Question 1

Aggregate demand can be greater than potential GDP.

Accepted Answer

A) True 
 B)False

Question 2

A decline in the rate of inflation is referred to as deflation.

Accepted Answer

A) True 
 B)False

Question 3

The recession phase

Accepted Answer

A) is no longer a phase of the business cycle. 
B) has the same duration and depth in all business cycles. 
C) varies in duration and depth with each business cycle. 
D) has the same depth in all business cycles. 
E) has the same duration in all business cycles. 
A) is no longer a phase of the business cycle. 
B) has the same duration and depth in all business cycles. 
C) varies in duration and depth with each business cycle. 
D) has the same depth in all business cycles. 
E) has the same duration in all business cycles.

Question 4

Over the past 50 years, real GDP per capita has roughly

Accepted Answer

A) stayed the same. 
B) tripled. 
C) increased by 50 percent. 
D) doubled. 
E) declined by 50 percent. 
A) stayed the same. 
B) tripled. 
C) increased by 50 percent. 
D) doubled. 
E) declined by 50 percent.

Question 5

Policies used to influence economic fluctuations are often called

Accepted Answer

A) supply-side policies. 
B) normative policies. 
C) positive policies. 
D) demand-side policies. 
E) recessionary policies. 
A) supply-side policies. 
B) normative policies. 
C) positive policies. 
D) demand-side policies. 
E) recessionary policies.

Question 6

Exhibit 17-5  
-Exhibit 17-5 shows real GDP from March 2015 through December 2017 for country A. Explain whether the following statement is true or false: "Economic fluctuations theory explains the move from point A to point B, and economic growth theory explains the move from point B to point C."

Accepted Answer

This statement is False
 Economic fluctu

Question 7

The production function shows the relationship between

Accepted Answer

A) real GDP and the combination of labor, capital, and technological inputs. 
B) potential and real GDP. 
C) inflation and potential GDP. 
D) GDP and real GDP. 
E) a country's GDP and GDP in the rest of the world. 
A) real GDP and the combination of labor, capital, and technological inputs. 
B) potential and real GDP. 
C) inflation and potential GDP. 
D) GDP and real GDP. 
E) a country's GDP and GDP in the rest of the world.

Question 8

The three determinants of the supply of real GDP are

Accepted Answer

A) labor, capital, and potential GDP. 
B) labor, capital, and households. 
C) labor, capital, and technology. 
D) labor, capital, and markets. 
E) labor, capital, and government. 
A) labor, capital, and potential GDP. 
B) labor, capital, and households. 
C) labor, capital, and technology. 
D) labor, capital, and markets. 
E) labor, capital, and government.

Question 9

The two branches of macroeconomic theory are

Accepted Answer

A) inflation and growth theory. 
B) inflation and economic fluctuations theory. 
C) economic fluctuations and unemployment theory. 
D) inflation and unemployment theory. 
E) economic fluctuations and economic growth theory. 
A) inflation and growth theory. 
B) inflation and economic fluctuations theory. 
C) economic fluctuations and unemployment theory. 
D) inflation and unemployment theory. 
E) economic fluctuations and economic growth theory.

Question 10

When examining a graph that plots real GDP over time, what two types of patterns occur?

Accepted Answer

Over the long run, real GDP ex

Question 11

The purpose of a ratio scale is

Accepted Answer

A) to show the absolute variation in a variable. 
B) to make equal percentage changes in a variable have the same vertical distance. 
C) to make equal percentage changes in a variable have the same horizontal distance. 
D) to make equal absolute changes in a variable have the same vertical distance. 
E) to show how a variable is divided amongst its factors. 
A) to show the absolute variation in a variable. 
B) to make equal percentage changes in a variable have the same vertical distance. 
C) to make equal percentage changes in a variable have the same horizontal distance. 
D) to make equal absolute changes in a variable have the same vertical distance. 
E) to show how a variable is divided amongst its factors.

Question 12

How long will it take a $100 deposit to increase to $200 if the rate of interest is 2 percent?

Accepted Answer

A) 10 years 
B) 18 years 
C) 25 years 
D) 36 years 
E) 72 years 
A) 10 years 
B) 18 years 
C) 25 years 
D) 36 years 
E) 72 years

Question 13

Another name for potential GDP is

Accepted Answer

A) GDP. 
B) real GDP per capita. 
C) aggregate demand. 
D) real GDP. 
E) aggregate supply. 
A) GDP. 
B) real GDP per capita. 
C) aggregate demand. 
D) real GDP. 
E) aggregate supply.

Question 14

The field of economics that studies the whole market economy is known as

Accepted Answer

A) microeconomics. 
B) market economics. 
C) macroeconomics. 
D) economics. 
A) microeconomics. 
B) market economics. 
C) macroeconomics. 
D) economics.

Question 15

If you borrow $100 from a friend and you pay her back $105 at the end of the year, the interest rate is

Accepted Answer

A) 5 percent. 
B) $105. 
C) 5 percent 
D) $5. 
E) $95. 
A) 5 percent. 
B) $105. 
C) 5 percent 
D) $5. 
E) $95.

Question 16

Suppose, when you retire 40 years from now, you will want to live on what is $5,000 per month at today's prices. How much will this be 40 years from now if the average annual rate of inflation is the same as that between 1970 and 2015? In 1970, the CPI was 29.9; in 2015, the CPI was 201.6.

Accepted Answer

The average annual rate of inflation bet

Question 17

The rate of inflation has no effect on the economy.

Accepted Answer

A) True 
 B)False

Question 18

According to the textbook, which of the following is one of the most important developments of the period between 2007 and 2009?

Accepted Answer

A) The rapid economic growth of countries in the European Monetary Union 
B) The Great Recession occurred in the United States 
C) The dissolution of the Federal Reserve as the central bank of the United States 
D) Great Depression as a global phenomenon 
A) The rapid economic growth of countries in the European Monetary Union 
B) The Great Recession occurred in the United States 
C) The dissolution of the Federal Reserve as the central bank of the United States 
D) Great Depression as a global phenomenon

Question 19

Which of the following statements is true?

Accepted Answer

A) Fiscal and monetary policy influence only economic growth. 
B) Fiscal policy influences only economic fluctuations, and monetary policy influences only economic growth. 
C) Fiscal and monetary policy influence only economic fluctuations. 
D) Fiscal policy influences only economic growth, and monetary policy influences only economic fluctuations. 
E) Fiscal and monetary policy influence both economic growth and economic fluctuations. 
A) Fiscal and monetary policy influence only economic growth. 
B) Fiscal policy influences only economic fluctuations, and monetary policy influences only economic growth. 
C) Fiscal and monetary policy influence only economic fluctuations. 
D) Fiscal policy influences only economic growth, and monetary policy influences only economic fluctuations. 
E) Fiscal and monetary policy influence both economic growth and economic fluctuations.

Question 20

As the economy went into recession in 2008, the unemployment rate

Accepted Answer

A) increased by about 3 percentage points. 
B) increased by 15 percentage points. 
C) fell by 5 percentage points. 
D) fell by 1.5 percentage points. 
E) did not change. 
A) increased by about 3 percentage points. 
B) increased by 15 percentage points. 
C) fell by 5 percentage points. 
D) fell by 1.5 percentage points. 
E) did not change.

Exam 17: Macroeconomics: the Big Picture

Aggregate demand can be greater than potential GDP.

A decline in the rate of inflation is referred to as deflation.

The recession phase

Over the past 50 years, real GDP per capita has roughly

Policies used to influence economic fluctuations are often called

Exhibit 17-5 -Exhibit 17-5 shows real GDP from March 2015 through December 2017 for country A. Explain whether the following statement is true or false: "Economic fluctuations theory explains the move from point A to point B, and economic growth theory explains the move from point B to point C."

The production function shows the relationship between

The three determinants of the supply of real GDP are

The two branches of macroeconomic theory are

When examining a graph that plots real GDP over time, what two types of patterns occur?

The purpose of a ratio scale is

How long will it take a $100 deposit to increase to $200 if the rate of interest is 2 percent?

Another name for potential GDP is

The field of economics that studies the whole market economy is known as

If you borrow $100 from a friend and you pay her back $105 at the end of the year, the interest rate is

Suppose, when you retire 40 years from now, you will want to live on what is $5,000 per month at today's prices. How much will this be 40 years from now if the average annual rate of inflation is the same as that between 1970 and 2015? In 1970, the CPI was 29.9; in 2015, the CPI was 201.6.

The rate of inflation has no effect on the economy.

According to the textbook, which of the following is one of the most important developments of the period between 2007 and 2009?

Which of the following statements is true?

As the economy went into recession in 2008, the unemployment rate

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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