Question 1

The clearest sign of economic growth is a(n)

Accepted Answer

A) increase in nominal GDP. 
B) increase in real GDP. 
C) decrease in nominal GDP. 
A) increase in nominal GDP. 
B) increase in real GDP. 
C) decrease in nominal GDP.

Question 2

Nominal GDP is another term for

Accepted Answer

A) current dollar GDP. 
B) constant dollar GDP. 
C) adjusted dollar GDP. 
D) relative value GDP. 
A) current dollar GDP. 
B) constant dollar GDP. 
C) adjusted dollar GDP. 
D) relative value GDP.

Question 3

For a macroeconomist, the case for aggregation is based on two principles⎯1) the composition of demand and supply may not matter for some purposes, and 2)

Accepted Answer

A) during fluctuations markets normally move together. 
B) individual markets allocate resources efficiently. 
C) inflation, unemployment, and growth never go together. 
D) individual markets distribute income efficiently. 
A) during fluctuations markets normally move together. 
B) individual markets allocate resources efficiently. 
C) inflation, unemployment, and growth never go together. 
D) individual markets distribute income efficiently.

Question 4

If a macroeconomist aggregates many markets into one, then

Accepted Answer

A) individual market differences are eliminated. 
B) one must not confuse ravioli and hot dogs. 
C) she is performing a meaningless exercise. 
D) differences between products must still be noted. 
A) individual market differences are eliminated. 
B) one must not confuse ravioli and hot dogs. 
C) she is performing a meaningless exercise. 
D) differences between products must still be noted.

Question 5

The composition of demand and supply in various markets is not important to the question of inflation..

Accepted Answer

A) True 
 B)False

Question 6

The basic organizing framework for both microeconomic and macroeconomic models is

Accepted Answer

A) purely competitive markets. 
B) government planning of the economy. 
C) demand and supply. 
D) democratic socialism. 
E) all of the above. 
A) purely competitive markets. 
B) government planning of the economy. 
C) demand and supply. 
D) democratic socialism. 
E) all of the above.

Question 7

If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy should experience

Accepted Answer

A) unemployment. 
B) recession. 
C) budget surpluses. 
D) inflation. 
A) unemployment. 
B) recession. 
C) budget surpluses. 
D) inflation.

Question 8

In the 1960s, U.S.economy experienced

Accepted Answer

A) a substantial decline in real GDP but limited inflation. 
B) a substantial decline in real GDP coupled with significant inflation. 
C) substantial real GDP growth coupled with significant inflation. 
D) substantial real GDP growth with limited inflation. 
A) a substantial decline in real GDP but limited inflation. 
B) a substantial decline in real GDP coupled with significant inflation. 
C) substantial real GDP growth coupled with significant inflation. 
D) substantial real GDP growth with limited inflation.

Question 9

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

Accepted Answer

A) inward shift of the aggregate demand curve. 
B) outward shift of the aggregate supply curve. 
C) inward shift of the aggregate supply curve. 
D) outward shift of the aggregate demand curve. 
A) inward shift of the aggregate demand curve. 
B) outward shift of the aggregate supply curve. 
C) inward shift of the aggregate supply curve. 
D) outward shift of the aggregate demand curve.

Question 10

The Iranian Revolution in 1979 led to another interruption of oil supplies to the United States.This caused the reoccurrence of

Accepted Answer

A) deflation. 
B) full-employment. 
C) trade surpluses. 
D) stagflation. 
A) deflation. 
B) full-employment. 
C) trade surpluses. 
D) stagflation.

Question 11

GDP does not measure the economic well-being of a nation because:

Accepted Answer

A) ​some things which contribute to well-being have no price tag 
B) ​GDP places no value on leisure 
C) ​ecological costs are not netted out of GDP 
D) ​All of the above are correct. 
A) ​some things which contribute to well-being have no price tag 
B) ​GDP places no value on leisure 
C) ​ecological costs are not netted out of GDP 
D) ​All of the above are correct.

Question 12

The primary benefit to the macroeconomy of increasing government spending is a(n)

Accepted Answer

A) decrease in the price level. 
B) decrease in real GDP. 
C) increase in the price level. 
D) decrease in the unemployment rate. 
A) decrease in the price level. 
B) decrease in real GDP. 
C) increase in the price level. 
D) decrease in the unemployment rate.

Question 13

In the period of U.S.economic history known as the Great Depression, the rate of inflation was generally

Accepted Answer

A) trending upward. 
B) positive. 
C) uncertain. 
D) negative. 
A) trending upward. 
B) positive. 
C) uncertain. 
D) negative.

Question 14

In the United States, GDP has grown slower than the population since 1870.

Accepted Answer

A) True 
 B)False

Question 15

What was suggested by Keynes to move the economy out of a depressed state?

Accepted Answer

A) The invisible hand 
B) The price mechanism 
C) Monetary and fiscal policy 
D) Zero government intervention 
A) The invisible hand 
B) The price mechanism 
C) Monetary and fiscal policy 
D) Zero government intervention

Question 16

The economy in the period 1950 to 1998 behaved differently than the economy in the 1870 to 1940 time period.Economists explain this difference

Accepted Answer

A) in part because of the use of stabilization policy. 
B) because of increases in U.S.population due to the "baby boom." 
C) in part because of the globalization of the economy. 
D) in part because of the use of competition policy. 
A) in part because of the use of stabilization policy. 
B) because of increases in U.S.population due to the "baby boom." 
C) in part because of the globalization of the economy. 
D) in part because of the use of competition policy.

Question 17

An example of an abstraction used in macroeconomics is

Accepted Answer

A) the price level. 
B) total costs. 
C) the tax rate. 
D) the treasury bill rate. 
E) proprietor's income. 
A) the price level. 
B) total costs. 
C) the tax rate. 
D) the treasury bill rate. 
E) proprietor's income.

Question 18

Macroeconomists pay little attention to the composition of aggregate output.

Accepted Answer

A) True 
 B)False

Question 19

Usually, increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence, during World War II, of

Accepted Answer

A) full employment. 
B) government ownership of factories. 
C) full production. 
D) wage and price controls. 
E) high levels of patriotism. 
A) full employment. 
B) government ownership of factories. 
C) full production. 
D) wage and price controls. 
E) high levels of patriotism.

Question 20

Define and distinguish between real and nominal GDP.Explain why the distinction is important to economists.

Accepted Answer

Real GDP (or GDP in constant dollars) is

Exam 22: An Introduction to Macroeconomics

The clearest sign of economic growth is a(n)

Nominal GDP is another term for

For a macroeconomist, the case for aggregation is based on two principles⎯1) the composition of demand and supply may not matter for some purposes, and 2)

If a macroeconomist aggregates many markets into one, then

The composition of demand and supply in various markets is not important to the question of inflation..

The basic organizing framework for both microeconomic and macroeconomic models is

If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy should experience

In the 1960s, U.S.economy experienced

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

The Iranian Revolution in 1979 led to another interruption of oil supplies to the United States.This caused the reoccurrence of

GDP does not measure the economic well-being of a nation because:

The primary benefit to the macroeconomy of increasing government spending is a(n)

In the period of U.S.economic history known as the Great Depression, the rate of inflation was generally

In the United States, GDP has grown slower than the population since 1870.

What was suggested by Keynes to move the economy out of a depressed state?

The economy in the period 1950 to 1998 behaved differently than the economy in the 1870 to 1940 time period.Economists explain this difference

An example of an abstraction used in macroeconomics is

Macroeconomists pay little attention to the composition of aggregate output.

Usually, increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence, during World War II, of

Define and distinguish between real and nominal GDP.Explain why the distinction is important to economists.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He 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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