Question 1

Economic policies that focus on long-term growth are referred to as

Accepted Answer

A) demand-side policies. 
B) supply-side policies. 
C) regional policies. 
D) fiscal policies. 
E) monetary policies. 
A) demand-side policies. 
B) supply-side policies. 
C) regional policies. 
D) fiscal policies. 
E) monetary policies.

Question 2

Which of the following is the best description of what economic fluctuations theory aims to explain?

Accepted Answer

A) The short-term fluctuations in real GDP 
B) The long-term upward rise of real GDP over time 
C) The long-term financial collapses of developing economies 
D) of these 
A) The short-term fluctuations in real GDP 
B) The long-term upward rise of real GDP over time 
C) The long-term financial collapses of developing economies 
D) of these

Question 3

To say that a recession is over is the same as saying the economy has returned to normal.

Accepted Answer

A) True 
 B)False

Question 4

Because of how it is defined, the real interest rate can never be negative.

Accepted Answer

A) True 
 B)False

Question 5

The average inflation rate in the United States in the 1990s was in the range of

Accepted Answer

A) 2 to 3 percent. 
B) -3 to -2 percent. 
C) 4 to 5 percent. 
D) 0 to 1 percent. 
E) 9 to 10 percent. 
A) 2 to 3 percent. 
B) -3 to -2 percent. 
C) 4 to 5 percent. 
D) 0 to 1 percent. 
E) 9 to 10 percent.

Question 6

The unemployment rate

Accepted Answer

A) has increased steadily over the last 40 years. 
B) is never equal to zero. 
C) is zero if the economy is in an expansion. 
D) increases as real GDP increases. 
E) is zero unless the economy is in a recession. 
A) has increased steadily over the last 40 years. 
B) is never equal to zero. 
C) is zero if the economy is in an expansion. 
D) increases as real GDP increases. 
E) is zero unless the economy is in a recession.

Question 7

Fiscal policy is

Accepted Answer

A) often used to stabilize economic expansions. 
B) often used to counter the negative impact other factors may have on aggregate demand. 
C) often used to counter the positive impact other factors may have on aggregate demand. 
D) of no use in countering economic fluctuations. 
E) mainly used to keep inflation low and stable. 
A) often used to stabilize economic expansions. 
B) often used to counter the negative impact other factors may have on aggregate demand. 
C) often used to counter the positive impact other factors may have on aggregate demand. 
D) of no use in countering economic fluctuations. 
E) mainly used to keep inflation low and stable.

Question 8

Which of the following statements is true?

Accepted Answer

A) In the 1980s, the rate of inflation became negative. 
B) The average rate of inflation has been close to zero over the past 50 years. 
C) Over the past 50 years, the United States has not experienced a low and stable rate of inflation. 
D) The inflation rate usually increases during a recession. 
E) The rate of inflation usually falls to zero during a recession. 
A) In the 1980s, the rate of inflation became negative. 
B) The average rate of inflation has been close to zero over the past 50 years. 
C) Over the past 50 years, the United States has not experienced a low and stable rate of inflation. 
D) The inflation rate usually increases during a recession. 
E) The rate of inflation usually falls to zero during a recession.

Question 9

Fiscal policy affects economic growth by

Accepted Answer

A) controlling strategic industries. 
B) developing new government agencies. 
C) funding higher education. 
D) providing unemployment compensation. 
E) affecting incentives to invest, work, hire workers, and develop new technologies. 
A) controlling strategic industries. 
B) developing new government agencies. 
C) funding higher education. 
D) providing unemployment compensation. 
E) affecting incentives to invest, work, hire workers, and develop new technologies.

Question 10

If real GDP and population are both growing at a positive rate,

Accepted Answer

A) real GDP must be growing slower than real GDP per capita. 
B) real GDP must be growing faster than real GDP per capita. 
C) real GDP per capita must be increasing. 
D) real GDP per capita must be decreasing. 
E) None of these 
A) real GDP must be growing slower than real GDP per capita. 
B) real GDP must be growing faster than real GDP per capita. 
C) real GDP per capita must be increasing. 
D) real GDP per capita must be decreasing. 
E) None of these

Question 11

Why would it be a good idea to plot time-series data on a ratio scale instead of a regular scale? What is the difference between the two types of graphs?

Accepted Answer

On a ratio-scale graph, the vertical sca

Question 12

What is potential GDP? What are its determinants? What is meant by a production function?

Accepted Answer

Potential GDP is the upward trend line i

Question 13

Exhibit 17-4
  
-The data in Exhibit 17-4 shows, for a certain country, real GDP and its growth trend from March of 2015 through December of 2017. Identify when the peak occurred, when the recession occurred, and when the economy reached its trough.

Accepted Answer

Recall the rule of thumb that a fall in

Question 14

Because of the increase in population over the past 50 years,

Accepted Answer

A) the rate of increase in real GDP per capita has been greater than the rate of increase in real GDP. 
B) real GDP has grown at a slower rate than GDP. 
C) the rate of increase in real GDP per capita has been less than the rate of increase in real GDP. 
D) there has been no growth in real GDP. 
E) the rate of increase in real GDP has been greater than the rate of increase in GDP. 
A) the rate of increase in real GDP per capita has been greater than the rate of increase in real GDP. 
B) real GDP has grown at a slower rate than GDP. 
C) the rate of increase in real GDP per capita has been less than the rate of increase in real GDP. 
D) there has been no growth in real GDP. 
E) the rate of increase in real GDP has been greater than the rate of increase in GDP.

Question 15

Suppose you have savings deposited in an account at an interest rate of 4 percent and your father tells you he earned 8 percent 10 years ago. Use the concept of the real interest rate to answer the following questions.

Accepted Answer

The answer of Suppose you have savings deposited in an...

Question 16

Economic growth and economic fluctuations can occur simultaneously.

Accepted Answer

A) True 
 B)False

Question 17

GDP is

Accepted Answer

A) a term used for economic growth. 
B) a measure of the economy's potential. 
C) another term for inflation. 
D) a measure of the total value of all goods and services produced in a country during a specific period of time. 
E) the total value of all goods and services produced during a specific period of time adjusted for the general increase in prices. 
A) a term used for economic growth. 
B) a measure of the economy's potential. 
C) another term for inflation. 
D) a measure of the total value of all goods and services produced in a country during a specific period of time. 
E) the total value of all goods and services produced during a specific period of time adjusted for the general increase in prices.

Question 18

The unemployment rate

Accepted Answer

A) is not related to the level of real GDP. 
B) increases as real GDP decreases. 
C) decreases as real GDP decreases. 
D) increases as real GDP increases. 
E) increases only if real GDP is below potential. 
A) is not related to the level of real GDP. 
B) increases as real GDP decreases. 
C) decreases as real GDP decreases. 
D) increases as real GDP increases. 
E) increases only if real GDP is below potential.

Question 19

A low and stable inflation rate has been a key feature of the U.S. economy for the past 40 years.

Accepted Answer

A) True 
 B)False

Question 20

Is it a good idea for the government to encourage workers to retire early and give them incentives to do so? How would this policy affect the economy's potential GDP?

Accepted Answer

If the government encourages w

Exam 17: Macroeconomics: the Big Picture

Economic policies that focus on long-term growth are referred to as

Which of the following is the best description of what economic fluctuations theory aims to explain?

To say that a recession is over is the same as saying the economy has returned to normal.

Because of how it is defined, the real interest rate can never be negative.

The average inflation rate in the United States in the 1990s was in the range of

The unemployment rate

Fiscal policy is

Which of the following statements is true?

Fiscal policy affects economic growth by

If real GDP and population are both growing at a positive rate,

Why would it be a good idea to plot time-series data on a ratio scale instead of a regular scale? What is the difference between the two types of graphs?

What is potential GDP? What are its determinants? What is meant by a production function?

Exhibit 17-4 -The data in Exhibit 17-4 shows, for a certain country, real GDP and its growth trend from March of 2015 through December of 2017. Identify when the peak occurred, when the recession occurred, and when the economy reached its trough.

Because of the increase in population over the past 50 years,

Suppose you have savings deposited in an account at an interest rate of 4 percent and your father tells you he earned 8 percent 10 years ago. Use the concept of the real interest rate to answer the following questions.

Economic growth and economic fluctuations can occur simultaneously.

GDP is

The unemployment rate

A low and stable inflation rate has been a key feature of the U.S. economy for the past 40 years.

Is it a good idea for the government to encourage workers to retire early and give them incentives to do so? How would this policy affect the economy's potential GDP?

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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