Question 1

Capital, as defined in the text, is the total amount of money available to produce the goods and services.

Accepted Answer

A) True 
 B)False

Question 2

A key assumption of the theory of economic fluctuations is that real GDP fluctuates around potential GDP.

Accepted Answer

A) True 
 B)False

Question 3

Changes in know-how have very little effect on economic growth.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that the hypothetical country of Malova experienced in 2017 a negative real interest rate of -2 percent, with a corresponding inflation rate of 12 percent. What must have been the prevalent nominal interest in Malova during 2017?

Accepted Answer

A) 14 percent 
B) 12 percent 
C) -14 percent 
D) -10 percent 
E) None of these 
A) 14 percent 
B) 12 percent 
C) -14 percent 
D) -10 percent 
E) None of these

Question 5

The economic downturn of 2008-2009 is commonly called

Accepted Answer

A) the Great Depression. 
B) the Great Moderation. 
C) the Great Recession. 
D) the Great Inflation. 
E) None of these 
A) the Great Depression. 
B) the Great Moderation. 
C) the Great Recession. 
D) the Great Inflation. 
E) None of these

Question 6

Exhibit 17-1
  
-In Exhibit 17-1, the best example of a recession phase is

Accepted Answer

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

Question 7

Which of the following statements is true?

Accepted Answer

A) The economy returns to normal when a recession ends. 
B) When a recession ends, most people feel the effects of an improving economy. 
C) The most recent economic expansion lasted about 26 years. 
D) A recession is not over until the unemployment rate begins to fall. 
E) The most recent recession officially started in December 2007. 
A) The economy returns to normal when a recession ends. 
B) When a recession ends, most people feel the effects of an improving economy. 
C) The most recent economic expansion lasted about 26 years. 
D) A recession is not over until the unemployment rate begins to fall. 
E) The most recent recession officially started in December 2007.

Question 8

Which of the following best describes the behavior of real GDP in the United States?

Accepted Answer

A) A long-term downward trend and more pronounced economic fluctuations in recent times 
B) A long-term downward trend and less pronounced economic fluctuations in recent times 
C) A long-term upward trend and more pronounced economic fluctuations in recent times 
D) long-term upward trend and less pronounced economic fluctuations in recent timesMo derate 
A) A long-term downward trend and more pronounced economic fluctuations in recent times 
B) A long-term downward trend and less pronounced economic fluctuations in recent times 
C) A long-term upward trend and more pronounced economic fluctuations in recent times 
D) long-term upward trend and less pronounced economic fluctuations in recent timesMo derate

Question 9

The economy of the United States was increasingly less stable in the period of 1980-2006, with economic fluctuations at the end of the 1990s that were much larger than those experienced during the rest of the twentieth century.

Accepted Answer

A) True 
 B)False

Question 10

When a recession is over, do people begin to immediately feel the effects of an improving economy? Use the experience of the most recent recession to justify your answer.

Accepted Answer

A recession is over when real GDP stops

Question 11

The real interest rate is

Accepted Answer

A) the difference between the stated, or nominal, interest rate and the expected rate of inflation. 
B) the difference between the stated, or nominal, interest rate and the rate of growth of real GDP. 
C) the sum of the stated, or nominal, interest rate plus the expected inflation rate. 
D) the rate of interest on Treasury bills. 
E) the same as the prime rate. 
A) the difference between the stated, or nominal, interest rate and the expected rate of inflation. 
B) the difference between the stated, or nominal, interest rate and the rate of growth of real GDP. 
C) the sum of the stated, or nominal, interest rate plus the expected inflation rate. 
D) the rate of interest on Treasury bills. 
E) the same as the prime rate.

Question 12

Exhibit 17-5  
-Exhibit 17-5 shows real GDP from March 2015 through December 2017 for country A. Would the move from point A to point B be officially labeled a recession? Explain briefly.

Accepted Answer

Yes, the move from point A to

Question 13

Which of the following statements is true?

Accepted Answer

A) If real GDP grows faster than population, the real GDP per capita will decrease. 
B) If real GDP grows slower than population, the real GDP per capita will increase. 
C) If real GDP and population grow at the same rate, the real GDP per capita will remain constant. 
D) None of these 
E) All of these 
A) If real GDP grows faster than population, the real GDP per capita will decrease. 
B) If real GDP grows slower than population, the real GDP per capita will increase. 
C) If real GDP and population grow at the same rate, the real GDP per capita will remain constant. 
D) None of these 
E) All of these

Question 14

The following table gives some recent data on rates of inflation for two hypothetical countries. How does the inflation rate in the United States over this same time period compare with the inflation rate in these two countries?

Accepted Answer

The rate of inflation in country A was v

Question 15

Everybody has benefited from the economic growth of the past 50 years.

Accepted Answer

A) True 
 B)False

Question 16

Does it make a difference if the rate of growth in real GDP per capita changes by less than a percentage point? Justify your answer using evidence from U.S. experience.

Accepted Answer

Small differences in economic growth can

Question 17

The Great Recession and other economic developments in the United States between 2007 and 2016 were isolated, so they were not shared by other industrial nations in Europe.

Accepted Answer

A) True 
 B)False

Question 18

There is evidence from recent U.S. economic trends that inflation and interest rates rise before a recession and fall in the aftermath.

Accepted Answer

A) True 
 B)False

Question 19

Based on the experience of the previous 50 years, there is good reason to expect the rate of inflation to equal zero, on average.

Accepted Answer

A) True 
 B)False

Exam 17: Macroeconomics: the Big Picture

Capital, as defined in the text, is the total amount of money available to produce the goods and services.

A key assumption of the theory of economic fluctuations is that real GDP fluctuates around potential GDP.

Changes in know-how have very little effect on economic growth.

Suppose that the hypothetical country of Malova experienced in 2017 a negative real interest rate of -2 percent, with a corresponding inflation rate of 12 percent. What must have been the prevalent nominal interest in Malova during 2017?

The economic downturn of 2008-2009 is commonly called

Exhibit 17-1 -In Exhibit 17-1, the best example of a recession phase is

Which of the following statements is true?

Which of the following best describes the behavior of real GDP in the United States?

The economy of the United States was increasingly less stable in the period of 1980-2006, with economic fluctuations at the end of the 1990s that were much larger than those experienced during the rest of the twentieth century.

When a recession is over, do people begin to immediately feel the effects of an improving economy? Use the experience of the most recent recession to justify your answer.

The real interest rate is

Exhibit 17-5 -Exhibit 17-5 shows real GDP from March 2015 through December 2017 for country A. Would the move from point A to point B be officially labeled a recession? Explain briefly.

Which of the following statements is true?

The following table gives some recent data on rates of inflation for two hypothetical countries. How does the inflation rate in the United States over this same time period compare with the inflation rate in these two countries?

Everybody has benefited from the economic growth of the past 50 years.

Does it make a difference if the rate of growth in real GDP per capita changes by less than a percentage point? Justify your answer using evidence from U.S. experience.

The Great Recession and other economic developments in the United States between 2007 and 2016 were isolated, so they were not shared by other industrial nations in Europe.

There is evidence from recent U.S. economic trends that inflation and interest rates rise before a recession and fall in the aftermath.

Based on the experience of the previous 50 years, there is good reason to expect the rate of inflation to equal zero, on average.

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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