Question 1

Shocks occur when actual events do not match expectations.

Accepted Answer

A) True 
 B)False

Question 2

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not an adjustment made when comparing standards of living across countries?

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 for different price levels across countries
D)  adjusting for different unemployment rates across countriesE) None of the above
F) C) and D)

Question 4

Which of the following is the best example of financial investment?

Accepted Answer

A)  Ford Motor Co.builds a new manufacturing plant.
B)  A student pursues an MBA degree.
C)  A retiree purchases Google stock.
D)  A young couple purchases a new home.E) B) and C)
F) None of the above

Question 5

(Consider This)  The U.S.recession that occurred in 2008 and 2009 represented a case where

Accepted Answer

A)  government policy intervention effectively offset the negative demand shock and minimized the effects on output and employment.
B)  prices were somewhat flexible, so the impact of the demand shock was felt about the same in terms of price and output changes.
C)  prices were relatively flexible, minimizing the impact on total output and employment.
D)  prices were relatively sticky and most of the impact was on total output.E) B) and D)
F) B) and C)

Question 6

Before the period of modern economic growth,

Accepted Answer

A)  only civilizations such as the Roman Empire experienced economic growth.
B)  rates of population growth virtually matched rates of output growth.
C)  most economies realized high rates of growth in output per person.
D)  output and population growth were stagnant.E) A) and B)
F) B) and C)

Question 7

One major reason for sticky prices could be that firms selling final goods and services do not want to annoy customers with frequently changing prices.

Accepted Answer

A) True 
 B)False

Question 8

The opportunity cost of investment is a reduction in future consumption.

Accepted Answer

A) True 
 B)False

Question 9

The so-called Great Recession in the U.S.

Accepted Answer

A)  is another name for the Great Depression.
B)  was the worst economic downturn since the Great Depression.
C)  was triggered by oil-supply shocks.
D)  was caused by a sharp increase in the value of the U.S.dollar.E) A) and B)
F) None of the above

Question 10

Investment happens when

Accepted Answer

A)  current income is greater than current spending.
B)  current consumption is greater than current output.
C)  resources are devoted toward increasing current output.
D)  resources are devoted toward increasing future output.E) B) and D)
F) C) and D)

Question 11

Business cycles refer to short-term fluctuations in prices.

Accepted Answer

A) True 
 B)False

Question 12

The "sticky price" model is the only one used by macroeconomists.

Accepted Answer

A) True 
 B)False

Question 13

For many decades prior to the Industrial Revolution, the standards of living in England and China

Accepted Answer

A)  remained roughly constant.
B)  increased steadily.
C)  declined substantially.
D)  increased many times over.E) All of the above
F) C) and D)

Question 14

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent.In this situation,

Accepted Answer

A)  output per person necessarily increases.
B)  output per person necessarily decreases.
C)  output per person necessarily remains unchanged.
D)  there is not enough information to determine what happens to output per person.E) A) and B)
F) A) and C)

Question 15

Decisions about saving and investment are

Accepted Answer

A)  generally made under conditions of complete certainty about the future.
B)  complicated by the fact that the future is uncertain.
C)  unaffected by expectations of the future.
D)  independent of expectations about the future.E) A) and D)
F) B) and D)

Question 16

Milk prices tend to be stickier than gasoline prices.

Accepted Answer

A) True 
 B)False

Question 17

Why are high rates of unemployment of concern to economists?

Accepted Answer

A)  Higher rates of unemployment generally lead to higher inflation rates.
B)  Environmental destruction is more prevalent when unemployment rates are high.
C)  There is lost output that could have been produced if the unemployed had been working.
D)  All of these options are reasons why economists are concerned about high unemployment rates.E) None of the above
F) All of the above

Question 18

Economists were sharply divided over how to best fight the Great Recession.The majority of economists favored the "Stimulus Solution," which involves

Accepted Answer

A)  relying on the invisible hand of the market to set things right.
B)  government actions to increase the total demand for output in the economy.
C)  making prices become more flexible so that equilibrium can be attained once more.
D)  stimulus from abroad through international trade and treaties.E) B) and C)
F) A) and C)

Question 19

Prices tend to be more flexible when there are only two or three rival firms rather than a large number of sellers in the market.

Accepted Answer

A) True 
 B)False

Question 20

Real GDP is calculated using current prices of outputs.

Accepted Answer

A) True 
 B)False

Exam 26: An Introduction to Macroeconomics

Before the period of modern economic growth,

Correct AnswerverifiedShow Answer

Business cycles refer to short-term fluctuations in prices.

Correct AnswerverifiedShow Answer

Decisions about saving and investment are

Correct AnswerverifiedShow Answer

Economists were sharply divided over how to best fight the Great Recession.The majority of economists favored the "Stimulus Solution," which involves

Correct AnswerverifiedShow Answer

(Consider This) The U.S.recession that occurred in 2008 and 2009 represented a case where

Correct AnswerverifiedShow Answer

The "sticky price" model is the only one used by macroeconomists.

Correct AnswerverifiedShow Answer

Investment happens when

Correct AnswerverifiedShow Answer

Real GDP is calculated using current prices of outputs.

Correct AnswerverifiedShow Answer

For many decades prior to the Industrial Revolution, the standards of living in England and China

Correct AnswerverifiedShow Answer

The so-called Great Recession in the U.S.

Correct AnswerverifiedShow Answer

Prices tend to be more flexible when there are only two or three rival firms rather than a large number of sellers in the market.

Correct AnswerverifiedShow Answer

Suppose that real GDP increases by 5 percent while the population of a country increases by 7 percent.In this situation,

Correct AnswerverifiedShow Answer

Why are high rates of unemployment of concern to economists?

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One major reason for sticky prices could be that firms selling final goods and services do not want to annoy customers with frequently changing prices.

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Which of the following is the best example of financial investment?

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Which of the following is not an adjustment made when comparing standards of living across countries?

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The opportunity cost of investment is a reduction in future consumption.

Correct AnswerverifiedShow Answer

Milk prices tend to be stickier than gasoline prices.

Correct AnswerverifiedShow Answer

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Correct AnswerverifiedShow Answer

Shocks occur when actual events do not match expectations.

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