Question 1

Business cycles are defined by the expansion, contraction, then expansion again of nominal GDP.

Accepted Answer

A) True 
 B)False

Question 2

The short-run alternation between economic downturns and recessions, then economic upturns and expansions is known as the _____ cycle.

Accepted Answer

A)  business 
B)  contractionary 
C)  expansionary 
D)  disequilibrium 
A)  business 
B)  contractionary 
C)  expansionary 
D)  disequilibrium

Question 3

In an open economy:

Accepted Answer

A)  the exchange rate is determined by the government. 
B)  specialization in activities with a comparative advantage is not possible. 
C)  trade is beneficial only to the larger economy. 
D)  there is trade in goods, services, and/or assets with other countries. 
A)  the exchange rate is determined by the government. 
B)  specialization in activities with a comparative advantage is not possible. 
C)  trade is beneficial only to the larger economy. 
D)  there is trade in goods, services, and/or assets with other countries.

Question 4

In 1936 economic theory changed dramatically with the publication of:

Accepted Answer

A)  The General Theory of Employment, Interest, and Money, by John Maynard Keynes. 
B)  The Wealth of Nations, by Adam Smith. 
C)  The Road to Serfdom, by F. A. Hayek. 
D)  Principles of Economics, by Paul Samuelson. 
A)  The General Theory of Employment, Interest, and Money, by John Maynard Keynes. 
B)  The Wealth of Nations, by Adam Smith. 
C)  The Road to Serfdom, by F. A. Hayek. 
D)  Principles of Economics, by Paul Samuelson.

Question 5

Which statement is TRUE?

Accepted Answer

A)  Inflation means an increase in the overall level of prices. 
B)  Deflation refers to a decrease in prices only in the energy and transportation sectors. 
C)  During inflation most people enjoy an increase in their standard of living even if their wages don't increase. 
D)  Inflation was a problem for the first time in the recession of 1929-1933. 
A)  Inflation means an increase in the overall level of prices. 
B)  Deflation refers to a decrease in prices only in the energy and transportation sectors. 
C)  During inflation most people enjoy an increase in their standard of living even if their wages don't increase. 
D)  Inflation was a problem for the first time in the recession of 1929-1933.

Question 6

Recessions are periods in which output and employment are falling.

Accepted Answer

A) True 
 B)False

Question 7

The trough of the business cycle:

Accepted Answer

A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  is a temporary maximum level of real GDP. 
D)  is a temporary minimum level of real GDP. 
A)  comes right after the expansion phase. 
B)  comes before the recession phase. 
C)  is a temporary maximum level of real GDP. 
D)  is a temporary minimum level of real GDP.

Question 8

If the economy grew at 3% this year and average prices increased _____, people would be better off this year than last year.

Accepted Answer

A)  by 3% 
B)  faster than 3% 
C)  less than 3% 
D)  faster than 10% 
A)  by 3% 
B)  faster than 3% 
C)  less than 3% 
D)  faster than 10%

Question 9

The onset of the Great Depression:

Accepted Answer

A)  was not a shock to anyone, since most economists predicted the Roaring Twenties were bound to end in disaster. 
B)  caused a disagreement between the Hoover administration and conventional economists because Hoover wanted the government to intervene much more quickly than most others. 
C)  came as a considerable shock to the conventional wisdom of economics at that time and opened the door for critiques of mainstream thought by economists like John Maynard Keynes. 
D)  was in 1918 at the end of World War I. 
A)  was not a shock to anyone, since most economists predicted the Roaring Twenties were bound to end in disaster. 
B)  caused a disagreement between the Hoover administration and conventional economists because Hoover wanted the government to intervene much more quickly than most others. 
C)  came as a considerable shock to the conventional wisdom of economics at that time and opened the door for critiques of mainstream thought by economists like John Maynard Keynes. 
D)  was in 1918 at the end of World War I.

Question 10

An open economy:

Accepted Answer

A)  trades only with its neighbors. 
B)  trades goods but not services or assets with other countries. 
C)  does not trade goods, services, or assets with other countries. 
D)  trades goods and services with other countries. 
A)  trades only with its neighbors. 
B)  trades goods but not services or assets with other countries. 
C)  does not trade goods, services, or assets with other countries. 
D)  trades goods and services with other countries.

Question 11

Inflation:

Accepted Answer

A)  raises the cost of making purchases. 
B)  can result in a decrease in barter transactions. 
C)  encourages people to hold cash. 
D)  makes borrowers worse off. 
A)  raises the cost of making purchases. 
B)  can result in a decrease in barter transactions. 
C)  encourages people to hold cash. 
D)  makes borrowers worse off.

Question 12

Economists use the term long-term growth to indicate:

Accepted Answer

A)  the expansion phase of the business cycle. 
B)  growth of the economy over several decades. 
C)  growth of the economy over one to five years. 
D)  long-run growth of the value of a company. 
A)  the expansion phase of the business cycle. 
B)  growth of the economy over several decades. 
C)  growth of the economy over one to five years. 
D)  long-run growth of the value of a company.

Question 13

In a typical business cycle, the peak is immediately followed by the:

Accepted Answer

A)  recession. 
B)  trough. 
C)  expansion. 
D)  depression. 
A)  recession. 
B)  trough. 
C)  expansion. 
D)  depression.

Question 14

Fiscal policy attempts to affect the overall level of spending through:

Accepted Answer

A)  changes in the inflation rate. 
B)  changes in the quantity of money or the interest rate. 
C)  changes in tax policy or government spending. 
D)  discretionary regulation of profits and wages. 
A)  changes in the inflation rate. 
B)  changes in the quantity of money or the interest rate. 
C)  changes in tax policy or government spending. 
D)  discretionary regulation of profits and wages.

Question 15

When the Great Depression reached its trough in 1933, the unemployment rate was approximately _____%.

Accepted Answer

A)  5 
B)  10 
C)  25 
D)  50 
A)  5 
B)  10 
C)  25 
D)  50

Question 16

The point at which a recession ends and the expansion begins is called the:

Accepted Answer

A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag. 
A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag.

Question 17

A depression occurs when:

Accepted Answer

A)  both output and employment increase. 
B)  the economic downturn becomes extremely deep and prolonged. 
C)  both price level and unemployment increase. 
D)  output rises but employment remains unchanged. 
A)  both output and employment increase. 
B)  the economic downturn becomes extremely deep and prolonged. 
C)  both price level and unemployment increase. 
D)  output rises but employment remains unchanged.

Question 18

One type of macroeconomic policy is antitrust enforcement.

Accepted Answer

A) True 
 B)False

Question 19

Promotion of employment and growth in the economy as a whole is the focus of:

Accepted Answer

A)  macroeconomics. 
B)  fiscal policy. 
C)  monetary policy. 
D)  microeconomics. 
A)  macroeconomics. 
B)  fiscal policy. 
C)  monetary policy. 
D)  microeconomics.

Question 20

Among the tools available to macroeconomic policy makers is:

Accepted Answer

A)  fiscal policy, for use in manipulating government spending and taxation. 
B)  antitrust policy, to break up monopolies. 
C)  environmental policy, to clean up the economy. 
D)  improving standards for food and drugs. 
A)  fiscal policy, for use in manipulating government spending and taxation. 
B)  antitrust policy, to break up monopolies. 
C)  environmental policy, to clean up the economy. 
D)  improving standards for food and drugs.

Business cycles are defined by the expansion, contraction, then expansion again of nominal GDP.

The short-run alternation between economic downturns and recessions, then economic upturns and expansions is known as the _____ cycle.

In an open economy:

In 1936 economic theory changed dramatically with the publication of:

Which statement is TRUE?

Recessions are periods in which output and employment are falling.

The trough of the business cycle:

If the economy grew at 3% this year and average prices increased _____, people would be better off this year than last year.

The onset of the Great Depression:

An open economy:

Inflation:

Economists use the term long-term growth to indicate:

In a typical business cycle, the peak is immediately followed by the:

Fiscal policy attempts to affect the overall level of spending through:

When the Great Depression reached its trough in 1933, the unemployment rate was approximately _____%.

The point at which a recession ends and the expansion begins is called the:

A depression occurs when:

One type of macroeconomic policy is antitrust enforcement.

Promotion of employment and growth in the economy as a whole is the focus of:

Among the tools available to macroeconomic policy makers is:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 6: Macroeconomics: the Big Picture

Business cycles are defined by the expansion, contraction, then expansion again of nominal GDP.

The short-run alternation between economic downturns and recessions, then economic upturns and expansions is known as the _____ cycle.

In an open economy:

In 1936 economic theory changed dramatically with the publication of:

Which statement is TRUE?

Recessions are periods in which output and employment are falling.

The trough of the business cycle:

If the economy grew at 3% this year and average prices increased _____, people would be better off this year than last year.

The onset of the Great Depression:

An open economy:

Inflation:

Economists use the term long-term growth to indicate:

In a typical business cycle, the peak is immediately followed by the:

Fiscal policy attempts to affect the overall level of spending through:

When the Great Depression reached its trough in 1933, the unemployment rate was approximately _____%.

The point at which a recession ends and the expansion begins is called the:

A depression occurs when:

One type of macroeconomic policy is antitrust enforcement.

Promotion of employment and growth in the economy as a whole is the focus of:

Among the tools available to macroeconomic policy makers is:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters