Question 1

When output __________,employment is expected to __________.

Accepted Answer

A) rises; rise 
B) rises; fall 
C) falls; rise 
D) falls; remain constant 
E) remains constant; fall 
A) rises; rise 
B) rises; fall 
C) falls; rise 
D) falls; remain constant 
E) remains constant; fall

Question 2

Gross world product is

Accepted Answer

A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage,trash,and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period 
A) the value of all final goods and services produced in the world during a given period 
B) the value of all sewage,trash,and bodily fluids produced in the world during a given period 
C) the value of all final goods and services produced in the United States during a given period 
D) the value of all final goods and services produced in all countries of the world except the United States during a given period 
E) the value of all intermediate goods and services produced in the world during a given period

Question 3

A rise in the price level

Accepted Answer

A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based 
A) moves the economy rightward along the aggregate demand curve 
B) moves the economy leftward along the aggregate demand curve 
C) shifts the aggregate demand curve to the left 
D) shifts the aggregate demand curve to the right 
E) is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based

Question 4

Exhibit 5-3  
-In Exhibit 5-3 AD1 and AS1 represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Europe falls,what will the new equilibrium be?

Accepted Answer

A) P2 and GDP1 
B) P3 and GDP6 
C) P6 and GDP5 
D) P4 and GDP3 
E) P5 and GDP2 
A) P2 and GDP1 
B) P3 and GDP6 
C) P6 and GDP5 
D) P4 and GDP3 
E) P5 and GDP2

Question 5

Suppliers have an incentive to increase aggregate output whenever the price level rises faster than the cost of production.

Accepted Answer

A) True 
 B)False

Question 6

Which is true of John Maynard Keynes?

Accepted Answer

A) He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B) He provided a model that closely resembled that of Adam Smith. 
C) He advocated a decrease in the money supply to stabilize the economy. 
D) He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E) He advocated tax increases to balance the federal government's budget during the Great Depression. 
A) He believed that serious economic contractions were natural phases in an otherwise healthy system. 
B) He provided a model that closely resembled that of Adam Smith. 
C) He advocated a decrease in the money supply to stabilize the economy. 
D) He argued that increased government demand should offset reduced private sector demand to prevent depression. 
E) He advocated tax increases to balance the federal government's budget during the Great Depression.

Question 7

An economic variable that is measured per unit of time,such as spending per year,is known as a(n)

Accepted Answer

A) stock variable 
B) periodic variable 
C) expectations variable 
D) flow variable 
E) constant variable 
A) stock variable 
B) periodic variable 
C) expectations variable 
D) flow variable 
E) constant variable

Question 8

The Keynesian approach to government economic policy

Accepted Answer

A) has emphasized the role of individual self-interest as a powerful stabilizing force 
B) has consistently failed to reduce fluctuations in economic activity 
C) was ineffective during the 1960s 
D) highlighted the role of aggregate demand 
E) was rechristened supply-side economics around 1980 
A) has emphasized the role of individual self-interest as a powerful stabilizing force 
B) has consistently failed to reduce fluctuations in economic activity 
C) was ineffective during the 1960s 
D) highlighted the role of aggregate demand 
E) was rechristened supply-side economics around 1980

Question 9

Between the Troubled Asset Relief Program and the American Recovery and Reinvestment Act,the Federal budget deficit

Accepted Answer

A) doubled 
B) tripled 
C) stayed the same 
D) was cut in half 
E) quadrupled 
A) doubled 
B) tripled 
C) stayed the same 
D) was cut in half 
E) quadrupled

Question 10

One explanation of why the aggregate demand curve is downward sloping is that

Accepted Answer

A) as prices fall,nominal income rises and so does the demand for real goods and services 
B) rising prices reduce people's wealth and thereby reduce spending 
C) with falling prices,government decides to spend less to increase the price level 
D) businesses increase investment spending in response to higher interest rates caused by inflation 
E) as prices fall,domestically produced goods become more expensive relative to foreign-produced products,which increases production 
A) as prices fall,nominal income rises and so does the demand for real goods and services 
B) rising prices reduce people's wealth and thereby reduce spending 
C) with falling prices,government decides to spend less to increase the price level 
D) businesses increase investment spending in response to higher interest rates caused by inflation 
E) as prices fall,domestically produced goods become more expensive relative to foreign-produced products,which increases production

Question 11

The U.S.economy has experienced alternating periods of expansion and contraction in economic activity relative to its long-term growth trend in the economy.These are called economic fluctuations or business cycles.

Accepted Answer

A) True 
 B)False

Question 12

The tax cuts passed during the Reagan administration were designed primarily

Accepted Answer

A) to make it easier for consumers to spend 
B) to shift the aggregate demand curve rightward 
C) to reduce the balance-of-payments deficit 
D) to increase the supply of productive resources 
E) to make filling out tax returns easier for the average taxpayer 
A) to make it easier for consumers to spend 
B) to shift the aggregate demand curve rightward 
C) to reduce the balance-of-payments deficit 
D) to increase the supply of productive resources 
E) to make filling out tax returns easier for the average taxpayer

Question 13

Given the following aggregate demand and aggregate supply schedules,determine the equilibrium level of prices and output. Aggregate Demand
Aggregate Supply
(quantity demanded
(quantity supplied
In billions of dollars)
Price Level
In billions of dollars)
$ 100
150
$1,200
200
125
1,000
400
100
800
600
75
600
800
50
400
1,000
25
200

Accepted Answer

A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75 
A) equilibrium output $1,000 and equilibrium price level 25 
B) equilibrium output $800 and equilibrium price level 50 
C) equilibrium output $200 and equilibrium price level 125 
D) equilibrium output $400 and equilibrium price level 25 
E) equilibrium output $600 and equilibrium price level 75

Question 14

The word stagflation describes a situation in which a higher price level occurs simultaneously with

Accepted Answer

A) higher employment 
B) economic growth 
C) lower aggregate output 
D) federal budget deficits 
E) federal budget surpluses 
A) higher employment 
B) economic growth 
C) lower aggregate output 
D) federal budget deficits 
E) federal budget surpluses

Question 15

As the price level increases,the amount of goods and services that consumers,businesses,and governments desire to purchase will change.How will this be illustrated?

Accepted Answer

A) a leftward movement of the aggregate demand curve 
B) a rightward movement of the aggregate demand curve 
C) a movement upward along the aggregate demand curve 
D) a movement downward along the aggregate demand curve 
E) the price level change causes the aggregate supply curve to shift,bringing the economy back into equilibrium 
A) a leftward movement of the aggregate demand curve 
B) a rightward movement of the aggregate demand curve 
C) a movement upward along the aggregate demand curve 
D) a movement downward along the aggregate demand curve 
E) the price level change causes the aggregate supply curve to shift,bringing the economy back into equilibrium

Question 16

An increase in aggregate supply will result in

Accepted Answer

A) lower levels of employment 
B) a rightward shift of the aggregate demand curve 
C) a higher price level 
D) a leftward shift of the aggregate demand curve 
E) an economic expansion 
A) lower levels of employment 
B) a rightward shift of the aggregate demand curve 
C) a higher price level 
D) a leftward shift of the aggregate demand curve 
E) an economic expansion

Question 17

Between 1947 and 2003,U.S.real GDP

Accepted Answer

A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased fivefold 
E) grew faster than did nominal GDP 
A) hardly changed at all 
B) decreased by about 10 percent 
C) doubled 
D) increased fivefold 
E) grew faster than did nominal GDP

Question 18

Exhibit 5-2  
-Refer to Exhibit 5-2.Which line or point represents equilibrium?

Accepted Answer

A) line a 
B) line b 
C) line c 
D) line d 
E) point e 
A) line a 
B) line b 
C) line c 
D) line d 
E) point e

Question 19

Exhibit 5-1    
-In Exhibit 5-1,which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Accepted Answer

A) an increase in household wealth 
B) a fall in domestic interest rates 
C) an increase in government spending 
D) an appreciation of the dollar relative to other currencies 
E) a decrease in the nation's money supply 
A) an increase in household wealth 
B) a fall in domestic interest rates 
C) an increase in government spending 
D) an appreciation of the dollar relative to other currencies 
E) a decrease in the nation's money supply

Question 20

Exhibit 5-1    
-Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

Accepted Answer

A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1 
A) real GDP decreased and then increased 
B) real GDP increased and then decreased 
C) real GDP fell from $10,000 to $6,000 
D) real GDP rose from $6,000 to $10,000 
E) the inflation rate fell from 4 to 1

Exam 5: Introduction to Macroeconomics

When output __________,employment is expected to __________.

Gross world product is

A rise in the price level

Exhibit 5-3 -In Exhibit 5-3 AD1 and AS1 represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Europe falls,what will the new equilibrium be?

Suppliers have an incentive to increase aggregate output whenever the price level rises faster than the cost of production.

Which is true of John Maynard Keynes?

An economic variable that is measured per unit of time,such as spending per year,is known as a(n)

The Keynesian approach to government economic policy

Between the Troubled Asset Relief Program and the American Recovery and Reinvestment Act,the Federal budget deficit

One explanation of why the aggregate demand curve is downward sloping is that

The U.S.economy has experienced alternating periods of expansion and contraction in economic activity relative to its long-term growth trend in the economy.These are called economic fluctuations or business cycles.

The tax cuts passed during the Reagan administration were designed primarily

The word stagflation describes a situation in which a higher price level occurs simultaneously with

As the price level increases,the amount of goods and services that consumers,businesses,and governments desire to purchase will change.How will this be illustrated?

An increase in aggregate supply will result in

Between 1947 and 2003,U.S.real GDP

Exhibit 5-2 -Refer to Exhibit 5-2.Which line or point represents equilibrium?

Exhibit 5-1 -In Exhibit 5-1,which of the following might cause a shift in the aggregate demand curve from AD to AD'?

Exhibit 5-1 -Exhibit 5-1 shows that from the beginning of period 1 to the end of period 2,

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

When output ,employment is expected to .

Exhibit 5-3 -In Exhibit 5-3 AD₁ and AS₁ represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Europe falls,what will the new equilibrium be?