Question 1

If a shift in the AD-curve has no impact on the price level, then

Accepted Answer

A) the unemployment rate must be extremely low 
B) the AD-curve must be vertical 
C) the AS-curve must be horizontal 
D) the AS-curve must be vertical 
E) both A and D 
A) the unemployment rate must be extremely low 
B) the AD-curve must be vertical 
C) the AS-curve must be horizontal 
D) the AS-curve must be vertical 
E) both A and D

Question 2

The CPI is defined as

Accepted Answer

A) the cost-price index, measuring cost increases to producers 
B) the cross-price index, measuring the increase in relative prices of two different inputs used in the production process 
C) a price index that measures the average price increase of all final goods and services produced 
D) a price index that measures the cost of a given market basket of intermediate goods and raw materials 
E) a price index that measures the cost of a market basket of goods representing the purchases of a typical urban consumer 
A) the cost-price index, measuring cost increases to producers 
B) the cross-price index, measuring the increase in relative prices of two different inputs used in the production process 
C) a price index that measures the average price increase of all final goods and services produced 
D) a price index that measures the cost of a given market basket of intermediate goods and raw materials 
E) a price index that measures the cost of a market basket of goods representing the purchases of a typical urban consumer

Question 3

If an increase in aggregate demand causes prices to increase slightly but output to increase significantly, then

Accepted Answer

A) the AS-curve must be very flat 
B) the AD-curve must be very steep 
C) the AD- and AS-curves must both be very steep 
D) we must be looking at the very long-run AD-AS model 
E) we must be looking at the very short-run AD-AS model 
A) the AS-curve must be very flat 
B) the AD-curve must be very steep 
C) the AD- and AS-curves must both be very steep 
D) we must be looking at the very long-run AD-AS model 
E) we must be looking at the very short-run AD-AS model

Question 4

Government intervention into economic activity will NOT lead to a change in the price level

Accepted Answer

A) in the very short-run model 
B) in the medium-run model 
C) in the very long-run model 
D) in the classical model 
E) assuming a macro-model that focuses on the growth of productive capacity 
A) in the very short-run model 
B) in the medium-run model 
C) in the very long-run model 
D) in the classical model 
E) assuming a macro-model that focuses on the growth of productive capacity

Question 5

If nominal GDP, prices, and population all increase but real GDP remains the same then

Accepted Answer

A) real GDP per capita will decrease 
B) real GDP per capita will increase 
C) we cannot tell what will happen to real GDP per capita 
D) the standard of living will increase 
E) the standard of living will remain the same 
A) real GDP per capita will decrease 
B) real GDP per capita will increase 
C) we cannot tell what will happen to real GDP per capita 
D) the standard of living will increase 
E) the standard of living will remain the same

Question 6

If real GDP increases from $14.8 trillion one year to $14.9 trillion in the next year, which will be true?

Accepted Answer

A) the GDP gap has probably become smaller 
B) economic growth is below the long-term trend rate 
C) economic growth is above the long-term trend rate 
D) economic growth is about the same as the long-term trend rate 
E) both A and C 
A) the GDP gap has probably become smaller 
B) economic growth is below the long-term trend rate 
C) economic growth is above the long-term trend rate 
D) economic growth is about the same as the long-term trend rate 
E) both A and C

Question 7

In the very long-run AD-AS model,

Accepted Answer

A) only fiscal policy can affect both output and prices 
B) only monetary policy can affect both output and prices 
C) monetary policy can affect output but not prices 
D) active stabilization policy is ineffective in changing output 
E) the unemployment rate is always assumed to be zero 
A) only fiscal policy can affect both output and prices 
B) only monetary policy can affect both output and prices 
C) monetary policy can affect output but not prices 
D) active stabilization policy is ineffective in changing output 
E) the unemployment rate is always assumed to be zero

Question 8

Which of the following factors does NOT contribute to economic growth?

Accepted Answer

A) the availability of resources such as labor and capital 
B) increases in the size of the population 
C) the availability of new and better technology 
D) increased knowledge gained through education or work experience 
E) all of the above can increase economic growth 
A) the availability of resources such as labor and capital 
B) increases in the size of the population 
C) the availability of new and better technology 
D) increased knowledge gained through education or work experience 
E) all of the above can increase economic growth

Question 9

Assume an economy that is currently at the full-employment level of output.If aggregate demand decreases, what should we expect in the median run?

Accepted Answer

A) a decrease in potential GDP and the price level 
B) an increase in unemployment and the price level 
C) a decrease in unemployment and the price level 
D) an increase in unemployment and a decrease in the price level 
E) a decrease in potential GDP and an increase in unemployment 
A) a decrease in potential GDP and the price level 
B) an increase in unemployment and the price level 
C) a decrease in unemployment and the price level 
D) an increase in unemployment and a decrease in the price level 
E) a decrease in potential GDP and an increase in unemployment

Question 10

Which of the following can be responsible for a change in the output gap?

Accepted Answer

A) an increase in potential GDP 
B) a decrease in actual GDP 
C) a decrease in aggregate demand 
D) all of the above 
E) only A and B 
A) an increase in potential GDP 
B) a decrease in actual GDP 
C) a decrease in aggregate demand 
D) all of the above 
E) only A and B

Question 11

In studying growth theory, we

Accepted Answer

A) assume that labor, capital, and raw materials are all used efficiently 
B) assume that increased use of inputs cannot lead to a higher living standard 
C) assume that technological advances cannot affect living standards 
D) try to explain the reasons for recessions and booms 
E) all of the above 
A) assume that labor, capital, and raw materials are all used efficiently 
B) assume that increased use of inputs cannot lead to a higher living standard 
C) assume that technological advances cannot affect living standards 
D) try to explain the reasons for recessions and booms 
E) all of the above

Question 12

If we look at the inflation rate (as measured by the CPI) in the U.S.from 1960 to 2012, we see that inflation was at its highest in the year

Accepted Answer

A) 1960 
B) 1970 
C) 1980 
D) 1990 
E) 2000 
A) 1960 
B) 1970 
C) 1980 
D) 1990 
E) 2000

Question 13

Nominal GDP is correctly defined as

Accepted Answer

A) the monetary value of all goods and services, final and intermediate, produced in a given year 
B) the monetary value of all wealth that is accumulated in a given year 
C) the national income minus all non-income charges against output 
D) the monetary value of all final goods and services currently produced in our economy in a given year 
E) the market value of all goods produced by domestically-owned resources in a given year 
A) the monetary value of all goods and services, final and intermediate, produced in a given year 
B) the monetary value of all wealth that is accumulated in a given year 
C) the national income minus all non-income charges against output 
D) the monetary value of all final goods and services currently produced in our economy in a given year 
E) the market value of all goods produced by domestically-owned resources in a given year

Question 14

Prices usually adjust fairly slowly; the speed of price adjustment can be summarized by

Accepted Answer

A) the Phillips curve 
B) the AD-curve 
C) the long-run AS-curve 
D) the output gap 
E) the trend path of GDP 
A) the Phillips curve 
B) the AD-curve 
C) the long-run AS-curve 
D) the output gap 
E) the trend path of GDP

Question 15

Potential GDP is the value of GDP that can be calculated if we assume that

Accepted Answer

A) there are no measurement errors 
B) the unemployment rate is zero 
C) the inflation rate is zero 
D) GDP has been adjusted for inflation 
E) the capital stock is working at full capacity and we have full employment 
A) there are no measurement errors 
B) the unemployment rate is zero 
C) the inflation rate is zero 
D) GDP has been adjusted for inflation 
E) the capital stock is working at full capacity and we have full employment

Question 16

Which of the following transactions will have a direct and immediate effect on GDP?

Accepted Answer

A) an unemployed worker gets unemployment compensation 
B) you sell your used car to a friend 
C) you buy some IBM stock 
D) a German tourist drinks Canadian beer in a New York City restaurant 
E) the value of your Google stock holdings drops drastically 
A) an unemployed worker gets unemployment compensation 
B) you sell your used car to a friend 
C) you buy some IBM stock 
D) a German tourist drinks Canadian beer in a New York City restaurant 
E) the value of your Google stock holdings drops drastically

Question 17

Which of the following does NOT directly affect GDP?

Accepted Answer

A) a car dealer liquidates his inventory at a loss of $100 per car 
B) Wal-Mart buys 100 Korean-made VCRs and sells them in Roanoke, Virginia 
C) stock market values drop sharply 
D) a Canadian tourist visits New York to see the Blue Jays play in Yankee stadium 
E) both A and C 
A) a car dealer liquidates his inventory at a loss of $100 per car 
B) Wal-Mart buys 100 Korean-made VCRs and sells them in Roanoke, Virginia 
C) stock market values drop sharply 
D) a Canadian tourist visits New York to see the Blue Jays play in Yankee stadium 
E) both A and C

Question 18

A change in which of the following will shift the AD-curve?

Accepted Answer

A) monetary or fiscal policy 
B) the level of consumer confidence 
C) the productive capacity of our economy 
D) all of the above 
E) only A and B 
A) monetary or fiscal policy 
B) the level of consumer confidence 
C) the productive capacity of our economy 
D) all of the above 
E) only A and B

Question 19

In the very long-run AD-AS model, if the AD-curve shifts to the left, then

Accepted Answer

A) prices and output will both decrease 
B) prices and output will both increase 
C) prices will decrease but output will remain the same 
D) output will decrease but prices will remain the same 
E) output will increase but prices will decrease 
A) prices and output will both decrease 
B) prices and output will both increase 
C) prices will decrease but output will remain the same 
D) output will decrease but prices will remain the same 
E) output will increase but prices will decrease

Question 20

The official unemployment rate for the U.S.includes

Accepted Answer

A) people actively looking for jobs 
B) people only marginally attached to the work force 
C) discouraged workers who are not actively looking for jobs 
D) only A and B 
E) all of the above 
A) people actively looking for jobs 
B) people only marginally attached to the work force 
C) discouraged workers who are not actively looking for jobs 
D) only A and B 
E) all of the above

Exam 1: Introduction

If a shift in the AD-curve has no impact on the price level, then

The CPI is defined as

If an increase in aggregate demand causes prices to increase slightly but output to increase significantly, then

Government intervention into economic activity will NOT lead to a change in the price level

If nominal GDP, prices, and population all increase but real GDP remains the same then

If real GDP increases from $14.8 trillion one year to $14.9 trillion in the next year, which will be true?

In the very long-run AD-AS model,

Which of the following factors does NOT contribute to economic growth?

Assume an economy that is currently at the full-employment level of output.If aggregate demand decreases, what should we expect in the median run?

Which of the following can be responsible for a change in the output gap?

In studying growth theory, we

If we look at the inflation rate (as measured by the CPI) in the U.S.from 1960 to 2012, we see that inflation was at its highest in the year

Nominal GDP is correctly defined as

Prices usually adjust fairly slowly; the speed of price adjustment can be summarized by

Potential GDP is the value of GDP that can be calculated if we assume that

Which of the following transactions will have a direct and immediate effect on GDP?

Which of the following does NOT directly affect GDP?

A change in which of the following will shift the AD-curve?

In the very long-run AD-AS model, if the AD-curve shifts to the left, then

The official unemployment rate for the U.S.includes

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and demand

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Money, interest, and income

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

Advanced topics

Filters