Macroeconomics Review Questions
Course Introduction
Macroeconomics is the study of the overall functioning and performance of an economy, encompassing large-scale economic factors such as national income, gross domestic product (GDP), unemployment, inflation, and monetary and fiscal policies. This course explores how these aggregate indicators are measured, the underlying factors that influence their movement, and the implications for economic growth and stability. Students will analyze the role of government intervention, central banking, and international trade in shaping economic outcomes, and will develop an understanding of how policy decisions impact employment, price levels, and the distribution of resources within a country.
Recommended Textbook Economics 5th Edition by R. Glenn Hubbard
Available Study Resources on Quizplus
30 Chapters
9264 Verified Questions
9264 Flashcards
Source URL: https://quizplus.com/study-set/3652
Page 2
Chapter 1: Economics: Foundations and Models
Available Study Resources on Quizplus for this Chatper
444 Verified Questions
444 Flashcards
Source URL: https://quizplus.com/quiz/72679
Sample Questions
Q1) Based on projections from the U.S. Census Bureau and the Congressional Budget Office,
A) there will be a significant increase in the demand for health care by the year 2020.
B) there will be a significant decrease in the demand for health care by the year 2020.
C) there will be no significant change in the demand for health care by the year 2020.
D) the change in the supply of health care will more than make up for the change in demand for health care by the year 2020.
Answer: A
Q2) Examining the conditions that could lead to a recession in an economy is an example of macroeconomics topic.
A)True
B)False
Answer: True
Q3) What is a centrally planned economy?
Answer: A centrally planned economy is an economy in which the government decides how economic resources will be allocated.
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Trade-Offs, Comparative Advantage, and the Market System
Available Study Resources on Quizplus for this Chatper
498 Verified Questions
498 Flashcards
Source URL: https://quizplus.com/quiz/72668
Sample Questions
Q1) The idea underlying Adam Smith's "invisible hand" is that people tend to behave in ways that go unnoticed in society.
A)True
B)False
Answer: False
Q2) Suppose in the Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine. In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine.
a. What is the opportunity cost of producing a gallon of wine for Germany?
b. What is the opportunity cost of producing a gallon of wine for Italy?
c. Which country has a comparative advantage in the production of beer?
d. Which country has a comparative advantage in the production of wine?
Answer: a. For Germany, the opportunity cost of producing a gallon of wine is 1/4 of a gallon of beer.
b. For Italy, the opportunity cost of producing a gallon of wine is 1/3 of a gallon of beer.
c. Germany has a comparative advantage in the production of wine.
d. Italy has a comparative advantage in the production of beer.
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
Available Study Resources on Quizplus for this Chatper
475 Verified Questions
475 Flashcards
Source URL: https://quizplus.com/quiz/72657
Sample Questions
Q1) What is the ceteris paribus condition?
Answer: The ceteris paribus condition is the requirement that when analyzing the relationship between two variables, such as price and quantity demanded, other variables must be held constant.
Q2) Refer to Table 3-4. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $10, the quantity demanded in the market would be
A) 2 lbs.
B) 48 lbs.
C) 50 lbs
D) 52 lbs.
Answer: D
Q3) Explain the Law of Demand.
Answer: The law of demand is the rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Economic Efficiency, Government Price Setting, and Taxes
Available Study Resources on Quizplus for this Chatper
419 Verified Questions
419 Flashcards
Source URL: https://quizplus.com/quiz/72655
Sample Questions
Q1) Refer to Table 4-8. If a minimum wage of $10.50 an hour is mandated, what is the quantity of labor supplied?
A) 400,000
B) 370,000
C) 340,000
D) 60,000
Q2) What is the difference between scarcity and a shortage?
Q3) The total amount of consumer surplus in a market is equal to the area below the demand curve.
A)True
B)False
Q4) Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket rises from $10 to $19,
A) only three tickets will be sold.
B) consumer surplus decreases from $31 to $6.
C) consumer surplus increases from $44 to $71.
D) no one will buy a ticket.
Q5) What is meant by the term "economic efficiency"?
Q6) What is a black market?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Externalities, Environmental Policy, and Public Goods
Available Study Resources on Quizplus for this Chatper
266 Verified Questions
266 Flashcards
Source URL: https://quizplus.com/quiz/72654
Sample Questions
Q1) State and local governments subsidize college students with grants and low-interest loans. The loans and subsidies are examples of
A) positive externalities.
B) Coase subsidies.
C) Pigovian subsidies.
D) emission allowances.
Q2) What are some of the limitations of the Coase theorem in practice?
Q3) An external cost is created when you
A) graduate from college.
B) buy flowers for your mother on Mother's Day.
C) litter on the side of the road.
D) buy a sandwich for lunch.
Q4) A modern example of the tragedy of the commons is the forests in many poor countries.
A)True
B)False
Q5) An externality is an example of a market failure.
A)True
B)False
Q6) State the Coase theorem.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 6: Elasticity: the Responsiveness of Demand and Supply
Available Study Resources on Quizplus for this Chatper
295 Verified Questions
295 Flashcards
Source URL: https://quizplus.com/quiz/72653
Sample Questions
Q1) Which of the following items is likely to have the highest income elasticity of demand?
A) a bus ride
B) a meal at Taco Bell
C) a vacation home in the Swiss Alps
D) a tank of gasoline
Q2) If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.
A) 0.17
B) 0.62
C) 1.62
D) 5
Q3) In general, a "big ticket item" such as a house or new car will
A) tend to have a more elastic demand than a lower priced good.
B) tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget.
C) tend to have an inelastic demand because it has many substitutes.
D) tend to have a more inelastic demand the more time that passes.
Q4) Briefly explain the economic concept of elasticity.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 7: The Economics of Health Care
Available Study Resources on Quizplus for this Chatper
334 Verified Questions
334 Flashcards
Source URL: https://quizplus.com/quiz/72652
Sample Questions
Q1) If consumers paid the full price of medical services instead of using health insurance and third-party payers to cover part of the cost, the quantity of medical services provided would decrease.
A)True
B)False
Q2) Uninsured patients receiving treatments at hospital emergency rooms that could have been provided less expensively at doctor's offices account for ________ of health care costs in the United States.
A) between 1 and 4 percent
B) approximately 25 percent
C) almost 40 percent
D) between 15 and 20 percent
Q3) The health care system in ________ is referred to as a single-payer health care system, and is a system in which the government provides national health insurance to all residents.
A) Canada
B) Japan
C) the United Kingdom
D) the United States
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 8: Firms, the Stock Market, and Corporate Governance
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/72651
Sample Questions
Q1) Who operates and controls a corporation in its day-to-day activities?
A) the board of directors
B) stockholders
C) employees
D) management
Q2) Which of the following is not an advantage of starting a new business as a proprietorship?
A) The owner has complete control over the business.
B) A proprietorship has few government rules and regulations to comply with.
C) Business profits are only taxed once, not twice.
D) A proprietorship can easily attain additional funding.
Q3) What is the present value of $888 in a one year if the current rate of interest is five percent?
A) $4,440
B) $845.71
C) $177.60
D) none of these
Q4) Corporations are legally owned by their shareholders.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 9: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
379 Verified Questions
379 Flashcards
Source URL: https://quizplus.com/quiz/72650
Sample Questions
Q1) Refer to Table 9-11. With trade, what is the total gain in clock production?
A) 150
B) 300
C) 2,100
D) 2,250
Q2) Protection in the form of tariffs create winners and losers. Winners include ________ and losers include ________.
A) U.S. consumers and taxpayers; foreign firms that rely on U.S. exports
B) firms sheltered from foreign competition; U.S. consumers and taxpayers
C) U.S. firms that rely on exports to foreign countries; foreign manufacturers
D) the U.S. government; firms sheltered from foreign competition
Q3) When BMW, a German company, purchases a welding machine that was made in Toronto, the purchase is
A) both a German and a Canadian import.
B) a German import and a Canadian export.
C) a German export and a Canadian import.
D) neither an export nor an import for either country.
Q4) Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 10: Consumer Choice and Behavioral Economics
Available Study Resources on Quizplus for this Chatper
302 Verified Questions
302 Flashcards
Source URL: https://quizplus.com/quiz/72678
Sample Questions
Q1) Gowri has $6 per day to purchase lunch. She spends all of her lunch money on pizza and iced-tea. The price of pizza is $2.00 per slice and iced-tea costs $1 per bottle.
a. Draw Gowri's budget constraint and label it BC0. Put pizza on the horizontal axis and iced-tea on the vertical axis. Be sure to identify the intercept values.
b. If the price of iced-tea rises to $1.20 per bottle, show what will happen to her budget constraint in your diagram. Be sure to indicate any new intercept values.
Q2) All but one of the following economists were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making. Which economist did not receive a Nobel Prize for this work?
A) Vernon Smith
B) Alan Krueger
C) Daniel Kahneman
D) Maurice Allais
Q3) Explain the concept of network externalities.
Q4) Why might network externalities result in products that contain inferior technologies?
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 11: Technology, Production, and Costs
Available Study Resources on Quizplus for this Chatper
330 Verified Questions
330 Flashcards
Source URL: https://quizplus.com/quiz/72677
Sample Questions
Q1) Which of the following can a firm do in the long run but not in the short run?
A) decrease the size of its physical plant
B) reduce its rate of output by laying off workers
C) increase its variable costs
D) increase its use of raw materials
Q2) Which of the following are examples of a firm experiencing a positive technological change?
a. A firm is able to reduce its inputs by 15 percent and still produce the same level of output.
b. A seminar attended by the firm's workers makes them more productive.
c. A firm adds 5 percent to its workforce and is able to maintain its initial level of output.
d. A firm restructures its distribution system and is able to save on its shipping times.
e. A firm rearranges its warehouse and finds that it can use fewer workers to maintain its productivity level.
Q3) As the level of output increases, what happens to the value of average fixed cost, and what happens to the difference between the value of average total cost and average variable cost?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 12: Firms in Perfectly Competitive Markets
Available Study Resources on Quizplus for this Chatper
298 Verified Questions
298 Flashcards
Source URL: https://quizplus.com/quiz/72676
Sample Questions
Q1) Refer to Figure 12-9. At price P2, the firm would
A) lose an amount equal to its fixed cost.
B) lose an amount more than fixed cost.
C) lose an amount less than fixed cost.
D) break even.
Q2) In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its
A) explicit plus its implicit costs.
B) fixed costs.
C) implicit costs.
D) explicit costs.
Q3) Refer to Figure 12-1. If the firm is producing 200 units, A) it breaks even.
B) it is making a loss.
C) it should cut back its output to maximize profit.
D) it should increase its output to maximize profit.
Q4) The minimum point on the average variable cost curve is called the loss-minimizing point.
A)True
B)False
15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Monopolistic Competition: the Competitive
Model in a More Realistic Setting
Available Study Resources on Quizplus for this Chatper
276 Verified Questions
276 Flashcards
Source URL: https://quizplus.com/quiz/72675
Sample Questions
Q1) Refer to Figure 13-6. Suppose the above graph represents the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced by Dell. On a graph, illustrate the demand, MR, MC, and ATC curves which would represent Dell maximizing profits at a quantity of 100,000 per month and identify the area on the graph which represents the profit.
Q2) Which of the following statements is true about monopolistically competitive firms?
A) Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
B) Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
C) Like perfectly competitive firms, monopolistically competitive firms maximize their profits by settling price equal to marginal cost.
D) Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.
Q3) What is the difference between the terms "marketing" and "advertising"?
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 14: Oligopoly: Firms in Less Competitive Markets
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/72674
Sample Questions
Q1) An equilibrium in which each player chooses its best strategy given the strategies chosen by the other players is called a Nash equilibrium.
A)True
B)False
Q2) In Michael Porter's five competitive forces model, what do the competitive forces determine?
Q3) In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this?
A) Firms engage in aggressive advertising to overcome the barriers to loyalty.
B) Most games are one-shot games so firms learn from their mistakes.
C) Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate.
D) Firms are constantly improving their products and anticipating changing consumer tastes.
Q4) The most important barrier to entry is economies of scale.
A)True
B)False
Q5) Firms in an oligopoly are said to be interdependent. What does this mean?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 15: Monopoly and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
271 Verified Questions
271 Flashcards
Source URL: https://quizplus.com/quiz/72673
Sample Questions
Q1) A natural monopoly is characterized by large fixed costs relative to variable costs.
A)True
B)False
Q2) Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. As a result of this change,
A) price will be higher, output will be lower and the deadweight loss will be eliminated.
B) consumer surplus will be smaller, producer surplus will be greater and there will be a reduction in economic efficiency.
C) price will be higher, consumer surplus will be greater and output will be greater.
D) consumer surplus will be smaller and producer surplus will be greater. There will be a net increase in economic surplus.
Q3) A patent or copyright is a barrier to entry based on
A) ownership of a key necessary raw material.
B) large economies of scale as output increases.
C) government action to protect a producer.
D) widespread network externalities.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Pricing Strategy
Available Study Resources on Quizplus for this Chatper
263 Verified Questions
263 Flashcards
Source URL: https://quizplus.com/quiz/72672
Sample Questions
Q1) Which of the following antitrust laws forbade firms to engage in price discrimination if the effect would lessen competition or create a monopoly?
A) the Sherman Act
B) the Clayton Act
C) the Robinson-Patman Act
D) the Cellar-Kefauver Act
Q2) Refer to Table 16-3. If Julie charges $10 per hour, how many hours of pet sitting services will be purchased and by whom?
A) 2 hours (1 hour by Cara and 1 hour by Dawn)
B) 1 hour by Cara only
C) 1 hour by Dawn only
D) 3 hours (1 hour each by Arun, Bernice and Cara)
Q3) Bubba's Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. This is an example of
A) arbitrage.
B) two-part tariff pricing.
C) price discrimination.
D) odd pricing.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 17: The Markets for Labor and Other Factors of Production
Available Study Resources on Quizplus for this Chatper
286 Verified Questions
286 Flashcards
Source URL: https://quizplus.com/quiz/72671
Sample Questions
Q1) Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If the last worker hired produces four units of output per hour, then to maximize profits the firm should
A) not change the number of workers it currently hires.
B) lay off some workers.
C) hire another worker.
D) There is not enough information to answer the question.
Q2) If the market wage rate increases, a firm's labor demand curve does not shift but the labor supply curve shifts to the right.
A)True
B)False
Q3) In order for a labor supply curve to be backward bending at high wages, A) leisure must be an inferior good.
B) the substitution effect of a wage increase must be greater than the income effect.
C) workers must have an irrational response to wage increases.
D) the income effect of a wage increase must be greater than the substitution effect.
Q4) Why are there superstar baseball players but no superstar chiropractors?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 18: Public Choice, Taxes, and the Distribution of Income
Available Study Resources on Quizplus for this Chatper
258 Verified Questions
258 Flashcards
Source URL: https://quizplus.com/quiz/72670
Sample Questions
Q1) Refer to Table 18-9. Sylvia is a single taxpayer with an income of $70,000. What is her marginal tax rate and what is her average tax rate?
A) marginal tax rate = 30%; average tax rate = 30%
B) marginal tax rate = 8%; average tax rate = 19.3%
C) marginal tax rate = 30%; average tax rate = 22.5%
D) marginal tax rate = 20%; average tax rate = 30%
Q2) Refer to Figure 18-9 to answer the following questions.
a. Did the distribution of income become more equal in 2010 that it was in 2009, or did it become less equal? Explain.
b. If area A = 1,600, area B = 200, and area C = 3,200, calculate the Gini coefficient for 2009 and the Gini coefficient for 2010.
Q3) Refer to Figure 18-6. Which country has the more unequal distribution of income?
A) Islandia
B) Syldavia
C) They may have the same absolute income distribution although their relative income distribution is different.
D) There is insufficient information to answer the question.
Q4) What is a Lorenz curve and what is a Gini coefficient?
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: GDP: Measuring Total Production and Income
Available Study Resources on Quizplus for this Chatper
266 Verified Questions
266 Flashcards
Source URL: https://quizplus.com/quiz/72669
Sample Questions
Q1) Refer to Table 19-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals
A) $2,200.
B) $2,100.
C) $1,600.
D) $1,400.
Q2) Emily is a writer. She buys pens and paper for $20 and writes a 500-page novel that she sells to a publishing company for $500,000. If the publisher prints 1 million copies that sell for $25 each, what is the contribution to GDP of Emily's novel?
A) $25 million
B) $20 million
C) $500,000
D) $50,000
Q3) GDP is not a perfect measure of well-being because
A) the value of leisure is included in GDP.
B) GDP is not adjusted for pollution.
C) GDP is adjusted for changes in crime rates.
D) GDP is adjusted for increases in drug addiction.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 20: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
292 Verified Questions
292 Flashcards
Source URL: https://quizplus.com/quiz/72667
Sample Questions
Q1) The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index. Which of the following is not one of the steps taken to reduce the bias?
A) using statistical methods to reduce the size of the quality bias
B) updating the market basket every two years, rather than every 10 years
C) incorporating substitutions by consumers when prices of specific products rise rapidly
D) conducting a point-of-purchase survey to track where consumers actually make their purchases
Q2) During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?
Q3) Emma is a road construction worker. During the winter months, Emma finds it more difficult to get work. The unemployment Emma experiences in the winter is A) structural.
B) cyclical.
C) seasonal.
D) functional.
Q4) Describe the three types of unemployment.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 21: Economic Growth, the Financial System, and Business Cycles
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/72666
Sample Questions
Q1) Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?
A) The quantity of loanable funds demanded by firms will rise above $120 million.
B) The quantity of loanable funds demanded by firms will fall below $120 million.
C) The budget deficit will have no impact on the quantity of loanable funds demanded by firms.
D) The interest rate will fall below 4 percent.
Q2) If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined.
A) labor force participation
B) the quantity of goods or services that can be produced by one hour of work
C) the working-age population
D) nominal GDP
Q3) A period of economic expansion ends with a business cycle trough.
A)True
B)False
Q4) Give three reasons why the U.S. economy is more stable since 1950.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 22: Long-Run Economic Growth: Sources and Policies
Available Study Resources on Quizplus for this Chatper
268 Verified Questions
268 Flashcards
Source URL: https://quizplus.com/quiz/72665
Sample Questions
Q1) Relative to productivity growth in the United States, which of the following countries experienced the largest decline in productivity growth from 1990 to 2012?
A) Canada
B) Japan
C) Germany
D) the United Kingdom
Q2) Disease, poor nutrition, and substandard health care in developing nations can reduce growth in an economy by
A) reducing physical capital.
B) reducing human capital.
C) increasing labor productivity.
D) increasing technological change.
Q3) Refer to Figure 22-1. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from
A) A to B.
B) B to C.
C) B to A.
D) C to A.
25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Aggregate Expenditure and Output in the Short Run
Available Study Resources on Quizplus for this Chatper
306 Verified Questions
306 Flashcards
Source URL: https://quizplus.com/quiz/72664
Sample Questions
Q1) A stock market crash which causes stock prices to fall should cause
A) a decrease in consumption spending.
B) an increase in consumption spending.
C) an increase in wealth.
D) no change in consumption spending.
Q2) If aggregate expenditure is more than GDP, then inventories fall and GDP rises.
A)True
B)False
Q3) The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure.
A) the price level; quantity of planned aggregate expenditure
B) the inflation rate; quantity of planned aggregate expenditure
C) the price level; quantity of planned investment expenditure
D) the price level; quantity of consumption expenditure
Q4) What are the five main determinants of consumption spending? Which of these is the most important?
Q5) Given Table 23-6 below, fill in the values for saving. Assume taxes = $800.
Q6) What is the difference between aggregate expenditure and consumption spending?
Q7) What is the difference between aggregate expenditure and aggregate demand?
To view all questions and flashcards with answers, click on the resource link above. Page 26
Chapter 24: Aggregate Demand and Aggregate Supply Analysis
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/72663
Sample Questions
Q1) The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.
A) new Keynesianism; the new classical model
B) the real business cycle model; Marxism
C) rational expectations; monetarism
D) the monetarist model; the Keynesian model
Q2) Which of the following is one explanation as to why the aggregate demand curve slopes downward?
A) Increases in the price level lower the interest rate and decrease consumption spending.
B) Increases in the price level lower the interest rate and decrease investment spending.
C) Increases in the U.S. price level relative to the price level in other countries lowers net exports.
D) Increases in the price level raise real wealth and lowers consumption spending.
Q3) Explain why the long-run aggregate supply curve is vertical.
Q4) What does the phrase "Keynesian revolution" refer to?
Q5) Why does the short-run aggregate supply curve slope upward?
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 25: Money, Banks, and the Federal Reserve System
Available Study Resources on Quizplus for this Chatper
280 Verified Questions
280 Flashcards
Source URL: https://quizplus.com/quiz/72662
Sample Questions
Q1) Which of the following best describes how banks create money?
A) Banks charge higher interest rates on loans than they pay on deposits.
B) Banks charge fees for providing financial advice.
C) Banks create checking account deposits when making loans from excess reserves.
D) Banks make loans from reserves.
Q2) In 1913, Congress established the Federal Reserve system with the intention of putting an end to
A) high interest rates.
B) high unemployment rates.
C) inflation.
D) bank panics.
Q3) Open market operations refer to the buying and selling of ________ by the ________ to control the money supply.
A) Treasury securities; Treasury Department
B) Treasury securities; Federal Reserve
C) stocks and bonds; Treasury Department
D) stocks and bonds; Federal Reserve
Q4) Why is the real-world deposit multiplier smaller than 1/RR, where RR is the required reserve ratio?
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 26: Monetary Policy
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/72661
Sample Questions
Q1) Suppose the Fed decreases the money supply. In response households and firms will ________ short term assets and this will drive ________ interest rates.
A) buy; up
B) buy; down
C) sell; up
D) sell; down
Q2) Would the Federal Reserve respond more aggressively with interest rate cuts in a recession caused by a decrease in spending, as in the 2001 recession, than in a recession caused by an increase in oil prices, as in the 1974-75 recession?
Q3) The situation in which short-term interest rates are pushed to zero, leaving the central bank unable to lower them further is known as
A) the Taylor rule.
B) a liquidity trap.
C) a zero-sum game.
D) an interest rate panic.
Q4) Using the money demand and money supply model, show and explain why the Federal Reserve cannot achieve a target for both the money supply and an interest rate.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 27: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
303 Verified Questions
303 Flashcards
Source URL: https://quizplus.com/quiz/72660
Sample Questions
Q1) A one-time tax rebate, which is not expected to be extended in future years, will
A) have a small positive effect on consumption and aggregate demand.
B) have no effect on consumption and aggregate demand.
C) have a significant positive effect on consumption and aggregate demand, with aggregate demand growing by a multiple of the tax rebate.
D) increase aggregate supply and aggregate demand.
Q2) To combat inflation, Congress and the president should
A) decrease government spending.
B) decrease taxes.
C) raise interest rates.
D) increase transfer payments.
Q3) Crowding out will be greater
A) the less sensitive consumption spending is to changes in the interest rate.
B) the further equilibrium GDP is below potential GDP.
C) the more sensitive investment spending is to changes in the interest rate.
D) if the economy is in recession, rather than at full employment.
Q4) What is meant by crowding out? Explain the difference between crowding out in the short run and in the long run.
To view all questions and flashcards with answers, click on the resource link above.
Page 30
Chapter 28: Inflation, Unemployment, and Federal Reserve Policy
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/72659
Sample Questions
Q1) During which of the following time periods did inflation remain above 5 percent every year?
A) 1990 through 1999
B) 1973 through 1982
C) 1968 through 1971
D) 1958 through 1962
Q2) The expansionary monetary and fiscal policies of the 1960s resulted in ________ inflation rates and ________ rates of unemployment.
A) high; high
B) low; low
C) low; high
D) high; low
Q3) When individuals use ________ about an economic variable to make a decision, expectations are rational.
A) only historical information
B) only information announced by the Fed
C) all available information
D) only information garnered in the private sector
Q4) Why is the credibility of the Fed's policy announcements particularly important?
Page 31
To view all questions and flashcards with answers, click on the resource link above.
Chapter 29: Macroeconomics in an Open Economy
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/72658
Sample Questions
Q1) What is the relationship between the balance of trade and the current account balance?
Q2) If the exchange rate between the Mexican peso and the U.S. dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar, what is the exchange rate when expresses in terms of dollars per peso?
Q3) What impact might an increase in the budget deficit have on interest rates and exchange rates?
A) Interest rates and exchange rates increase.
B) Interest rates increase and exchange rates decrease.
C) Interest rates decrease and exchange rates increase.
D) Interest rates and exchange rates decrease.
Q4) If currency speculators decide that the value of the dollar should rise in the future relative to the yen, this will increase the demand for dollars and decrease the supply of dollars.
A)True
B)False
Q5) Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.
To view all questions and flashcards with answers, click on the resource link above. Page 32
Chapter 30: The International Financial System
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/72656
Sample Questions
Q1) The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory. In July 2013, the Economist reported that the average price of a Big Mac in the United States was $4.56. In Mexico, the average price of a Big Mac at that time was 37 pesos. If the exchange rate between the dollar and the peso was 13.60 pesos per dollar, explain how it would be profitable to buy Big Macs in Mexico instead of in the United States.
Q2) Fluctuating exchange rates can alter a multinational firm's profits and losses. German auto maker Volkswagen produces automobiles in Germany and sells them in the United States. If the dollar depreciates against the euro, then Volkswagen's revenues from these operations should ________ because it will take ________ U.S. dollars to purchase the German-made Volkswagens.
A) rise; more
B) rise; fewer C) fall; more D) fall; fewer
Q3) What is destabilizing speculation? What role did it play in the collapse of the Bretton Woods system?
Q4) Briefly describe how the Bretton Woods system operated.
Q5) Describe the four determinants of exchange rates in the long run.
To view all questions and flashcards with answers, click on the resource link above. Page 33