Question 1

An increase in the overall level of prices in an economy is called:

Accepted Answer

A)   Growth
B)   Expansion
C)   Inflation
D)   Nominal GDP growthE) A) and D)
F) B) and C)

Question 2

Financial institutions reward savers with the following, except:

Accepted Answer

A)   Interest
B)   Wages
C)   Dividends
D)   Capital gainsE) A) and D)
F) B) and C)

Question 3

Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. How will the firm respond to a negative demand shock if prices are flexible?

Accepted Answer

A)   The firm will continue to produce 500 computers per week and charge a price of $600
B)   The firm will continue to produce 500 computers per week and charge a price of $1200
C)   The firm will cut production to 300 computers per week and charge a price of $1000
D)   The firm will cut production to 300 computers per week and charge a price of $600E) A) and C)
F) A) and B)

Question 4

Businesses are the main economic investors, while households are the main savers.

Accepted Answer

A) True 
 B)False

Question 5

If expectations are always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Accepted Answer

A) True 
 B)False  True

Question 6

If the prices of goods and services were flexible, then the economy could always produce at its optimal capacity.

Accepted Answer

A) True 
 B)False

Question 7

Modern economic growth:

Accepted Answer

A)   Started occurring since the time of the Roman Empire
B)   Has been experienced by all countries around the world
C)   Refers to the phenomenon when a country's total output rises
D)   Makes a country's output per person rise at a compounded rateE) B) and C)
F) A) and B)

Question 8

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

Accepted Answer

A)   Apple builds a new plant to manufacture iPads
B)   Your college purchases a 5-year old building in order to have more classrooms
C)   A retiree purchases U.S. government bonds
D)   A company like Bank of America acquires another company like Merrill LynchE) B) and C)
F) All of the above

Question 9

Which of the following statements about price wars is true?

Accepted Answer

A)   Firms that have to deal with the possibility of price wars often have extremely flexible prices.
B)   Firms that do not have to deal with the possibility of price wars often have sticky prices.
C)   Price wars tend to increase the short-run flexibility of prices.
D)   Firms that have to deal with the possibility of price wars often have sticky prices.E) A) and B)
F) A) and C)

Question 10

Before the late 1700's, living standards in the richest part of the world were:

Accepted Answer

A)   About five times higher than living standards in the poorest parts of the world
B)   At most only two to three times higher than living standards in the poorest parts of the world
C)   About 50 times higher than living standards in the poorest parts of the world
D)   About the same as living standards in the poorest parts of the worldE) None of the above
F) C) and D) B

Question 11

Investment is ultimately limited by the amount of savings in the economy.

Accepted Answer

A) True 
 B)False

Question 12

The period when output and living standards decline is referred to as:

Accepted Answer

A)   Inflation
B)   Economic decline
C)   An inventory downturn
D)   A recessionE) B) and C)
F) C) and D) D

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Explanations about what caused the Great Recession differ sharply among economists. The so-called Austrian Explanation involves the following factors, except:

Accepted Answer

A)   A massive euphoric bubble in housing prices that popped
B)   Government actions that kept interest rates very low for a long period
C)   Excessive borrowing for consumption, construction, and investment
D)   A huge negative demand shock in the economyE) A) and B)
F) B) and C)

Question 15

Business cycles refer to short term fluctuations in prices.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   Will increase by 5%
B)   Will not change
C)   Will increase by 1%
D)   Will decreaseE) A) and C)
F) A) and B)

Question 17

Short-run fluctuations in output and employment are referred to as:

Accepted Answer

A)   Economic growth
B)   Business cycles
C)   Inventory cycles
D)   Recession and inflationE) B) and C)
F) All of the above

Question 18

The period known as the "Industrial Revolution" began in the United States in the late 1800's.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following groups is the principal source of savings in an economy?

Accepted Answer

A)   Banks
B)   Government
C)   Businesses
D)   HouseholdsE) None of the above
F) B) and C)

Question 20

Which of the following is most likely to be an indication of higher unemployment?

Accepted Answer

A)   An increase in real GDP
B)   An increase in nominal GDP
C)   A decrease in real GDP
D)   A decrease in nominal GDPE) All of the above
F) A) and B)

Exam 6: An Introduction to Macroeconomics

An increase in the overall level of prices in an economy is called:

Correct AnswerverifiedShow Answer

Financial institutions reward savers with the following, except:

Correct AnswerverifiedShow Answer

Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. How will the firm respond to a negative demand shock if prices are flexible?

Correct AnswerverifiedShow Answer

Businesses are the main economic investors, while households are the main savers.

Correct AnswerverifiedShow Answer

If expectations are always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Correct AnswerverifiedTrue

If the prices of goods and services were flexible, then the economy could always produce at its optimal capacity.

Correct AnswerverifiedShow Answer

Modern economic growth:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements about price wars is true?

Correct AnswerverifiedShow Answer

Before the late 1700's, living standards in the richest part of the world were:

Correct AnswerverifiedB

Investment is ultimately limited by the amount of savings in the economy.

Correct AnswerverifiedShow Answer

The period when output and living standards decline is referred to as:

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Explanations about what caused the Great Recession differ sharply among economists. The so-called Austrian Explanation involves the following factors, except:

Correct AnswerverifiedShow Answer

Business cycles refer to short term fluctuations in prices.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Short-run fluctuations in output and employment are referred to as:

Correct AnswerverifiedShow Answer

The period known as the "Industrial Revolution" began in the United States in the late 1800's.

Correct AnswerverifiedShow Answer

Which of the following groups is the principal source of savings in an economy?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an indication of higher unemployment?

Correct AnswerverifiedShow Answer

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True

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B

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D

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