Question 1

If the level of investment spending decreases,

Accepted Answer

A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases. 
A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases. B

Question 2

If the flow of net taxes to government is less than the flow of government purchases, the government budget is said to be in _______ and the government must _________in the financial markets.

Accepted Answer

A)  surplus; buy back its bonds 
B)  surplus; sell bonds 
C)  deficit; sell bonds 
D)  deficit; buy back its bonds 
A)  surplus; buy back its bonds 
B)  surplus; sell bonds 
C)  deficit; sell bonds 
D)  deficit; buy back its bonds C

Question 3

If decision makers don't think about the future, economists say they would have

Accepted Answer

A)  static expectations. 
B)  rational expectations. 
C)  dynamic expectations. 
D)  adaptive expectations. 
A)  static expectations. 
B)  rational expectations. 
C)  dynamic expectations. 
D)  adaptive expectations. A

Question 4

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Accepted Answer

A)  If the economy satisfies the equilibrium condition, it will move toward the condition. 
B)  If the economy does not satisfy the equilibrium condition, it will remain in the same place. 
C)  If the economy does not satisfy the equilibrium condition, it will move away from the condition. 
D)  If the economy does not satisfy the equilibrium condition, it will move toward the condition. 
A)  If the economy satisfies the equilibrium condition, it will move toward the condition. 
B)  If the economy does not satisfy the equilibrium condition, it will remain in the same place. 
C)  If the economy does not satisfy the equilibrium condition, it will move away from the condition. 
D)  If the economy does not satisfy the equilibrium condition, it will move toward the condition.

Question 5

Output per unit of labor (Y/L) will _______ if ______________.

Accepted Answer

A)  decrease; the capital-labor ratio (K/L) increases 
B)  decrease; the efficiency of labor (
E)  increases 
C)  decrease; the efficiency of labor (
E)  decreases 
D)  increase; the capital-labor ratio (K/L) decreases and the efficiency of labor (
E)  increases 
A)  decrease; the capital-labor ratio (K/L) increases 
B)  decrease; the efficiency of labor (
E)  increases 
C)  decrease; the efficiency of labor (
E)  decreases 
D)  increase; the capital-labor ratio (K/L) decreases and the efficiency of labor (
E)  increases

Question 6

Whenever the Cobb-Douglas production function is used, the parameters that are the exponents will be

Accepted Answer

A)  between zero and one. 
B)  greater than one. 
C)  less than zero. 
D)  none of the above. 
A)  between zero and one. 
B)  greater than one. 
C)  less than zero. 
D)  none of the above.

Question 7

Which of the following is included in the more complicated circular flow diagram?

Accepted Answer

A)  Households 
B)  Businesses 
C)  Government 
D)  All of the above 
A)  Households 
B)  Businesses 
C)  Government 
D)  All of the above

Question 8

According to the Phillips Curve, in the short-run

Accepted Answer

A)  if unemployment decreases, real GDP will increase. 
B)  if unemployment decreases, the long-run real rate of interest will increase. 
C)  if unemployment decreases, inflation will increase. 
D)  if unemployment increases, inflation will increase. 
A)  if unemployment decreases, real GDP will increase. 
B)  if unemployment decreases, the long-run real rate of interest will increase. 
C)  if unemployment decreases, inflation will increase. 
D)  if unemployment increases, inflation will increase.

Question 9

Each of the following is one of the four dominant concepts of the rhetoric of economics except

Accepted Answer

A)  the image of the circular flow of purchasing power through the economy. 
B)  the use of the word "market" to describe a physical place where exchange occurs. 
C)  the idea of "equilibrium": that economic processes tend to move the economy into some sort of balance, . and to keep the economy at this point of balance. 
D)  the use of graphs and diagrams as an alternative to equations and arithmetic in expressing economic relationships. 
A)  the image of the circular flow of purchasing power through the economy. 
B)  the use of the word "market" to describe a physical place where exchange occurs. 
C)  the idea of "equilibrium": that economic processes tend to move the economy into some sort of balance, . and to keep the economy at this point of balance. 
D)  the use of graphs and diagrams as an alternative to equations and arithmetic in expressing economic relationships.

Question 10

The simplified circular flow diagram links

Accepted Answer

A)  households and businesses via incomes and spending. 
B)  households and businesses via taxes and spending. 
C)  businesses and government via taxes and spending. 
D)  businesses and government via income and spending. 
A)  households and businesses via incomes and spending. 
B)  households and businesses via taxes and spending. 
C)  businesses and government via taxes and spending. 
D)  businesses and government via income and spending.

Question 11

Economists call the process of reducing the complexity and variation of the real-world economy into a handful of equations

Accepted Answer

A)  "building a model." 
B)  "building a house." 
C)  "building a representative structure." 
D)  "crafting a puzzle." 
A)  "building a model." 
B)  "building a house." 
C)  "building a representative structure." 
D)  "crafting a puzzle."

Question 12

Output per unit of labor (Y/L) will _______ if ______________.

Accepted Answer

A)  decrease; the capital-labor ratio (K/L) decreases 
B)  decrease; the efficiency of labor (
E)  increases 
C)  decrease; the capital-labor ratio (K/L) increases 
D)  stay the same; the efficiency of labor (
E)  decreases 
A)  decrease; the capital-labor ratio (K/L) decreases 
B)  decrease; the efficiency of labor (
E)  increases 
C)  decrease; the capital-labor ratio (K/L) increases 
D)  stay the same; the efficiency of labor (
E)  decreases

Question 13

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Accepted Answer

A)  If the economy satisfies the equilibrium condition, it will move toward the condition. 
B)  If the economy satisfies the equilibrium condition, it will remain in the same place. 
C)  If the economy does not satisfy the equilibrium condition, it will move away from the condition. 
D)  If the economy does not satisfy the equilibrium condition, it will remain in the same place. 
A)  If the economy satisfies the equilibrium condition, it will move toward the condition. 
B)  If the economy satisfies the equilibrium condition, it will remain in the same place. 
C)  If the economy does not satisfy the equilibrium condition, it will move away from the condition. 
D)  If the economy does not satisfy the equilibrium condition, it will remain in the same place.

Question 14

Each of the following is part of an economy's production function except

Accepted Answer

A)  the economy's investment-labor ratio. 
B)  the level of technology or efficiency of the labor force. 
C)  the level of real GDP per worker. 
D)  the economy's capital-labor ratio. 
A)  the economy's investment-labor ratio. 
B)  the level of technology or efficiency of the labor force. 
C)  the level of real GDP per worker. 
D)  the economy's capital-labor ratio.

Question 15

If decision makers assume that the future is going to be like the recent past, economists say they would have

Accepted Answer

A)  static expectations. 
B)  rational expectations. 
C)  dynamic expectations. 
D)  adaptive expectations. 
A)  static expectations. 
B)  rational expectations. 
C)  dynamic expectations. 
D)  adaptive expectations.

Question 16

Use the Cobb-Douglas production function to answer this question. Suppose that the capital-labor ratio and the efficiency of the labor force are each raised to the power 1/2. If capital-labor ratio grows at 4% per year and if the efficiency of the labor force grows at 2% per year, then output per worker

Accepted Answer

A)  will grow at 6% per year. 
B)  will grow at 2% per year. 
C)  will grow at 3% per year. 
D)  will grow at 5% per year. 
A)  will grow at 6% per year. 
B)  will grow at 2% per year. 
C)  will grow at 3% per year. 
D)  will grow at 5% per year.

Question 17

If the level of consumption spending increases and the level of net exports decreases,

Accepted Answer

A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases. 
A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases.

Question 18

Each of the following is a fundamental step that almost every successful construction of a macroeconomic model follows except

Accepted Answer

A)  the use of representative agents. 
B)  a focus on the opportunity costs in undertaking agents' decisions. 
C)  careful attention to the effect of people's expectations on events. 
D)  careful attention to making the model as complicated as possible. 
A)  the use of representative agents. 
B)  a focus on the opportunity costs in undertaking agents' decisions. 
C)  careful attention to the effect of people's expectations on events. 
D)  careful attention to making the model as complicated as possible.

Question 19

If the level of consumption spending decreases and the level of net exports decreases,

Accepted Answer

A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases. 
A)  the level of aggregate demand increases. 
B)  the level of aggregate demand decreases. 
C)  the level of aggregate demand could increase or decrease, depending on the relative magnitude of the changes. 
D)  the level of taxes deceases.

Question 20

K/L is

Accepted Answer

A)  the capital per unit of output ratio. 
B)  the capital per unit of labor ratio. 
C)  the output per unit of labor ratio. 
D)  the efficiency of output ratio. 
A)  the capital per unit of output ratio. 
B)  the capital per unit of labor ratio. 
C)  the output per unit of labor ratio. 
D)  the efficiency of output ratio.

If the level of investment spending decreases,

If the flow of net taxes to government is less than the flow of government purchases, the government budget is said to be in _ and the government must ___in the financial markets.

If decision makers don't think about the future, economists say they would have

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Output per unit of labor (Y/L) will _ if ________.

Whenever the Cobb-Douglas production function is used, the parameters that are the exponents will be

Which of the following is included in the more complicated circular flow diagram?

According to the Phillips Curve, in the short-run

Each of the following is one of the four dominant concepts of the rhetoric of economics except

The simplified circular flow diagram links

Economists call the process of reducing the complexity and variation of the real-world economy into a handful of equations

Output per unit of labor (Y/L) will _ if ________.

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Each of the following is part of an economy's production function except

If decision makers assume that the future is going to be like the recent past, economists say they would have

If the level of consumption spending increases and the level of net exports decreases,

Each of the following is a fundamental step that almost every successful construction of a macroeconomic model follows except

If the level of consumption spending decreases and the level of net exports decreases,

K/L is

Introduction to Macroeconomics

Measuring the Macroeconomy

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

Exam 3: Thinking Like an Economist

If the level of investment spending decreases,

If the flow of net taxes to government is less than the flow of government purchases, the government budget is said to be in _______ and the government must _________in the financial markets.

If decision makers don't think about the future, economists say they would have

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Output per unit of labor (Y/L) will _______ if ______________.

Whenever the Cobb-Douglas production function is used, the parameters that are the exponents will be

Which of the following is included in the more complicated circular flow diagram?

According to the Phillips Curve, in the short-run

Each of the following is one of the four dominant concepts of the rhetoric of economics except

The simplified circular flow diagram links

Economists call the process of reducing the complexity and variation of the real-world economy into a handful of equations

Output per unit of labor (Y/L) will _______ if ______________.

Which of the following is one of the two requirements that must be satisfied for an equation to be considered an equilibrium condition?

Each of the following is part of an economy's production function except

If decision makers assume that the future is going to be like the recent past, economists say they would have

If the level of consumption spending increases and the level of net exports decreases,

Each of the following is a fundamental step that almost every successful construction of a macroeconomic model follows except

If the level of consumption spending decreases and the level of net exports decreases,

K/L is

Introduction to Macroeconomics

Measuring the Macroeconomy

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

Changes in the Macroeconomy and Changes in Macroeconomic Policy

The Future of Macroeconomics

Epilogue

Filters

If the flow of net taxes to government is less than the flow of government purchases, the government budget is said to be in _ and the government must ___in the financial markets.

Output per unit of labor (Y/L) will _ if ________.

Output per unit of labor (Y/L) will _ if ________.