Question 1

Monetary 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 and 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 and the interest rate. 
C)  changes in tax policy or government spending. 
D)  discretionary regulation of profits and wages.

Question 2

Changing the level of government spending is an example of _____ policy.

Accepted Answer

A)  fiscal 
B)  interest rate 
C)  monetary 
D)  exchange rate 
A)  fiscal 
B)  interest rate 
C)  monetary 
D)  exchange rate

Question 3

John Maynard Keynes believed that the government should:

Accepted Answer

A)  actively try to mitigate the effects of recessions by using fiscal and monetary policies. 
B)  not interfere with the economy but let the economy self-correct. 
C)  intervene only when there is a boom but let the recession run its course. 
D)  not use fiscal and monetary policies, as these policies have long-term adverse effects. 
A)  actively try to mitigate the effects of recessions by using fiscal and monetary policies. 
B)  not interfere with the economy but let the economy self-correct. 
C)  intervene only when there is a boom but let the recession run its course. 
D)  not use fiscal and monetary policies, as these policies have long-term adverse effects.

Question 4

Monetary policy attempts to affect the overall level of spending by making changes in:

Accepted Answer

A)  taxes. 
B)  taxes and spending. 
C)  taxes and interest rates. 
D)  interest rates and the quantity of money. 
A)  taxes. 
B)  taxes and spending. 
C)  taxes and interest rates. 
D)  interest rates and the quantity of money.

Question 5

For the past several months, per capita output has increased at a slower and slower rate. Over the same period, the unemployment rate has been falling, but it appears that both have leveled off. Where in the business cycle is the economy?

Accepted Answer

A)  peak 
B)  recession 
C)  trough 
D)  expansion 
A)  peak 
B)  recession 
C)  trough 
D)  expansion

Question 6

If wages grew at 5% last year and average prices grew at 3%, then the average worker:

Accepted Answer

A)  is better off. 
B)  is worse off. 
C)  has lost purchasing power. 
D)  is unaffected. 
A)  is better off. 
B)  is worse off. 
C)  has lost purchasing power. 
D)  is unaffected.

Question 7

If macroeconomic policy has been successful over time, it is likely that the economy has NOT seen:

Accepted Answer

A)  any inflation. 
B)  any severe recessions. 
C)  any unemployment. 
D)  a business cycle. 
A)  any inflation. 
B)  any severe recessions. 
C)  any unemployment. 
D)  a business cycle.

Question 8

The view that the government should take an active role in the macroeconomy dates to:

Accepted Answer

A)  the Civil War. 
B)  World War I. 
C)  the Great Depression. 
D)  the Vietnam War. 
A)  the Civil War. 
B)  World War I. 
C)  the Great Depression. 
D)  the Vietnam War.

Question 9

Inflation affects people adversely because:

Accepted Answer

A)  nominal income falls. 
B)  purchasing power tends to increase. 
C)  the budget deficit increases. 
D)  it causes money to lose its value over time. 
A)  nominal income falls. 
B)  purchasing power tends to increase. 
C)  the budget deficit increases. 
D)  it causes money to lose its value over time.

Question 10

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

Accepted Answer

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

Question 11

Inflation:

Accepted Answer

A)  is a movement of the economy toward economic growth. 
B)  can be thought of as an increase in a nation's standard of living. 
C)  is a sustained fall in the overall level of prices. 
D)  is an increase in the overall level of prices. 
A)  is a movement of the economy toward economic growth. 
B)  can be thought of as an increase in a nation's standard of living. 
C)  is a sustained fall in the overall level of prices. 
D)  is an increase in the overall level of prices.

Question 12

The most painful consequence of a recession is:

Accepted Answer

A)  rising unemployment. 
B)  increasing inflation. 
C)  increasing aggregate output. 
D)  higher interest rates. 
A)  rising unemployment. 
B)  increasing inflation. 
C)  increasing aggregate output. 
D)  higher interest rates.

Question 13

Which is MOST likely a macroeconomic, not microeconomic, question?

Accepted Answer

A)  Is the national unemployment rate rising or falling? 
B)  Are consumers buying more bottled water and less fruit juice? 
C)  Are salaries for nurses rising or falling? 
D)  Should a tax be levied on each ton of carbon dioxide a factory emits? 
A)  Is the national unemployment rate rising or falling? 
B)  Are consumers buying more bottled water and less fruit juice? 
C)  Are salaries for nurses rising or falling? 
D)  Should a tax be levied on each ton of carbon dioxide a factory emits?

Question 14

The concept that the whole is greater than the sum of its parts best characterizes:

Accepted Answer

A)  microeconomics. 
B)  supply and demand. 
C)  macroeconomics. 
D)  business forecasting. 
A)  microeconomics. 
B)  supply and demand. 
C)  macroeconomics. 
D)  business forecasting.

Question 15

The trade balance is the difference between the value of:

Accepted Answer

A)  the trade deficit and the budget deficit. 
B)  exports and imports. 
C)  the exchange rates of two countries that are engaged in international trade. 
D)  the national debt and the foreign debt. 
A)  the trade deficit and the budget deficit. 
B)  exports and imports. 
C)  the exchange rates of two countries that are engaged in international trade. 
D)  the national debt and the foreign debt.

Question 16

If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as the:

Accepted Answer

A)  quantity theory. 
B)  crowding-out theory. 
C)  paradox of thrift. 
D)  permanent income hypothesis. 
A)  quantity theory. 
B)  crowding-out theory. 
C)  paradox of thrift. 
D)  permanent income hypothesis.

Question 17

An increase in the nation's _____ is generally accepted as a long-run indicator of a rising standard of living.

Accepted Answer

A)  output per person 
B)  unemployment rate 
C)  inflation rate 
D)  trade deficit 
A)  output per person 
B)  unemployment rate 
C)  inflation rate 
D)  trade deficit

Question 18

Following a trough, real GDP increases.

Accepted Answer

A) True 
 B)False

Question 19

What do a rubber-necking traffic jam and the paradox of thrift have in common?

Accepted Answer

A)  Individual behavior has large negative consequences for the whole of society. 
B)  Seemingly bad behavior ends up harming everyone. 
C)  Seemingly careless behavior leads to good times for all. 
D)  Government intervention can only make matters worse. 
A)  Individual behavior has large negative consequences for the whole of society. 
B)  Seemingly bad behavior ends up harming everyone. 
C)  Seemingly careless behavior leads to good times for all. 
D)  Government intervention can only make matters worse.

Question 20

A nation whose value of imports exceeds its value of exports is said to have:

Accepted Answer

A)  hyperinflation. 
B)  a trade deficit. 
C)  price stability. 
D)  a trade surplus. 
A)  hyperinflation. 
B)  a trade deficit. 
C)  price stability. 
D)  a trade surplus.

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

Changing the level of government spending is an example of _____ policy.

John Maynard Keynes believed that the government should:

Monetary policy attempts to affect the overall level of spending by making changes in:

For the past several months, per capita output has increased at a slower and slower rate. Over the same period, the unemployment rate has been falling, but it appears that both have leveled off. Where in the business cycle is the economy?

If wages grew at 5% last year and average prices grew at 3%, then the average worker:

If macroeconomic policy has been successful over time, it is likely that the economy has NOT seen:

The view that the government should take an active role in the macroeconomy dates to:

Inflation affects people adversely because:

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

Inflation:

The most painful consequence of a recession is:

Which is MOST likely a macroeconomic, not microeconomic, question?

The concept that the whole is greater than the sum of its parts best characterizes:

The trade balance is the difference between the value of:

If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as the:

An increase in the nation's _____ is generally accepted as a long-run indicator of a rising standard of living.

Following a trough, real GDP increases.

What do a rubber-necking traffic jam and the paradox of thrift have in common?

A nation whose value of imports exceeds its value of exports is said to have:

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

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

Changing the level of government spending is an example of _____ policy.

John Maynard Keynes believed that the government should:

Monetary policy attempts to affect the overall level of spending by making changes in:

For the past several months, per capita output has increased at a slower and slower rate. Over the same period, the unemployment rate has been falling, but it appears that both have leveled off. Where in the business cycle is the economy?

If wages grew at 5% last year and average prices grew at 3%, then the average worker:

If macroeconomic policy has been successful over time, it is likely that the economy has NOT seen:

The view that the government should take an active role in the macroeconomy dates to:

Inflation affects people adversely because:

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

Inflation:

The most painful consequence of a recession is:

Which is MOST likely a macroeconomic, not microeconomic, question?

The concept that the whole is greater than the sum of its parts best characterizes:

The trade balance is the difference between the value of:

If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as the:

An increase in the nation's _____ is generally accepted as a long-run indicator of a rising standard of living.

Following a trough, real GDP increases.

What do a rubber-necking traffic jam and the paradox of thrift have in common?

A nation whose value of imports exceeds its value of exports is said to have:

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