Question 1

Situations in which firms expect one thing to happen but then something else happens are called

Accepted Answer

A)  recessions.
B)  shocks.
C)  business cycles.
D)  fluctuations.E) C) and D)
F) All of the above

Question 2

Economists were sharply divided over how to best fight the Great Recession.A vocal minority of economists favored the "Structural Solution," arguing that the economy needs to undergo some structural adjustments and that government should, therefore,

Accepted Answer

A)  rely on the invisible hand of the market to reallocate resources, by letting weak firms die out quickly.
B)  take serious actions to increase the total demand for output in the economy.
C)  fix prices so that consumers can afford the basic stuff they need and also to control inflation.
D)  set up social programs and welfare structures to help out those who are suffering most from the recession.E) A) and C)
F) A) and B)

Question 3

There is a trade-off between

Accepted Answer

A)  saving and investment.
B)  current production and future consumption.
C)  current consumption and future consumption.
D)  consumption and spending.E) A) and B)
F) A) and C)

Question 4

Suppose a small economy produces only HDTV sets.In year one, 100,000 sets are produced and sold at a price of $1,200 each.In year two, 100,000 sets are produced and sold at a price of $1,000 each.As a result,

Accepted Answer

A)  nominal GDP stays constant, while real GDP decreases.
B)  nominal GDP decreases, while real GDP stays constant.
C)  nominal GDP and real GDP both decrease.
D)  nominal GDP decreases, and real GDP decreases even more.E) B) and D)
F) A) and C)

Question 5

Economists believe that most short-run fluctuations

Accepted Answer

A)  are the result of demand shocks.
B)  are the result of supply shocks.
C)  will not last long because prices will adjust to equalize the quantities demanded and supplied of goods and services.
D)  will always have a negative effect on real GDP, inflation, and unemployment.E) B) and D)
F) B) and C)

Question 6

(Consider This) The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses.

Accepted Answer

A) True 
 B)False

Question 7

In 2008-2009, the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Accepted Answer

A) True 
 B)False

Question 8

Increased optimism about the future will lead to

Accepted Answer

A)  less current investment and less future consumption.
B)  more current investment and more future consumption.
C)  more current investment and less future consumption.
D)  less current investment and more future consumption.E) A) and D)
F) B) and D)

Question 9

The amount of investment is ultimately limited by the amount of

Accepted Answer

A)  production.
B)  saving.
C)  employment.
D)  inflation.E) B) and D)
F) B) and C)

Question 10

Price stickiness tends to moderate over time.

Accepted Answer

A) True 
 B)False

Question 11

The Great Recession of 2007-09 was triggered by a

Accepted Answer

A)  steep rise in bond values.
B)  steep decline in housing prices.
C)  sharp increase in oil prices.
D)  sharp decline in the value of the U.S.dollar.E) All of the above
F) A) and B)

Question 12

If prices of goods and services were inflexible, then

Accepted Answer

A)  a negative demand shock would lead to increased real GDP in the short run.
B)  a positive demand shock would lead to increased real GDP in the short run.
C)  a negative demand shock would have no short-run effect on real GDP.
D)  there would be no short-run demand shocks.E) A) and D)
F) A) and B)

Question 13

At the core of understanding economic growth is the idea that to raise living standards over time, an economy must

Accepted Answer

A)  produce and consume goods and services.
B)  save and invest.
C)  export and import.
D)  employ resources and earn incomes.E) A) and B)
F) B) and C)

Question 14

Purchasing power parity refers to

Accepted Answer

A)  converting each country's GDP into U.S.dollars.
B)  dividing each country's GDP by the size of its population.
C)  adjusting GDP figures for the fact that prices are much lower in some countries than in others.
D)  adjusting different GDP figures for inflation over time.E) All of the above
F) A) and C)

Question 15

Under modern economic growth, the annual average increase in output per person is

Accepted Answer

A)  often not large, perhaps 2 percent per year.
B)  often large, perhaps greater than 5 percent per year.
C)  often small, perhaps less than 1 percent per year.
D)  often the same in rich countries as in poor countries.E) B) and C)
F) A) and D)

Question 16

Suppose a family's income increases by 5 percent at the same time that inflation is 6 percent.Then the family's living standard

Accepted Answer

A)  will increase by 5 percent.
B)  will not change.
C)  will increase by 1 percent.
D)  will decrease.E) All of the above
F) B) and D)

Question 17

Economists need different models of the economy because

Accepted Answer

A)  the economy behaves differently depending on how much time has passed after a demand shock.
B)  we need a different model to analyze a positive demand shock than we need to analyze a negative demand shock.
C)  the way economic performance is measured changes over time.
D)  prices tend to be less flexible over time.E) B) and D)
F) A) and C)

Question 18

(Consider This) If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.

Accepted Answer

A) True 
 B)False

Question 19

(Consider This)  Suppose that Toyota buys a factory previously owned by Chrysler Motors.Economists would

Accepted Answer

A)  consider this to be an economic investment.
B)  not consider this to be an economic investment, because Toyota is less efficient than Chrysler.
C)  not consider this to be an economic investment, because no new capital is created through the purchase.
D)  not consider this to be an economic investment, because there is no way to know how it will affect stock holdings in the two companies.E) C) and D)
F) B) and D)

Exam 26: An Introduction to Macroeconomics

If prices of goods and services were inflexible, then

Correct Answer
verified

At the core of understanding economic growth is the idea that to raise living standards over time, an economy must

Correct Answer
verified

Price stickiness tends to moderate over time.

Correct Answer
verified

(Consider This) Suppose that Toyota buys a factory previously owned by Chrysler Motors.Economists would

Correct Answer
verified

The Great Recession of 2007-09 was triggered by a

Correct Answer
verified

Suppose a family's income increases by 5 percent at the same time that inflation is 6 percent.Then the family's living standard

Correct Answer
verified

Increased optimism about the future will lead to

Correct Answer
verified

Economists need different models of the economy because

Correct Answer
verified

Economists were sharply divided over how to best fight the Great Recession.A vocal minority of economists favored the "Structural Solution," arguing that the economy needs to undergo some structural adjustments and that government should, therefore,

Correct Answer
verified

Under modern economic growth, the annual average increase in output per person is

Correct Answer
verified

The amount of investment is ultimately limited by the amount of

Correct Answer
verified

Economists believe that most short-run fluctuations

Correct Answer
verified

In 2008-2009, the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Correct Answer
verified

Situations in which firms expect one thing to happen but then something else happens are called

Correct Answer
verified

There is a trade-off between

Correct Answer
verified

(Consider This) The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses.

Correct Answer
verified

Purchasing power parity refers to

Correct Answer
verified

Suppose a small economy produces only HDTV sets.In year one, 100,000 sets are produced and sold at a price of $1,200 each.In year two, 100,000 sets are produced and sold at a price of $1,000 each.As a result,

Correct Answer
verified

(Consider This) If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.

Correct Answer
verified

Exam 26: An Introduction to Macroeconomics

If prices of goods and services were inflexible, then

Correct AnswerverifiedShow Answer

At the core of understanding economic growth is the idea that to raise living standards over time, an economy must

Correct AnswerverifiedShow Answer

Price stickiness tends to moderate over time.

Correct AnswerverifiedShow Answer

(Consider This) Suppose that Toyota buys a factory previously owned by Chrysler Motors.Economists would

Correct AnswerverifiedShow Answer

The Great Recession of 2007-09 was triggered by a

Correct AnswerverifiedShow Answer

Suppose a family's income increases by 5 percent at the same time that inflation is 6 percent.Then the family's living standard

Correct AnswerverifiedShow Answer

Increased optimism about the future will lead to

Correct AnswerverifiedShow Answer

Economists need different models of the economy because

Correct AnswerverifiedShow Answer

Economists were sharply divided over how to best fight the Great Recession.A vocal minority of economists favored the "Structural Solution," arguing that the economy needs to undergo some structural adjustments and that government should, therefore,

Correct AnswerverifiedShow Answer

Under modern economic growth, the annual average increase in output per person is

Correct AnswerverifiedShow Answer

The amount of investment is ultimately limited by the amount of

Correct AnswerverifiedShow Answer

Economists believe that most short-run fluctuations

Correct AnswerverifiedShow Answer

In 2008-2009, the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Correct AnswerverifiedShow Answer

Situations in which firms expect one thing to happen but then something else happens are called

Correct AnswerverifiedShow Answer

There is a trade-off between

Correct AnswerverifiedShow Answer

(Consider This) The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses.

Correct AnswerverifiedShow Answer

Purchasing power parity refers to

Correct AnswerverifiedShow Answer

Suppose a small economy produces only HDTV sets.In year one, 100,000 sets are produced and sold at a price of $1,200 each.In year two, 100,000 sets are produced and sold at a price of $1,000 each.As a result,

Correct AnswerverifiedShow Answer

(Consider This) If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.

Correct AnswerverifiedShow Answer

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