Question 1

If the economy is going into a recession, the Federal Reserve is likely to

Accepted Answer

A) raise interest rates to increase aggregate demand. 
B) raise interest rates to decrease aggregate demand. 
C) lower interest rates to increase aggregate demand. 
D) lower interest rates to reduce aggregate demand. 
E) do nothing because it is not clear what effect interest rates have on aggregate demand. 
A) raise interest rates to increase aggregate demand. 
B) raise interest rates to decrease aggregate demand. 
C) lower interest rates to increase aggregate demand. 
D) lower interest rates to reduce aggregate demand. 
E) do nothing because it is not clear what effect interest rates have on aggregate demand.

Question 2

Inflation and economic growth are positively correlated.

Accepted Answer

A) True 
 B)False

Question 3

Name three important characteristics of the inflation experience of the past 40 years.

Accepted Answer

Over the past 40 yea

Question 4

Suppose there is a permanent decrease in capital in a particular country. How does this change affect that economy's potential GDP? What economic policies can the government use to offset this decline?

Accepted Answer

Potential GDP will fall. The government

Question 5

Suppose the CPI in 2015 was 188.9. In 1985, it was 49.3. What was the average annual rate of inflation over this 30-year period?

Accepted Answer

A) 397 percent 
B) 10.21 percent 
C) 2.04 percent 
D) 5.54 percent 
E) 4.58 percent 
A) 397 percent 
B) 10.21 percent 
C) 2.04 percent 
D) 5.54 percent 
E) 4.58 percent

Question 6

The unemployment rate in the United States is zero unless the economy is in a recession.

Accepted Answer

A) True 
 B)False

Question 7

According to the textbook, which of the following is one of the most important developments of the 1980-2006 period?

Accepted Answer

A) A period called the Great Moderation 
B) The end of the World Trade Organization 
C) The dissolution of the European Union 
D) beginning of the Great Depression 
A) A period called the Great Moderation 
B) The end of the World Trade Organization 
C) The dissolution of the European Union 
D) beginning of the Great Depression

Question 8

After a recession, the economy usually takes several years to return to its pre-recession state.

Accepted Answer

A) True 
 B)False

Question 9

The average annual growth rate of the U.S. economy over the past 50 years has been about

Accepted Answer

A) 0 percent. 
B) 10 percent. 
C) 15 percent. 
D) 3 percent. 
E) -3 percent. 
A) 0 percent. 
B) 10 percent. 
C) 15 percent. 
D) 3 percent. 
E) -3 percent.

Question 10

According to the text, the difference in real income per capita between the North and the South has widened in the 100 years after the Civil War.

Accepted Answer

A) True 
 B)False

Question 11

The adjective real, in the term real GDP, is used to indicate that

Accepted Answer

A) it is the perfect measure of what is produced. 
B) this measure of output is official as opposed to an unofficial measure. 
C) this measure of output is adjusted for the general increase in prices over time. 
D) this measure of output is adjusted for the government's economic involvement. 
E) it measures only real goods and services, not the value of those that can't be measured, such as a home-cooked meal. 
A) it is the perfect measure of what is produced. 
B) this measure of output is official as opposed to an unofficial measure. 
C) this measure of output is adjusted for the general increase in prices over time. 
D) this measure of output is adjusted for the government's economic involvement. 
E) it measures only real goods and services, not the value of those that can't be measured, such as a home-cooked meal.

Question 12

Suppose you deposit $100 in the bank and leave it there for 10 years. At the end of 10 years, how much will be in my account if the annual rate of interest is 5 percent?

Accepted Answer

A) $150 
B) $163 
C) $105 
D) $200 
E) $175 
A) $150 
B) $163 
C) $105 
D) $200 
E) $175

Question 13

Which of the following statements is true about the most recent recessions in the U.S.?

Accepted Answer

A) The unemployment rate began to fall as the economy went into recession. 
B) The unemployment rate did not change during most recent recessions. 
C) The most recent recessions reported unemployment rates that were significantly higher than those observed during the great depression. 
D) The unemployment rate increased to over 20 percent during the most recent recessions. 
E) None of these. 
A) The unemployment rate began to fall as the economy went into recession. 
B) The unemployment rate did not change during most recent recessions. 
C) The most recent recessions reported unemployment rates that were significantly higher than those observed during the great depression. 
D) The unemployment rate increased to over 20 percent during the most recent recessions. 
E) None of these.

Question 14

An increase in the overall price level is called

Accepted Answer

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

Question 15

Which of the following trends were not observed in the 1980-2006 period?

Accepted Answer

A) China saw production per capita of its citizens increase significantly. 
B) India saw production per capita of its citizens increase significantly. 
C) Sub-Saharan African countries experienced a dramatic expansion of their economies. 
D) the recession in 1981-1982, the United States experienced two decades of almost continuous economic growth, with only minor recessions. 
A) China saw production per capita of its citizens increase significantly. 
B) India saw production per capita of its citizens increase significantly. 
C) Sub-Saharan African countries experienced a dramatic expansion of their economies. 
D) the recession in 1981-1982, the United States experienced two decades of almost continuous economic growth, with only minor recessions.

Question 16

The most recent recession officially started in December 2009.

Accepted Answer

A) True 
 B)False

Question 17

Between the early 1980s and 2006, the U.S. economy was in a period of

Accepted Answer

A) steady economic growth, and low inflation and unemployment. 
B) high inflation, unemployment and economic volatility. 
C) an economic depression of high unemployment and deflation. 
D) with no economic growth but stable prices. 
A) steady economic growth, and low inflation and unemployment. 
B) high inflation, unemployment and economic volatility. 
C) an economic depression of high unemployment and deflation. 
D) with no economic growth but stable prices.

Question 18

You will earn more interest from a given amount of bank saving deposit after 10 years with the compounding effect than without the compounding effect.

Accepted Answer

A) True 
 B)False

Question 19

Suppose a country's real GDP increased 3 percent between 2016 and 2017, while its population increased 2 percent. Between 2016 and 2017, real GDP per capita of this country

Accepted Answer

A) increased by 5 percent. 
B) increased by 1percent. 
C) decreased by 5 percent. 
D) decreased by 1 percent. 
E) remained the same. 
A) increased by 5 percent. 
B) increased by 1percent. 
C) decreased by 5 percent. 
D) decreased by 1 percent. 
E) remained the same.

Question 20

Government policy concerning taxing, spending, and borrowing is called monetary policy.

Accepted Answer

A) True 
 B)False

Exam 17: Macroeconomics: the Big Picture

If the economy is going into a recession, the Federal Reserve is likely to

Inflation and economic growth are positively correlated.

Name three important characteristics of the inflation experience of the past 40 years.

Suppose there is a permanent decrease in capital in a particular country. How does this change affect that economy's potential GDP? What economic policies can the government use to offset this decline?

Suppose the CPI in 2015 was 188.9. In 1985, it was 49.3. What was the average annual rate of inflation over this 30-year period?

The unemployment rate in the United States is zero unless the economy is in a recession.

According to the textbook, which of the following is one of the most important developments of the 1980-2006 period?

After a recession, the economy usually takes several years to return to its pre-recession state.

The average annual growth rate of the U.S. economy over the past 50 years has been about

According to the text, the difference in real income per capita between the North and the South has widened in the 100 years after the Civil War.

The adjective real, in the term real GDP, is used to indicate that

Suppose you deposit $100 in the bank and leave it there for 10 years. At the end of 10 years, how much will be in my account if the annual rate of interest is 5 percent?

Which of the following statements is true about the most recent recessions in the U.S.?

An increase in the overall price level is called

Which of the following trends were not observed in the 1980-2006 period?

The most recent recession officially started in December 2009.

Between the early 1980s and 2006, the U.S. economy was in a period of

You will earn more interest from a given amount of bank saving deposit after 10 years with the compounding effect than without the compounding effect.

Suppose a country's real GDP increased 3 percent between 2016 and 2017, while its population increased 2 percent. Between 2016 and 2017, real GDP per capita of this country

Government policy concerning taxing, spending, and borrowing is called monetary policy.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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