Social Science: Macroeconomics
Review Questions
Course Introduction
This course provides an introduction to macroeconomics, a major branch of economics that examines the behavior, performance, and structure of entire economies rather than individual markets. Students will explore key topics such as national income, economic growth, unemployment, inflation, and fiscal and monetary policy. The course emphasizes understanding how governments and central banks use policy tools to influence overall economic activity, and it analyzes the impact of both domestic and global forces on economic outcomes. By integrating real-world examples and contemporary issues, students gain insights into the challenges of managing economies and learn to evaluate policy effectiveness in promoting stability and growth.
Recommended Textbook
Principles of Macroeconomics A Streamlined Approach 3rd Edition by Robert H. Frank
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13 Chapters
2266 Verified Questions
2266 Flashcards
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Chapter 1: Thinking Like an Economist
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135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/49257
Sample Questions
Q1) The cost-benefit model used by economists is:
A) unrealistic because it is too detailed and specific to apply to most situations.
B) unrealistic because everyone can think of times when he or she violated the principle.
C) useful because everyone follows it all of the time.
D) useful because most people follow it most of the time.
Answer: D
Q2) The Cost-Benefit Principle:
A) fully captures how people choose between alternatives.
B) provides an abstract model of a rational person should choose between alternatives.
C) describes how people behave once they have enough education.
D) provides little insight into how people actually chose between alternatives.
Answer: B
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3
Chapter 2: Supply and Demand
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173 Verified Questions
173 Flashcards
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Sample Questions
Q1) If supply increases and demand decreases, the new equilibrium price will be ______ and the new equilibrium quantity will be ______.
A) lower; lower
B) lower; uncertain
C) higher; higher
D) higher; uncertain
Answer: B
Q2) Suppose that the equilibrium price of french fries rises while the equilibrium quantity falls. The most likely explanation for these changes is:
A) a decrease in demand for french fries.
B) an increase in demand for french fries.
C) an increase in the supply of french fries.
D) a decrease in the supply of french fries.
Answer: D
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4
Chapter 3: International Trade and Trade Policy
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) A legal limit on the quantity of a good that may be imported is called a(n)
A) tariff
B) quota
C) trade limit
D) import tax
Answer: B
Q2) The benefits of specialization can be used to explain why:
A) workers prefer to work on a variety of tasks during the day.
B) machines are more productive than human workers.
C) individuals and nations benefit from trade.
D) big companies take advantage of smaller ones.
Answer: C
Q3) Which of the following statements is true?
A) Absolute advantage implies comparative advantage.
B) Comparative advantage does not require absolute advantage.
C) Absolute advantage requires comparative advantage.
D) Comparative advantage requires absolute advantage.
Answer: B
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Page 5
Chapter 4: Macroeconomics: the Birds-Eye View of the Economy
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) "If the Federal Reserve raises interest rates, demand for housing is likely to fall" is a _______ statement about ________ policy.
A) positive; fiscal
B) normative; fiscal
C) positive; monetary
D) normative; monetary
Q2) Major macroeconomic questions include all of the following EXCEPT:
A) Are free trade agreements beneficial?
B) Can inflation be reduced without generating additional unemployment?
C) What causes slowdowns in productivity growth?
D) How do monopoly firms set prices and determine quantities to produce?
Q3) If total output increases from $1 trillion to $2 trillion as population increases from 100 million to 200 million, then output per person:
A) doubles.
B) increases, but by less than 100 percent.
C) remains constant.
D) decreases
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Page 6
Chapter 5: Measuring Economic Activity: GDP, Unemployment,
and Inflation
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) Capital goods are
A) long-lived goods used for producing other goods and services.
B) the end products of production.
C) publicly provided.
D) excluded from GDP.
Q2) The measure of the cost of a standard basket of goods and services in any period relative to the cost of the same basket of goods and services in the base year is called the:
A) consumption cost calculator.
B) consumption production index.
C) consumer production index.
D) consumer price index.
Q3) As the rate of inflation increases, the increased cost to a consumer of more frequent trips to the bank to make cash withdrawals represents an increase in the:
A) shoe leather costs of inflation.
B) erosion of the purchasing power of cash.
C) tax distortion generated by inflation.
D) "noise" in the price system.
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Chapter 6: Economic Growth, Productivity, and Living Standards
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) The introduction of new technologies to production is ______ source of productivity improvement.
A) the most important
B) the only
C) the least important
D) no longer a
Q2) Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals _____, while your deposit in Bank S equals ______.
A) $1,060; $1,100
B) $1,600; $2,000
C) $1,600; $2,594
D) $1,791; $2,000
Q3) The major economic cost of growth is:
A) higher interest rates.
B) consumption sacrificed for capital formation.
C) higher inflation rates.
D) investment in stocks and bonds.
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Chapter 7: The Labor Market: Workers, Wages, and Unemployment
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) A Luddite is:
A) someone who opposes the introduction of new technologies.
B) a worker whose real wage rises as a result of globalization.
C) a fictional character from American folk history.
D) a consumer who refuses to buy imported goods, even if they are cheaper.
Q2) Periods of unusually low production in an economy result in ______ unemployment.
A) cyclical
B) environmental
C) structural
D) frictional
Q3) An increase in the demand for chicken is predicted to ______ the real wage and ______ employment of unskilled workers in a poultry processing plant.
A) increase; increase
B) increase; decrease
C) increase; not change
D) decrease; decrease
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Page 9
Chapter 8: Saving and Capital Formation
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Which of the following hypotheses is a plausible explanation for why U.S. households save so little?
A) Government assistance to the elderly has reduced the need for life-cycling saving.
B) Most American already own homes and, therefore, have less need for life-cycle saving.
C) The highly developed financial markets in the U.S. have reduced the need for precautionary saving by Americans.
D) Government assistance to low-income U.S. households has increased the demonstration effects on spending by the poor.
Q2) Chris earns $1,500 per week and spends $1,000 per week on living expenses, puts $200 in a savings account, and buys $300 worth of shares in a stock mutual fund. Chris's saving is _____, and Chris's saving rate is _____.
A) $200; 13.3%
B) $200; 20.0%
C) $300; 20.0%
D) $500; 33.3%
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Chapter 9: Money, The Federal Reserve, and Global
Financial Markets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) A financial intermediary that sells shares in itself to the public, and then uses the funds to buy a wide variety of financial assets is called a:
A) commercial bank.
B) credit union.
C) stock exchange.
D) mutual fund.
Q2) Sydney purchases a newly issued, two-year government bond with a principal amount of $10,000 and a coupon rate of 6% paid annually. One year before the bonds matures (and after receiving the coupon payment for the first year), Sydney sells the bond in the bond market. What price (rounded to the nearest dollar) will Sydney receive for his bond if newly issued one-year government bonds are paying a 5% coupon rate?
A) $9,906
B) $10,000
C) $10,095
D) $10,600
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Chapter 10: Short-Term Economic Fluctuations and Fiscal Policy
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) Aggregate expenditure is total:
A) value added in the economy.
B) spending on final goods and services.
C) income of households, businesses, governments, and foreigners.
D) revenue from the sale of goods and services.
Q2) Which of the following workers is most likely to lose his/her job during a recession?
A) Construction worker
B) Baker
C) Farmer
D) Barber
Q3) Typically, the unemployment rate ______ during a recession and ______ during an expansion.
A) rises; rises even more
B) rises; falls
C) rises; does not change
D) falls; rises
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Page 12
Chapter 11: Stabilizing the Economy: The Role of the
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) Because an increase in the nominal interest rate raises the opportunity costs of holding money, the money demand curve:
A) shifts to the right.
B) shifts to the left.
C) slopes upward.
D) slopes downward.
Q2) If the Federal Reserve wants to decrease the money supply, it should:
A) decrease reserve requirements.
B) decrease the discount rate.
C) decrease the interest that it pays on reserves.
D) conduct open-market sales.
Q3) Higher nominal interest rates ______ the amount of money demanded and a higher price level ______ the amount of money demanded.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
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Chapter 12: Inflation and Aggregate Supply
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) Which of the following will shift the aggregate demand curve to the right?
A) Income taxes are raised.
B) The government increases spending on education.
C) Consumers become pessimistic about the future.
D) Business managers become pessimistic about the future.
Q2) When the economy is in short-run equilibrium, there will be ______ output gap.
A) no
B) only a recessionary
C) either a recessionary or an expansionary
D) only an expansionary
Q3) Starting from long-run equilibrium, a large increase in government purchases will result in a(n) _____ gap in the short-run and ____ inflation and ____ output in the long-run.
A) expansionary; higher; potential
B) expansionary; higher; higher
C) recessionary; lower; lower
D) recessionary; higher; potential
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14
Chapter 13: Exchange Rates and the Open Economy
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) When the nominal exchange rate changes from 4 francs per dollar to 6 francs per dollar, the dollar has:
A) appreciated.
B) depreciated.
C) become overvalued.
D) become undervalued.
Q2) Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $2 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either _____ domestic interest rates, or ________the supply of international reserves by purchasing New Pesos
A) raise; increase
B) raise; decrease
C) lower; decrease
D) lower; increase
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