Question 1

The effect throughout the entire economy of one individual's increase in spending will be

Accepted Answer

A)  less than the individual's spending. 
B)  equal to the individual's spending. 
C)  greater than the individual's spending. 
D)  offset by another individual's saving. 
A)  less than the individual's spending. 
B)  equal to the individual's spending. 
C)  greater than the individual's spending. 
D)  offset by another individual's saving.

Question 2

If the U.S.economy is experiencing falling price levels,the

Accepted Answer

A)  expenditure schedule will shift downward. 
B)  expenditure schedule will shift upward. 
C)  slope of the expenditure schedule increases. 
D)  slope of the expenditure schedule decreases. 
A)  expenditure schedule will shift downward. 
B)  expenditure schedule will shift upward. 
C)  slope of the expenditure schedule increases. 
D)  slope of the expenditure schedule decreases.

Question 3

When constructing a basic macroeconomic model,several assumptions (not realistic,but necessary to simplify the analysis)are made.Which of the following are assumed to be constant?

Accepted Answer

A)  the price level 
B)  the rate of interest 
C)  the foreign exchange rate 
D)  the level of government spending 
E)  All of the above are held constant. 
A)  the price level 
B)  the rate of interest 
C)  the foreign exchange rate 
D)  the level of government spending 
E)  All of the above are held constant.

Question 4

The multiplier principle explains how

Accepted Answer

A)  any change in the economy will be magnified. 
B)  $1 invested will increase GDP by more than $1. 
C)  expenditures and incomes increase as investment increases. 
D)  All of the above are correct. 
A)  any change in the economy will be magnified. 
B)  $1 invested will increase GDP by more than $1. 
C)  expenditures and incomes increase as investment increases. 
D)  All of the above are correct.

Question 5

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

Accepted Answer

A)  the price level rises. 
B)  the price level falls. 
C)  real income rises. 
D)  real income falls. 
A)  the price level rises. 
B)  the price level falls. 
C)  real income rises. 
D)  real income falls.

Question 6

45° line diagrams show how

Accepted Answer

A)  investment varies with income. 
B)  expenditures vary with income. 
C)  investment spending rises when GDP rises. 
D)  GDP is affected by government purchases. 
A)  investment varies with income. 
B)  expenditures vary with income. 
C)  investment spending rises when GDP rises. 
D)  GDP is affected by government purchases.

Question 7

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

Accepted Answer

A) 20. 
B) 50. 
C) 1.50. 
D) 5.00. 
A) 20. 
B) 50. 
C) 1.50. 
D) 5.00.

Question 8

Figure 9-3
  
-In Figure 9-3,investment plus net exports equals

Accepted Answer

A)  $200 billion. 
B)  $400 billion. 
C)  $600 billion. 
D)  $800 billion. 
E)  $1,200 billion. 
A)  $200 billion. 
B)  $400 billion. 
C)  $600 billion. 
D)  $800 billion. 
E)  $1,200 billion.

Question 9

Equilibrium GDP will not exist where output exceeds aggregate demand because businesses will notice that

Accepted Answer

A)  their profits are positive. 
B)  inventory stocks are building up. 
C)  inventory stocks are being depleted. 
D)  their level of depreciation is rising. 
A)  their profits are positive. 
B)  inventory stocks are building up. 
C)  inventory stocks are being depleted. 
D)  their level of depreciation is rising.

Question 10

What is meant by the concept of a "coordination failure" in macroeconomics?

Accepted Answer

When individual members of an economy re

Question 11

An increase in autonomous consumption has the same equilibrium effect as a(n)

Accepted Answer

A)  decrease in investment. 
B)  increase in investment. 
C)  decrease in net exports. 
D)  increase in taxes. 
A)  decrease in investment. 
B)  increase in investment. 
C)  decrease in net exports. 
D)  increase in taxes.

Question 12

An economic recession in Japan will cause the aggregate demand curve in the United States to shift to the right.

Accepted Answer

A) True 
 B)False

Question 13

A decrease in the price level causes a lower equilibrium quantity demanded.

Accepted Answer

A) True 
 B)False

Question 14

In a simple macroeconomic model,only one component of expenditures is allowed to change:

Accepted Answer

A)  investment. 
B)  consumption. 
C)  net exports. 
D)  government spending. 
E)  transfer payments. 
A)  investment. 
B)  consumption. 
C)  net exports. 
D)  government spending. 
E)  transfer payments.

Question 15

If the economy is suffering a recession,inventories are probably falling.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-3
  
-In Figure 9-3,at $5,000 billion GDP,inventories will be

Accepted Answer

A)  falling, signaling businesses to increase production. 
B)  accumulating, signaling businesses to increase production. 
C)  accumulating, signaling businesses to cut production. 
D)  falling, signaling businesses to cut production. 
A)  falling, signaling businesses to increase production. 
B)  accumulating, signaling businesses to increase production. 
C)  accumulating, signaling businesses to cut production. 
D)  falling, signaling businesses to cut production.

Question 17

If the amount that consumers wish to save at the full employment level of income is greater than the amount that businesses plan to invest,then

Accepted Answer

A)  there will be an inflationary gap. 
B)  there will be a recessionary gap. 
C)  total demand will exceed potential GDP. 
D)  the economy will move to a higher level of output. 
A)  there will be an inflationary gap. 
B)  there will be a recessionary gap. 
C)  total demand will exceed potential GDP. 
D)  the economy will move to a higher level of output.

Question 18

If total spending exceeds total output,then

Accepted Answer

A)  inventory levels will rise. 
B)  inventory levels will remain constant. 
C)  inventory levels will fall. 
D)  output will eventually decrease. 
A)  inventory levels will rise. 
B)  inventory levels will remain constant. 
C)  inventory levels will fall. 
D)  output will eventually decrease.

Question 19

Assume a simple macroeconomic model.When inventories rise unexpectedly,

Accepted Answer

A)  income is above its equilibrium value. 
B)  income will rise until it reaches its equilibrium value. 
C)  total spending is higher than total output. 
D)  All of the above. 
A)  income is above its equilibrium value. 
B)  income will rise until it reaches its equilibrium value. 
C)  total spending is higher than total output. 
D)  All of the above.

Question 20

Figure 9-3
  
-In Figure 9-3,saving at equilibrium GDP is.

Accepted Answer

A)  $1,200 billion. 
B)  $1,000 billion. 
C)  $800 billion. 
D)  $600 billion. 
E)  $400 billion. 
A)  $1,200 billion. 
B)  $1,000 billion. 
C)  $800 billion. 
D)  $600 billion. 
E)  $400 billion.

The effect throughout the entire economy of one individual's increase in spending will be

If the U.S.economy is experiencing falling price levels,the

When constructing a basic macroeconomic model,several assumptions (not realistic,but necessary to simplify the analysis)are made.Which of the following are assumed to be constant?

The multiplier principle explains how

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

45° line diagrams show how

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

Figure 9-3 -In Figure 9-3,investment plus net exports equals

Equilibrium GDP will not exist where output exceeds aggregate demand because businesses will notice that

What is meant by the concept of a "coordination failure" in macroeconomics?

An increase in autonomous consumption has the same equilibrium effect as a(n)

An economic recession in Japan will cause the aggregate demand curve in the United States to shift to the right.

A decrease in the price level causes a lower equilibrium quantity demanded.

In a simple macroeconomic model,only one component of expenditures is allowed to change:

If the economy is suffering a recession,inventories are probably falling.

Figure 9-3 -In Figure 9-3,at $5,000 billion GDP,inventories will be

If the amount that consumers wish to save at the full employment level of income is greater than the amount that businesses plan to invest,then

If total spending exceeds total output,then

Assume a simple macroeconomic model.When inventories rise unexpectedly,

Figure 9-3 -In Figure 9-3,saving at equilibrium GDP is.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 9: Demand-Side Equilibrium: Unemployment or Inflation?

The effect throughout the entire economy of one individual's increase in spending will be

If the U.S.economy is experiencing falling price levels,the

When constructing a basic macroeconomic model,several assumptions (not realistic,but necessary to simplify the analysis)are made.Which of the following are assumed to be constant?

The multiplier principle explains how

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

45° line diagrams show how

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

Figure 9-3 -In Figure 9-3,investment plus net exports equals

Equilibrium GDP will not exist where output exceeds aggregate demand because businesses will notice that

What is meant by the concept of a "coordination failure" in macroeconomics?

An increase in autonomous consumption has the same equilibrium effect as a(n)

An economic recession in Japan will cause the aggregate demand curve in the United States to shift to the right.

A decrease in the price level causes a lower equilibrium quantity demanded.

In a simple macroeconomic model,only one component of expenditures is allowed to change:

If the economy is suffering a recession,inventories are probably falling.

Figure 9-3 -In Figure 9-3,at $5,000 billion GDP,inventories will be

If the amount that consumers wish to save at the full employment level of income is greater than the amount that businesses plan to invest,then

If total spending exceeds total output,then

Assume a simple macroeconomic model.When inventories rise unexpectedly,

Figure 9-3 -In Figure 9-3,saving at equilibrium GDP is.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters