to the payment of lower nominal benefits than would be the case if the index accurately measures inflation. 
B)  It raises the government's revenue earnings through Social Security taxes. 
C)  It allows retirees to keep their purchasing power constant. 
D)  It raises government expenditure on programs such as Social Security.

Question 17

A sustained period of rising real GDP is called a(n):

Accepted Answer

A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession. 
A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession.

Question 18

The natural rate of unemployment:

Accepted Answer

A)  is generally fixed for most countries. 
B)  is affected by demographic changes. 
C)  usually decreases over time. 
D)  is determined solely by business cycles. 
A)  is generally fixed for most countries. 
B)  is affected by demographic changes. 
C)  usually decreases over time. 
D)  is determined solely by business cycles.

Question 19

Which of the following is a source of frictional unemployment?

Accepted Answer

A)  A downturn in economic activity 
B)  Low costs of acquiring information about job vacancies 
C)  The time it takes to search for jobs that best matches one's skills 
D)  Outsourcing 
A)  A downturn in economic activity 
B)  Low costs of acquiring information about job vacancies 
C)  The time it takes to search for jobs that best matches one's skills 
D)  Outsourcing

Question 20

Which of the following statements is true?

Accepted Answer

A)  The CPI can be accurately computed using two different baskets of goods across two different periods. 
B)  The implicit price deflator is computed using a fixed basket of certain consumer goods. 
C)  The CPI and the implicit price deflator can be used to calculate inflation. 
D)  The CPI is computed using the value of nominal GDP. 
A)  The CPI can be accurately computed using two different baskets of goods across two different periods. 
B)  The implicit price deflator is computed using a fixed basket of certain consumer goods. 
C)  The CPI and the implicit price deflator can be used to calculate inflation. 
D)  The CPI is computed using the value of nominal GDP.

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions . Table 5-7 -Refer to Table 5-7. Calculate a mechanic's real wage in 2005.

The Consumer Price Index is NOT used:

While calculating real GDP, market prices are held constant at some level.

Real GDP is multiplied by _____ to get nominal GDP.

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion. Calculate the value of the implicit price deflator, in the way such numbers are normally published.

What is hyperinflation?

Which of the following would tend to increase the natural rate of unemployment?

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

A(n) _____ shows the movement in the average level of prices.

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions . Table 5-4 -Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in prices and not due to a change in output.

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

The trough of the business cycle:

The CPI is used for calculating payments from the U.S. government to individuals. To the extent that it is biased upward, which of the following is likely to occur?

A sustained period of rising real GDP is called a(n):

The natural rate of unemployment:

Which of the following is a source of frictional unemployment?

Which of the following statements is true?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

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Exam 5: Macroeconomics: the Big Picture

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions . Table 5-7 -Refer to Table 5-7. Calculate a mechanic's real wage in 2005.

The Consumer Price Index is NOT used:

While calculating real GDP, market prices are held constant at some level.

Real GDP is multiplied by _____ to get nominal GDP.

Suppose in 2007, nominal GDP in a country Clarendon was $12,840 billion and real GDP was $10,560 billion. Calculate the value of the implicit price deflator, in the way such numbers are normally published.

What is hyperinflation?

Which of the following would tend to increase the natural rate of unemployment?

What is the difference between a real value and a nominal value? Explain how a nominal value can be converted to a real value?

A(n) _____ shows the movement in the average level of prices.

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions . Table 5-4 -Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in prices and not due to a change in output.

When subprime mortgage loans were first sold, they were a profitable investment for the banks that sold them but proved to be a bad deal for home buyers.

The trough of the business cycle:

The CPI is used for calculating payments from the U.S. government to individuals. To the extent that it is biased upward, which of the following is likely to occur?

A sustained period of rising real GDP is called a(n):

The natural rate of unemployment:

Which of the following is a source of frictional unemployment?

Which of the following statements is true?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters