Applied Macroeconomics
Final Test Solutions
Course Introduction
Applied Macroeconomics explores the practical application of macroeconomic theories and concepts to real-world economic issues and policy-making. The course covers topics such as national income determination, fiscal and monetary policies, inflation, unemployment, economic growth, and international trade. Students learn to analyze economic data, interpret macroeconomic indicators, and assess the impact of government policies on the economy. Through case studies and empirical research, the course emphasizes the use of quantitative tools and models to understand current macroeconomic challenges and to formulate effective policy responses.
Recommended Textbook
ECON MACRO 6th Edition by William A. McEachern
Available Study Resources on Quizplus
19 Chapters
3854 Verified Questions
3854 Flashcards
Source URL: https://quizplus.com/study-set/1161
Page 2
Chapter 1: The Art and Science of Economic Analysis
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/22937
Sample Questions
Q1) The ceteris paribus assumption is a behavioral assumption.
A)True
B)False
Answer: False
Q2) Refer to Table 1.1. What is Sergio's marginal benefit if he tutors for four hours instead of two hours?
A) $50
B) $40
C) $30
D) $20
E) $10
Answer: D
Q3) Secondary effects are consequences of economic actions that develop slowly over time as people react to events.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Economic Tools and Economic Systems
Available Study Resources on Quizplus for this Chatper
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/22938
Sample Questions
Q1) The opportunity cost of choosing a particular activity _____
A) can be easily and accurately calculated.
B) cannot be estimated.
C) does not change over time.
D) varies depending on time and circumstances.
E) is measured in terms of the money spent on the activity.
Answer: D
Q2) You can either read a book, get something to eat, or take a nap. The opportunity cost of getting something to eat is _____
A) the cost of what you eat.
B) the difference between the costs of the book and the food.
C) the difference between the opportunity costs of reading and sleeping.
D) the net benefit of sleeping.
E) impossible to determine because the most preferred alternative is not known.
Answer: E
Q3) A person who can produce more of a good than another person is said to possess a comparative advantage.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Economic Decision Makers
Available Study Resources on Quizplus for this Chatper
225 Verified Questions
225 Flashcards
Source URL: https://quizplus.com/quiz/22939
Sample Questions
Q1) As real wage increases, the opportunity cost of working in the home increases.
A)True
B)False
Answer: True
Q2) The value during a given period of a country's exported goods minus the value of its imported goods is known as the _____
A) balance of payments.
B) merchandise trade balance.
C) foreign direct investment.
D) current account deficit.
E) current account surplus.
Answer: B
Q3) Which of the following is not a government transfer program?
A) unemployment compensation
B) social Security
C) food stamps
D) Medicare
E) income taxes
Answer: E
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Demand, Supply, and Markets
Available Study Resources on Quizplus for this Chatper
205 Verified Questions
205 Flashcards
Source URL: https://quizplus.com/quiz/22940
Sample Questions
Q1) The income effect of an increase in the price of backpacks, a normal good, is a(n)
A) decrease in the demand for backpacks.
B) decrease in the quantity of backpacks demanded.
C) decrease in the supply of backpacks.
D) increase in the quantity of backpacks demanded.
E) increase in the quantity of backpacks supplied.
Q2) Other things constant, which of the following is likely to change the quantity of wheat supplied?
A) a government subsidy for farmers who do not grow wheat
B) an increase in the price of soybeans
C) a decrease in the price of the fertilizer used in wheat production
D) a fall in the price of wheat
E) an expectation of a future increase in wheat prices
Q3) The law of supply indicates that _____
A) when prices rise, the quantity demanded rises.
B) when prices rise, the quantity demanded falls.
C) when prices fall, the quantity supplied rises.
D) when prices fall, the quantity supplied falls.
E) when prices rise, the quantity demanded stays the same.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/22941
Sample Questions
Q1) Which of the following variables is measured only at a particular point in time and not over different time periods?
A) the unemployment rate
B) consumer income
C) the federal government's debt
D) the federal government's budget deficit
E) total expenditure
Q2) The market value of all final goods and services produced in a nation during a particular period is called the _____
A) gross domestic product.
B) net national product.
C) national income.
D) gross national product.
E) gross world product.
Q3) Before the Great Depression, macroeconomic policy was based primarily on _____
A) human spirits.
B) demand-side economics.
C) supply-side economics.
D) laissez-faire philosophy.
E) government interference.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Tracking the U S Economy
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/22942
Sample Questions
Q1) Chain-weighted indexes have less bias compared to fixed-weight indexes.
A)True
B)False
Q2) The immediate effect of a purchase of a government bond on the gross domestic product (GDP) is _____
A) a decrease in consumption.
B) an increase in government spending.
C) an increase in investment.
D) a decrease in investment.
E) nonexistent, since no real goods and services have been produced.
Q3) Which of the following is an example of an injection into the circular flow of income and expenditure?
A) net taxes
B) saving
C) transfer payments
D) government borrowing
E) disposable income
Q4) The value-added method to measure GDP does not avoid double-counting.
A)True
B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/22943
Sample Questions
Q1) Frictional unemployment refers to unemployment that is a result of _____
A) a mismatch of skills.
B) being out of work 27 weeks or longer.
C) job search.
D) seasonal decreases in the demand for labor.
E) a recession in an economy.
Q2) Inmates from the county prison who are on work release are counted as part of the labor force.
A)True
B)False
Q3) Inflation is the hardest on those living on fixed incomes.
A)True
B)False
Q4) Which of the following groups tends to have the highest unemployment rate in the United States?
A) African American teenagers
B) workers, aged 25 or older, who are college graduates
C) white women
D) workers, 25 years of age or older, who are high school dropouts
E) white teenagers
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Productivity and Growth
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22944
Sample Questions
Q1) An economy's standard of living grows over the long run because of _____
A) better protection of domestic industries from foreign competition.
B) centralized planning and decision making.
C) technological improvements.
D) stringent foreign trade policies.
E) a high-growth rate of population.
Q2) The gross domestic product of Solvasa, a small island country, is $68 billion. The adult population of the country is 8.7 million, and 11.3 million citizens are below 18 years of age. The output per capita of Solvasa is approximately equal to _____
A) $7,800.
B) $3,400.
C) $6,017.
D) $5,201.
E) $6,950.
Q3) Industrial policy involves governments using taxes, subsidies, and regulations to nurture the development of specific industries.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Aggregate Demand
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22945
Sample Questions
Q1) The fraction of a change in income that is spent on consumption is known as _____
A) disposable income.
B) the consumption function.
C) the marginal propensity to consume.
D) the marginal propensity to save.
E) net wealth.
Q2) Which of the following is correct if real GDP is $20 trillion and spending is $20.5 trillion?
A) Spending is greater than output by $0.5 trillion.
B) Spending is lesser than output by $0.5 trillion.
C) Spending is greater than output by $20.5 trillion.
D) Spending is lesser than output by $20.5 trillion.
E) Spending is equal to output.
Q3) A decrease in net wealth will _____
A) shift the consumption function downward.
B) make the consumption function steeper.
C) cause an upward movement along the consumption function.
D) cause a downward movement along the consumption function.
E) make the consumption function flatter.
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Aggregate Supply
Available Study Resources on Quizplus for this Chatper
202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/22946
Sample Questions
Q1) Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. If output is at Y , _____
A) the economy produces its potential output and unemployment is at the natural rate.
B) the economy produces its potential output and unemployment is higher than the natural rate.
C) the economy produces its potential output and unemployment is lower than the natural rate.
D) the economy is less than its potential output and unemployment is at the natural rate.
E) the economy is more than its potential output and unemployment is at the natural rate.
Q2) Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At a price of P , firms will _____
A) supply less than potential output.
B) supply more than potential output.
C) supply potential output.
D) increase prices.
E) decrease prices.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/22947
Sample Questions
Q1) Permanent income _____
A) is the income a person expects on average over the long term.
B) is the income a person expects on average over the short term.
C) is discretionary income.
D) is the income that is spent on durable goods.
E) is the income that is spent on nondurable goods.
Q2) Which of the following is true about classical economists?
A) They argued that the sources of depressions and high unemployment lay within the market system.
B) They advocated laissez-faire policies to promote economic growth.
C) They believed the economy would naturally tend toward unemployment.
D) They believed prices and wages were rigid.
E) They encouraged government intervention in markets.
Q3) The effectiveness of any stimulus program depends on _____
A) the nature of the tax only.
B) the size of the tax and spending multipliers.
C) the nature of the tax and tax multipliers.
D) the income group targeted.
E) the marginal propensity to consume only.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Federal Budgets and Public Policy
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/22948
Sample Questions
Q1) Which of the following is the chief link between the U.S. federal budget deficit and the U.S. trade deficit during the 1980s?
A) High U.S. interest rates led to a rise in the relative value of the dollar.
B) High U.S. interest rates led to a decrease in the relative value of the dollar.
C) Higher interest rates resulted in the crowding out of some private investment, reducing the stimulating effect of the government's deficit.
D) The U.S. price level declined relative to that of foreign countries, causing U.S. interest rates to fall.
E) The additional fiscal stimulus provided by a higher government deficit encouraged some firms to invest more.
Q2) Transfer payments are included in the government budget deficit but not included in the government purchases component of GDP.
A)True
B)False
Q3) In 2009, the U.S. budget deficit was $1.4 trillion.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Money and the Financial System
Available Study Resources on Quizplus for this Chatper
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/22949
Sample Questions
Q1) Which of the following best illustrates the double coincidence of wants?
A) Both Tom and Jerry would like to purchase the same good.
B) Tom has something he's willing to trade with Jerry; Jerry has something he's not willing to trade with Tom.
C) Tom and Jerry have very similar tastes; hence, Tom's wants coincide with Jerry's.
D) Tom has something he's willing to trade with Jerry, who wants it; Jerry has something he's willing to trade with Tom, who wants it.
E) Tom has something Jerry wants; Jerry has nothing Tom wants.
Q2) Barter is the direct exchange of goods and services for _____
A) any kind of money.
B) other goods and services.
C) either goods or money.
D) commodity money.
E) foreign currency.
Q3) One characteristic of cattle that makes them unsuitable as a medium of exchange is that they are not easily divisible.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Banking and the Money Supply
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22950
Sample Questions
Q1) Most of the Fed's liabilities are in the form of _____
A) Federal Reserve notes.
B) checkable deposits.
C) U.S. Treasury deposits.
D) loans to member banks.
E) certificates of deposit.
Q2) Suppose the reserve requirement is 15 percent. Which of the following is true?
A) The simple money multiplier is 15.
B) The simple money multiplier is 1/15.
C) The simple money multiplier is 30,000.
D) The simple money multiplier is 1/30,000.
E) The simple money multiplier is 1/0.15.
Q3) Which of the following measures did the Fed take during the financial crisis of 2008?
A) The Fed lowered the discount rate and paid interest on reserves held at the Fed.
B) The Fed increased the reserve requirement ratio.
C) The Fed sold all government securities.
D) The Fed decreased its spending.
E) The Fed increased the discount rate.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Monetary Theory and Policy
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22951
Sample Questions
Q1) Which statement describes an advantage of money as a store of value?
A) It can generate high interest income.
B) It can facilitate hassle-free international exchange.
C) It can be easily liquidated.
D) It can signal a nation's economic health.
E) It can increase potential output.
Q2) After September 2007, 10 cuts over 15 months brought the target rate between _____, the _____ in history.
A) 0 and 0.25 percent; lowest
B) 3 and 5 percent; lowest
C) 15 and 18 percent; highest
D) 10 and 15 percent; highest
E) 5 and 8 percent; highest
Q3) The average number of times per year each dollar is used to purchase final goods and services is called _____
A) nominal gross domestic product.
B) real gross domestic product.
C) the velocity of money.
D) the quantity of money.
E) the supply of money.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Macro Policy Debate: Active or Passive?
Available Study Resources on Quizplus for this Chatper
198 Verified Questions
198 Flashcards
Source URL: https://quizplus.com/quiz/22952
Sample Questions
Q1) Ms. Jones is a professor at a university. She strongly supports the rational expectations theory. She is likely to believe that the only time active policy has an impact on aggregate output is when _____
A) an expansionary policy is implemented.
B) a recessionary policy is implemented.
C) policy changes are unannounced.
D) an economy has a recessionary gap.
E) an economy has an expansionary gap.
Q2) Exhibit 16.5 shows a Phillips curve. Combinations of inflation and unemployment that are attainable as long as the curve itself does not shift are represented by _____
A) point a.
B) point b.
C) point c.
D) points a and b.
E) points c and d.
Q3) An increase in price expectations shifts the long-run Phillips curve, but not the short-run Phillips curve.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: International Trade
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22953
Sample Questions
Q1) Regional trading bloc agreements _____
A) are not considered trade restrictions.
B) are required by World Trade Organization rules.
C) exist primarily in Russia, Africa, and South America.
D) require all nations in a specified region to trade only with other countries in the same geographic area.
E) make special trade deals between countries in that region and discriminate against countries outside the region.
Q2) Which of the following explains why many countries with relatively small populations import automobiles from Japan, the United States, and Germany instead of producing them domestically?
A) differences in resource endowments
B) economies of scale
C) differences in tastes
D) import quotas
E) import tariffs
Q3) Specialization based on absolute advantage leads to gains from trade.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: International Finance
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/22954
Sample Questions
Q1) In order for the balance of payments to balance, the _____
A) current account balance must equal the capital account balance.
B) sum of the current account balance, the capital account balance, the net flow of international reserves, and the statistical discrepancy must have a negative value.
C) sum of the current account balance, the capital account balance, the net flow of international reserves, and the statistical discrepancy must have a positive value.
D) sum of the current account balance, the capital account balance, the net flow of international reserves, and the statistical discrepancy must equal zero.
E) the sum of the current account balance, the capital account balance, and the net flow of international reserves must be greater than the statistical discrepancy.
Q2) The Bretton Woods agreement was reached _____
A) immediately after the Civil War.
B) just before World War I.
C) just after World War I.
D) just after the Great Depression.
E) toward the end of World War II.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Economic Development
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/22955
Sample Questions
Q1) Which of the following is at the end of the production chain that a typical economy moves up along?
A) raw materials
B) agriculture
C) hunting and gathering
D) services
E) manufacturing
Q2) Industrial market countries are also referred to as _____
A) developing countries.
B) low-income economies.
C) middle-income economies.
D) transitional economies.
E) high-income economies.
Q3) In 2016, high-income economies, home to less than _____ of the world's population, produced more than _____of the world's output.
A) one fifth; half
B) one tenth; half
C) one quarter; three quarters
D) half; three quarters
To view all questions and flashcards with answers, click on the resource link above.
Page 21