Intermediate Macroeconomics
Exam Practice Tests
Course Introduction
Intermediate Macroeconomics delves into the analysis of national economies, building upon basic concepts to explore theories and models that explain economic growth, inflation, unemployment, and policy effectiveness. The course covers the determination of output, interest rates, and price levels, incorporating both classical and Keynesian perspectives. Students learn to apply analytical tools to real-world economic issues, evaluate government fiscal and monetary policies, and assess the impact of shocks on macroeconomic stability. Emphasis is placed on understanding both short-run fluctuations and long-run economic trends, equipping students with the skills necessary to interpret economic data and policy debates.
Recommended Textbook
Macroeconomics Australia in the Global Environment 1st Australian Edition by Michael Parkin
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17 Chapters
2734 Verified Questions
2734 Flashcards
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Chapter 1: Getting Started
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) In the diagram above,which figure(s)show(s)an inverse relationship between the variables?
A)Both B and C
B)Only D
C)Only B
D)Both A and C
E)Only C
Answer: C
Q2) Whenever people's incomes increase,they buy more guitars.Hence a scatter diagram shows that the relationship between income and guitars purchased is
A)a positive relationship.
B)some sort of relationship,but whether it is positive or negative depends on whether income is plotted on the vertical or horizontal axis.
C)a linear relationship.
D)a negative relationship.
E)a U-shaped relationship.
Answer: A
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Page 3
Chapter 2: The Australian and Global Economies
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) The concept of human capital describes
A)the number of machines per employed worker.
B)the human population,that is,the quantity of labour.
C)human skills,that is,the quality of labour.
D)the number of machines (capital)that have been produced by people (humans).
E)the number of workers per operating machine.
Answer: C
Q2) Human capital is
A)the knowledge humans accumulate through education and experience.
B)machinery that needs human supervision.
C)any type of machinery.
D)solely the innate ability we are born with.
E)the money humans have saved.
Answer: A
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Chapter 3: The Economic Problem
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218 Verified Questions
218 Flashcards
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Sample Questions
Q1) When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost
A)decreases.
B)remains constant.
C)increases.
D)might increase,decrease or remain constant depending on how much people value the additional units of the good.
E)cannot be predicted.
Answer: C
Q2) The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is
A)1/4 of a pizza.
B)30 pizzas.
C)34 pizzas.
D)undefined because neither point is production efficient.
E)4 pizzas.
Answer: E
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Page 5
Chapter 4: Demand and Supply
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) The above figure shows the market for t-shirts.If the price of t-shirts is $8,then
A)there is a surplus and the price of t-shirts will rise.
B)the market is in equilibrium.
C)there is a surplus and the price of t-shirts will fall.
D)there is a shortage and the price of t-shirts will fall.
E)the quantity demanded is greater than quantity supplied.
Q2) A price floor is
A)the lower bound that consumers are willing to pay for a good or service.
B)the maximum price that a consumer is willing to pay for a good or service.
C)a government regulation that places a lower limit on the price of a good or service.
D)a government regulation that places a cap on prices.
E)Both A and B.
Q3) In the above figure,the shift in the supply curve from S to S might reflect
A)an increase in the price of a pizza.
B)an increase in income if pizza is a normal good.
C)a decrease in the cost of the tomato sauce used to produce pizza.
D)an increase in the price of a good that is a substitute for consumers.
E)a decrease in the number of pizza producers.
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Chapter 5: Gdp: a Measure of Total Production and Income
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Which of the following is included as investment in GDP?
i.Cars produced during the year but unsold at the end of the year.
Ii New capital equipment produced and purchased during the year.
iii.Purchases of a company's shares and bonds.
A)i and ii
B)i,ii and iii
C)iii only
D)i only
E)ii only
Q2) Nominal GDP increases
A)only if the productivity of resources increases.
B)only if prices increase.
C)if either prices and/or total production increase.
D)only if total production increases.
E)only if depreciation decreases.
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Chapter 6: Jobs and Unemployment
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) Andrew is not working,but is available and willing to work after finishing a month-long mission trip for his church.While on his mission,Andrew did not look for work.Andrew is considered
A)a marginally attached worker.
B)a discouraged job seeker.
C)part of the labour force.
D)unemployed.
E)Both answers A and B are correct.
Q2) As the unemployment rate increases,
A)potential GDP increases.
B)real GDP decreases.
C)full employment GDP decreases.
D)both real GDP and potential GDP decrease.
E)potential GDP decreases.
Q3) At full employment there still exists some unemployment because
A)the Australian economy is constantly creating and destroying jobs.
B)it is unnatural to have all people work 35 hours per week.
C)there are always people too old or young to be in the labour force.
D)real GDP can never exceed potential GDP.
E)some portion of our population will always be too lazy to work.
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Chapter 7: The Cpi and the Cost of Living
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) The core inflation rate
A)tends to fluctuate more than the CPI inflation rate.
B)tends to fluctuate more than the chain price index inflation rate.
C)tends to have a higher quality change bias than the CPI inflation rate.
D)tends to fluctuate less than both the chain price index and CPI inflation rates.
E)None of the above.
Q2) In Australia between 1980/81 and 2014/15,the
A)real and the nominal wage rates decreased by the same amount.
B)nominal wage rate decreased and the real wage rate increased.
C)nominal wage rate increased more than the real wage rate.
D)real wage rate increased more than the nominal wage rate.
E)nominal and real wage rates increased by the same amount.
Q3) You borrow at a nominal interest rate of 10 per cent.If the inflation rate is 4 per cent,then the real interest rate is
A)the $10 in interest you have to pay.
B)16 per cent.
C)6 per cent.
D)14 per cent.
E)2.5 per cent.
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Page 9
Chapter 8: Economic Growth
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) Approximately how long will it take Ethiopia to double its real GDP per person of $100 if its growth rate of real GDP per person is 0.9 per cent?
A)77.7 years
B)109 years
C)70 years
D)63 years
E)100 years
Q2) The supply of labour is defined as the relationship between the real wage rate and the
A)amount of jobs supplied by households.
B)amount of jobs supplied by firms.
C)quantity of labour supplied by firms.
D)equilibrium quantity of employment.
E)quantity of labour supplied by households.
Q3) Economic freedom provides the
A)incentive system that encourages growth-producing activities.
B)political system that encourages democracy.
C)necessary alternative to free markets.
D)production system that discourages property rights.
E)social system that supports families.
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Chapter 9: Finance,saving and Investment
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) A fall in the real interest rate brings a
A)movement up along the supply of loanable funds curve.
B)rightward shift of the demand for loanable funds curve.
C)leftward shift of the supply of loanable funds curve.
D)rightward shift of the supply of loanable funds curve.
E)movement down along the supply of loanable funds curve.
Q2) If a government bond is $1,000 and entitles the owner to receive $40 per year,then the interest rate on the bond is
A)2 per cent.
B)4 per cent.
C)40 per cent.
D)3 per cent.
E)5 per cent.
Q3) Wealth is
A)another name for income.
B)defined as the money in your savings account.
C)the value of all the things that a person owns.
D)equivalent to saving.
E)the same as investment in financial capital.
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Page 11
Chapter 10: Money,the Price Level and Inflation
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213 Verified Questions
213 Flashcards
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Sample Questions
Q1) A public authority that provides banking services to banks and regulates financial institutions and markets is called a
A)central bank.
B)commercial bank.
C)mint.
D)money market fund.
E)thrift institution.
Q2) The opportunity cost of holding money instead of an interest-earning asset is the
A)inflation rate minus the nominal interest rate.
B)inflation rate.
C)inflation rate minus the real interest rate.
D)real interest rate.
E)nominal interest rate.
Q3) All of the following shift the demand for money curve EXCEPT
A)an increase in the price level.
B)an improvement in financial technology.
C)a rise in the nominal interest rate.
D)a decrease in real GDP.
E)an increase in real GDP.
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Page 12
Chapter 11: Aggregate Supply and Aggregate Demand
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Which of the following factors could start a demand-pull inflation?
A)A decrease in the money wage rate
B)An increase in the money wage rate
C)A decrease in government expenditure
D)An increase in the quantity of money
E)An increase in tax rates
Q2) A demand-pull inflation initially is characterised by
A)decreasing real output and a labour surplus.
B)increasing real output and a labour shortage.
C)decreasing real output and a labour shortage.
D)no change in real output and a labour shortage.
E)increasing real output and a labour surplus.
Q3) The table above gives data for the nation of Pearl,a small island in the South Pacific.The economy is at full employment when real GDP is
A)$22 billion.
B)$34 billion.
C)$25 billion.
D)$31 billion.
E)$28 billion.
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Page 13
Chapter 12: Aggregate Expenditure Multiplier
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189 Verified Questions
189 Flashcards
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Sample Questions
Q1) What is the key difference between the aggregate expenditure model and the aggregate demand/aggregate supply model?
A)The aggregate demand/aggregate supply model assumes that the price level is fixed.
B)The aggregate expenditure model assumes that real GDP is fixed.
C)The aggregate expenditure model examines monetary policy,whereas the aggregate demand/aggregate supply model does not.
D)The aggregate expenditure model assumes that the price level is fixed.
E)Monetary and real factors interact in the aggregate demand/aggregate supply model.
Q2) The slope of the consumption function is
A)equal to the MPC and is equal to 1.
B)equal to the MPC and is greater than 1.
C)equal to the MPC and is less than 1.
D)not equal to the MPC and is less than 1.
E)not equal to the MPC and is equal to 1.
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Chapter 13: The Short-Run Policy Trade Off
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate,and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.
A)no relationship;no relationship
B)no relationship;a negative relationship
C)a negative relationship;a positive relationship
D)a positive relationship;a negative relationship
E)a negative relationship;no relationship
Q2) Suppose potential GDP is $100 billion and the natural unemployment rate is 5 per cent.If the unemployment rate is 6 per cent then,according to Okun's Law,real GDP is
A)$102 billion.
B)$101 billion.
C)$98 billion.
D)$100 billion.
E)$99 billion.
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15
Chapter 14: Fiscal Policy
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Increasing the income tax rate ________ the ________.
A)decreases;supply of labour
B)increases;demand for labour
C)decreases;demand for labour
D)does not change;supply of labour
E)increases;supply of labour
Q2) The cyclical deficit is the portion of the deficit
A)that does not add to the national debt.
B)that is the result of discretionary federal spending.
C)that would exist if the economy were at full employment.
D)that is the result of nondiscretionary federal spending.
E)created by fluctuations in real GDP.
Q3) The above table gives the government outlays and tax revenues from 2008 through to 2012 for two countries.In 2011,country A had a ________ and country B had a
A)balanced budget;budget deficit
B)budget surplus;balanced budget
C)budget deficit;budget deficit
D)budget surplus;budget surplus
E)balanced budget;budget surplus
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Chapter 15: Monetary Policy
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Using the data in the above table,if potential GDP for this economy is $25 billion,then at the present moment real GDP is
A)at the full-employment level of output.
B)less than potential GDP.
C)greater than potential GDP.
D)not comparable to potential GDP.
E)equal to potential GDP.
Q2) Discretionary monetary policy is defined as policy
A)that is pursued regardless of the current state of the economy.
B)for which the policymaker always publicises the policy as extensively as possible because its effectiveness depends on the public's knowledge of the policy.
C)that is based on the judgements of policymakers.
D)for which the markets make all decisions.
E)that responds to a changing economy with predetermined rules.
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Chapter 16: International Trade Policy
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) A quota is
A)a specified maximum amount that can be imported.
B)a specified minimum amount that must be imported.
C)the minimum amount that domestic firms can dump.
D)a tax on imports.
E)a tariff on exports.
Q2) If a nation can produce a good or service at the lowest opportunity cost,then it
A)does not want to export the good because the low cost means it makes only a low profit.
B)will definitely import the good because it can beat other countries' prices.
C)is best for the nation to not trade the good internationally.
D)might export or import the good,depending on whether or not it has a comparative advantage in the production of the good.
E)can sell the product at a lower price than other nations.
Q3) Comparative advantage is based on
A)comparing physical endowments,such as mineral resources,of two countries.
B)two countries producing the same good.
C)differences in opportunity costs between two countries.
D)one country being able to out-produce another country in some good.
E)comparing the capital accumulations of two countries.
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Chapter 17: International Finance
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) The current account balance equals
A)net exports + net transfers - net interest.
B)net exports + net transfers.
C)net exports - net transfers + net interest.
D)net exports + net transfers + net interest.
E)net exports - net transfers - net interest.
Q2) If the exchange rate changes from 0.70 euro per dollar to 0.80 euro per dollar,the dollar has
A)depreciated against the euro.
B)fallen inversely in value.
C)depreciated against the dollar.
D)appreciated against the dollar.
E)appreciated against the euro.
Q3) Purchasing power parity determines the exchange rate in
A)the long run.
B)the short run.
C)the long run and the short run.
D)nations that do not allow their exchange rate to fluctuate.
E)theory only,but not in reality.
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