Question 1

Real GDP measures the change in the price level over time.

Accepted Answer

A) True 
 B)False

Question 2

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and
real estate.

Accepted Answer

A) True 
 B)False

Question 3

Inventories rise when

Accepted Answer

A)   actual demand for output is more than expected.
B)   actual demand for output is less than expected.
C)   actual supply of output is less than expected.
D)   actual demand for output is about the same as expected.E) B) and D)
F) B) and C)

Question 4

Refer to the ﬁgures. Which ﬁgure(s)  represent(s)  a situation where prices are sticky?

Accepted Answer

A)   A only
B)   B only
C)   both A and B
D)   neither A nor BE) All of the above
F) None of the above

Question 5

The two topics of primary concern in macroeconomics are

Accepted Answer

A)   short-run ﬂuctuations in output and employment and long-run economic growth.
B)   unemployment and wage rates in labor markets.
C)   monopoly power of corporations and small business proﬁtability.
D)   oil prices and housing markets.E) B) and D)
F) All of the above

Question 6

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

Accepted Answer

A)   real gross domestic product.
B)   inﬂation statistics.
C)   prices of oil and gasoline.
D)   unemployment data.E) B) and D)
F) None of the above

Question 7

In 2017, China's GDP per person was almost as high as that of the United States.

Accepted Answer

A) True 
 B)False

Question 8

Buying 100 shares of Google stock would be an example of economic investment.

Accepted Answer

A) True 
 B)False

Question 9

Nominal GDP measures a nation's output in current year prices.

Accepted Answer

A) True 
 B)False

Question 10

Demand shocks

Accepted Answer

A)   refer to unexpected changes in the desires of households and businesses to buy goods and services.
B)   refer to unexpected changes in the ability of ﬁrms to produce and sell goods and services.
C)   always have a negative effect on the economy.
D)   cause fewer short-run ﬂuctuations than supply shocks.E) B) and C)
F) A) and D)

Question 11

(Consider This)  Which of the following is an example of economic investment?

Accepted Answer

A)   Volvo buys an old factory building from General Motors.
B)   Nike buys a new machine that increases shoe production.
C)   Bill Gates buys shares of stock in IBM.
D)   Warren Buffet buys U.S. savings bonds.E) All of the above
F) B) and C)

Question 12

Business cycle ﬂuctuations typically arise because

Accepted Answer

A)   the actual supply of goods and services ends up being more or less than what consumers were expecting.
B)   the actual demand for goods and services ends up being more or less than the expected supply of goods and services.
C)   the actual demand for goods and services ends up being more or less than what ﬁrms were expecting.
D)   prices tend to be ﬂexible in the short run.E) A) and C)
F) C) and D)

Question 13

Which of the following is not an important question that macroeconomic models help clarify?

Accepted Answer

A)   Can governments reduce the severity of their economies' recessions?
B)   Is a policy of manipulating interest rates more effective at mitigating short-run economic ﬂuctuations than a policy of changing the tax rates?
C)   How will OPEC manipulate and maintain the price of crude oil in the world markets?
D)   Is there a trade-off between lower unemployment and lower inﬂation?E) None of the above
F) All of the above

Question 14

Business cycles refer to short-term ﬂuctuations in prices.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Accepted Answer

A)   cause inﬂation.
B)   increase unemployment.
C)   lower prices but leave output unaffected.
D)   reduce both prices and output.E) A) and C)
F) None of the above

Question 16

Firms that choose to use a ﬁxed-price policy

Accepted Answer

A)   will tend to experience larger inventory changes than ﬁrms that follow a ﬂexible-price policy.
B)   will tend to experience smaller inventory changes than ﬁrms that follow a ﬂexible-price policy.
C)   ﬁnd that their inventories do not respond to demand shocks.
D)   will not hold inventories.E) A) and B)
F) All of the above

Question 17

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas) 
But sold them for $12 each. Based on this information, we can conclude that Harry's production of
Large pepperoni pizzas this year

Accepted Answer

A)   increased nominal GDP by $20,000 but left real GDP unchanged.
B)   increased nominal GDP by $120,000 and increased real GDP by $100,000.
C)   left nominal GDP unchanged but increased real GDP by $20,000.
D)   increased nominal GDP by $120,000 but left real GDP unchanged.E) None of the above
F) All of the above

Question 18

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Accepted Answer

A)   Nominal and real GDP would both rise.
B)   Nominal and real GDP would both be unchanged.
C)   Real GDP would rise, but nominal GDP would be unchanged.
D)   Nominal GDP would rise, but real GDP would be unchanged.E) None of the above
F) A) and D)

Question 19

Financial institutions reward savers with the following, except

Accepted Answer

A)   interest.
B)   wages.
C)   dividends.
D)   capital gains.E) B) and D)
F) A) and C)

Question 20

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Accepted Answer

A)   Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will increase.
B)   Firms' inventories will decrease, causing them to increase production. Ultimately, real GDP will increase and unemployment will decrease.
C)   Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will increase and unemployment will increase.
D)   Firms' inventories will increase, causing them to cut production. Ultimately, real GDP will decrease and unemployment will decrease.E) None of the above
F) C) and D)

Exam 6: An Introduction to Macroeconomics

Nominal GDP measures a nation's output in current year prices.

Correct Answer
verified

In 2017, China's GDP per person was almost as high as that of the United States.

Correct Answer
verified

Financial institutions reward savers with the following, except

Correct Answer
verified

Business cycles refer to short-term ﬂuctuations in prices.

Correct Answer
verified

Real GDP measures the change in the price level over time.

Correct Answer
verified

Buying 100 shares of Google stock would be an example of economic investment.

Correct Answer
verified

The two topics of primary concern in macroeconomics are

Correct Answer
verified

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and real estate.

Correct Answer
verified

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

Correct Answer
verified

Which of the following is not an important question that macroeconomic models help clarify?

Correct Answer
verified

Demand shocks

Correct Answer
verified

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Correct Answer
verified

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Correct Answer
verified

Correct Answer
verified

Business cycle ﬂuctuations typically arise because

Correct Answer
verified

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Correct Answer
verified

Refer to the ﬁgures. Which ﬁgure(s) represent(s) a situation where prices are sticky?

Correct Answer
verified

(Consider This) Which of the following is an example of economic investment?

Correct Answer
verified

Inventories rise when

Correct Answer
verified

Firms that choose to use a ﬁxed-price policy

Correct Answer
verified

Exam 6: An Introduction to Macroeconomics

Nominal GDP measures a nation's output in current year prices.

Correct AnswerverifiedShow Answer

In 2017, China's GDP per person was almost as high as that of the United States.

Correct AnswerverifiedShow Answer

Financial institutions reward savers with the following, except

Correct AnswerverifiedShow Answer

Business cycles refer to short-term ﬂuctuations in prices.

Correct AnswerverifiedShow Answer

Real GDP measures the change in the price level over time.

Correct AnswerverifiedShow Answer

Buying 100 shares of Google stock would be an example of economic investment.

Correct AnswerverifiedShow Answer

The two topics of primary concern in macroeconomics are

Correct AnswerverifiedShow Answer

Economists use the word investment to refer to the purchase of assets such as stocks, bonds, and real estate.

Correct AnswerverifiedShow Answer

The major statistics that provide macroeconomists a picture of the health of an economy include the following, except

Correct AnswerverifiedShow Answer

Which of the following is not an important question that macroeconomic models help clarify?

Correct AnswerverifiedShow Answer

Demand shocks

Correct AnswerverifiedShow Answer

Suppose that prices are sticky in the short-run. Which of the following best describes the economy's response to a negative demand shock?

Correct AnswerverifiedShow Answer

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Business cycle ﬂuctuations typically arise because

Correct AnswerverifiedShow Answer

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely

Correct AnswerverifiedShow Answer

Refer to the ﬁgures. Which ﬁgure(s) represent(s) a situation where prices are sticky?

Correct AnswerverifiedShow Answer

(Consider This) Which of the following is an example of economic investment?

Correct AnswerverifiedShow Answer

Inventories rise when

Correct AnswerverifiedShow Answer

Firms that choose to use a ﬁxed-price policy

Correct AnswerverifiedShow Answer

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