Question 1

How long did the recent economic expansion last before the beginning of the Great Recession?

Accepted Answer

A) About a year. 
B) About two years. 
C) About three years. 
D) About 6 years. 
E) About 20 years. 
A) About a year. 
B) About two years. 
C) About three years. 
D) About 6 years. 
E) About 20 years.

Question 2

Suppose that at a given point in time the rate of inflation in the economy is equal to 2 percent and the nominal interest rate is 5 percent. What is the real interest rate consistent with this situation?

Accepted Answer

A) 2 percent 
B) -3 percent 
C) 3 percent 
D) 7 percent 
E) None of these 
A) 2 percent 
B) -3 percent 
C) 3 percent 
D) 7 percent 
E) None of these

Question 3

The negative correlation that occurs between inflation and economic growth can best be explained by

Accepted Answer

A) inflation increasing uncertainty. 
B) inflation decreasing uncertainty. 
C) inflation making everything cheaper. 
D) inflation making everything too expensive. 
E) None of these 
A) inflation increasing uncertainty. 
B) inflation decreasing uncertainty. 
C) inflation making everything cheaper. 
D) inflation making everything too expensive. 
E) None of these

Question 4

Exhibit 17-1
  
-In Exhibit 17-1, the best example of an expansion phase is

Accepted Answer

A) from point A to point B. 
B) from point B to point E. 
C) from point B to point C. 
D) from point B to point D. 
E) from point A to point e. 
A) from point A to point B. 
B) from point B to point E. 
C) from point B to point C. 
D) from point B to point D. 
E) from point A to point e.

Question 5

State and define as best you can the three determinants of the aggregate supply of real GDP.

Accepted Answer

The three determinants of the aggregate

Question 6

If real GDP and population grow at the same rate, the real GDP per capita will decrease.

Accepted Answer

A) True 
 B)False

Question 7

Between 1980 and 2000, China's GDP grew at an annual rate of 9.7 percent. China's GDP in 2006 was estimated to be $2.5 trillion. If China continues to grow at the same rate as it did between 1980 and 2000, what will its GDP be in 2026? How many years will it take for China's GDP to be twice as large as it was in 2006?

Accepted Answer

Year 2026 is 20 years from 2006. In 2026

Question 8

The theory of economic fluctuations emphasizes fluctuations in the supply of goods and services as the reason for the ups and downs in the economy.

Accepted Answer

A) True 
 B)False

Question 9

Suppose at the beginning of 2017, I loaned out $100 and at the end of the year was paid back $108. The inflation rate during the year was 3 percent.

Accepted Answer

The answer of Suppose at the beginning of 2017, I...

Question 10

Suppose people expect there to be a substantial increase in the rate of inflation over the next few years. Which of the following would you predict?

Accepted Answer

A) An increase in the real interest rate and a decrease in the nominal interest rate 
B) No increase or decrease in the nominal and real interest rates 
C) A constant nominal interest rate and a higher real interest rate 
D) A higher nominal interest rate 
E) A decline in the nominal interest rate 
A) An increase in the real interest rate and a decrease in the nominal interest rate 
B) No increase or decrease in the nominal and real interest rates 
C) A constant nominal interest rate and a higher real interest rate 
D) A higher nominal interest rate 
E) A decline in the nominal interest rate

Question 11

The long-run upward trend in real GDP is called

Accepted Answer

A) the business cycle. 
B) inflation. 
C) recession. 
D) economic growth. 
E) economic fluctuations. 
A) the business cycle. 
B) inflation. 
C) recession. 
D) economic growth. 
E) economic fluctuations.

Question 12

How do fiscal policy and monetary policy influence economic growth?

Accepted Answer

Fiscal policy influences economic growth

Question 13

Suppose you read in the newspaper that a large decline in business spending has occurred. Explain how this could cause real GDP to fall. Could the decline in business spending also cause potential GDP to decline? Explain.

Accepted Answer

Spending by businesses (i.e., investment

Question 14

What is meant by a recession? As a rule of thumb, when is the economy considered to be in a recession?

Accepted Answer

A recession occurs when real G

Question 15

Which of the following statements is true?

Accepted Answer

A) Real GDP fluctuates around potential GDP. 
B) Potential GDP fluctuates around real GDP. 
C) Real GDP is something like an average of GDP. 
D) The growth rate of potential GDP is well known and generally agreed upon. 
E) Real GDP cannot be any greater than potential GDP. 
A) Real GDP fluctuates around potential GDP. 
B) Potential GDP fluctuates around real GDP. 
C) Real GDP is something like an average of GDP. 
D) The growth rate of potential GDP is well known and generally agreed upon. 
E) Real GDP cannot be any greater than potential GDP.

Question 16

Trends and fluctuations in nominal interest rates

Accepted Answer

A) are closely connected with real GDP and the rate of inflation. 
B) are not closely connected with any economic variable. 
C) are closely connected with real GDP and not with the rate of inflation. 
D) are closely connected only with trends and fluctuations in the rate of inflation. 
E) depend on the exchange rate. 
A) are closely connected with real GDP and the rate of inflation. 
B) are not closely connected with any economic variable. 
C) are closely connected with real GDP and not with the rate of inflation. 
D) are closely connected only with trends and fluctuations in the rate of inflation. 
E) depend on the exchange rate.

Question 17

The increase in real GDP per capita over the past 50 years is closest to

Accepted Answer

A) $1,000. 
B) $3 trillion. 
C) $30,000. 
D) $100,000. 
E) $3,000. 
A) $1,000. 
B) $3 trillion. 
C) $30,000. 
D) $100,000. 
E) $3,000.

Question 18

The theory of economic fluctuations emphasizes fluctuations in

Accepted Answer

A) the growth rate of potential GDP. 
B) aggregate supply. 
C) aggregate demand. 
D) technology. 
E) potential GDP. 
A) the growth rate of potential GDP. 
B) aggregate supply. 
C) aggregate demand. 
D) technology. 
E) potential GDP.

Question 19

In terms of the decline in real GDP, the 2008-2009 recession was

Accepted Answer

A) eight times less severe than the Great Depression. 
B) eight times more severe than the Great Depression. 
C) the same as the Great Depression. 
D) 20 times more severe than the Great Depression. 
E) None of these 
A) eight times less severe than the Great Depression. 
B) eight times more severe than the Great Depression. 
C) the same as the Great Depression. 
D) 20 times more severe than the Great Depression. 
E) None of these

Question 20

Economists generally agree on the cause of the recession that began in 1990.

Accepted Answer

A) True 
 B)False

Exam 17: Macroeconomics: the Big Picture

How long did the recent economic expansion last before the beginning of the Great Recession?

Suppose that at a given point in time the rate of inflation in the economy is equal to 2 percent and the nominal interest rate is 5 percent. What is the real interest rate consistent with this situation?

The negative correlation that occurs between inflation and economic growth can best be explained by

Exhibit 17-1 -In Exhibit 17-1, the best example of an expansion phase is

State and define as best you can the three determinants of the aggregate supply of real GDP.

If real GDP and population grow at the same rate, the real GDP per capita will decrease.

The theory of economic fluctuations emphasizes fluctuations in the supply of goods and services as the reason for the ups and downs in the economy.

Suppose at the beginning of 2017, I loaned out $100 and at the end of the year was paid back $108. The inflation rate during the year was 3 percent.

Suppose people expect there to be a substantial increase in the rate of inflation over the next few years. Which of the following would you predict?

The long-run upward trend in real GDP is called

How do fiscal policy and monetary policy influence economic growth?

Suppose you read in the newspaper that a large decline in business spending has occurred. Explain how this could cause real GDP to fall. Could the decline in business spending also cause potential GDP to decline? Explain.

What is meant by a recession? As a rule of thumb, when is the economy considered to be in a recession?

Which of the following statements is true?

Trends and fluctuations in nominal interest rates

The increase in real GDP per capita over the past 50 years is closest to

The theory of economic fluctuations emphasizes fluctuations in

In terms of the decline in real GDP, the 2008-2009 recession was

Economists generally agree on the cause of the recession that began in 1990.

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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