Contemporary Macroeconomic Issues
Exam Review
Course Introduction
Contemporary Macroeconomic Issues explores the pressing economic challenges and policy debates facing modern economies. The course examines topics such as unemployment, inflation, economic growth, fiscal and monetary policy, globalization, financial crises, and income inequality. Students analyze current events using macroeconomic theories and models, evaluate the effectiveness of policy responses, and consider the global interconnectedness of economies. Through case studies, empirical data, and policy analysis, the course equips students with the tools to critically assess and engage with the macroeconomic issues that shape todays world.
Recommended Textbook
Principles of Macroeconomics 5th Edition by Robert Frank
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15 Chapters
1841 Verified Questions
1841 Flashcards
Source URL: https://quizplus.com/study-set/2918
Page 2
Chapter 1: Thinking Like an Economist
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134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/58108
Sample Questions
Q1) You had to pay $600 (non-refundable) for your meal plan for Fall semester which gives you up to 150 meals. If you eat only 100 meals, your average cost for a meal equals:
A) $6.
B) $5.
C) $4.
D) $0.25.
Answer: A
Q2) In deciding the number of guitars to buy for his shop before the Christmas season, Mark is making a(n) __________________ decision.
A) microeconomic
B) macroeconomic
C) economic surplus
D) marginal choice
Answer: A
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Chapter 2: Comparative Advantage
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109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/58101
Sample Questions
Q1) The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:
A) the average quality of batters has fallen.
B) the league imposes harsh penalties for steroid use.
C) specialization by pitchers, infielders, and outfielders has made it harder for batters to hit.
D) baseball diamonds have become larger.
Answer: C
Q2) In general, it is true that:
A) more specialization is always better.
B) less specialization is always better.
C) specialization imposes costs as well as benefits.
D) more specialization is always worse.
Answer: C
Q3) The core principle that is illustrated by the production possibilities curve is:
A) the Scarcity Principle.
B) the Cost-Benefit Principle.
C) the Incentive Principle.
D) The Principle of Comparative Advantage.
Answer: A
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Chapter 3: Supply and Demand
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120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/58100
Sample Questions
Q1) As the price of a good rises:
A) firms earn larger profits.
B) more firms can cover their opportunity costs of producing the good.
C) firms find they can raise price by even more.
D) government regulation becomes more justified.
Answer: B
Q2) "Holding all other relevant factors constant, consumers will purchase more of a good as the price falls." This statement reflects the behavior underlying:
A) the demand curve.
B) an increase in demand.
C) the supply curve.
D) a decrease in the demand curve.
Answer: A
Q3) In a free market, if the price of a good is below the equilibrium price, then; A) government needs to set a higher price.
B) suppliers, dissatisfied with growing inventories, will raise the price.
C) demanders, to acquire the good, will bid the price higher.
D) suppliers, dissatisfied with growing inventories, will lower the price.
Answer: C
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Page 5
Chapter 4: Macroeconomics: the Birds-Eye View of the Economy
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/58099
Sample Questions
Q1) The following table provides data for an economy in a certain year. \[\begin{array}
{ l r }
\text { Consumption expenditures } & 1,000 \\
\text { Imports } & 600 \\
\text { Government purchases of goods and services } & 700 \\
\text { Construction of new homes and apartments } & 500 \\
\text { Sales of existing homes and apartments } & 600 \\
\text { Exports } & 500 \\
\text { Government payments to retirees } & 200 \\
\text { Household purchases of durable goods } & 300 \\
\text { Beginning-of-year inventory } & 500 \\
\text { End-of-year inventory } & 600 \\
\text { Business fixed investment } & 300
\end{array}\] Given the data in the table, compute the value of GDP.
A) 2,400
B) 2,500
C) 2,600
D) 2,700
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Chapter 5: Measuring Economic Activity: Gdp and Unemployment
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146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/58098
Sample Questions
Q1) Inflation reduces economic efficiency because it does each of the following EXCEPT:
A) Distort incentives through interaction with the tax laws.
B) Obscure information transmitted by prices.
C) Induce people to minimize cash holdings.
D) Change relative prices.
Q2) A labor contract provides for a first-year wage of $15 per hour, and specifies that the real wage will rise by 2 percent in the second year of the contract. The CPI is 1.00 in the first year and 1.09 in the second year. What dollar wage must be paid in the second year?
A) $15.30
B) $16.09
C) $16.65
D) $16.68
Q3) If workers received a 5 percent wage increase and the rate of inflation was 3 percent, then their real wage:
A) increased.
B) decreased.
C) remained constant.
D) equaled the nominal wage.
Page 7
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Chapter 6: Measuring the Price Level and Inflation
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134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/58097
Sample Questions
Q1) Susan Suarez would like to work forty hours per week, but can only find twenty hours per week of work. In the official employment statistics, Susan is classified as:
A) employed.
B) unemployed.
C) out of the labor force.
D) underemployed.
Q2) Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.
A) capital-labor
B) skill-biased
C) marginal-productivity
D) high-low
Q3) An increase in the size of the working-age population: A) increases labor demand.
B) decreases labor demand.
C) increases labor supply.
D) decreases labor supply.
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8
Chapter 7: Economic Growth, Productivity, and Living Standards
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142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/58096
Sample Questions
Q1) Long-run increases in living standards, as measured by real GDP per person, are primarily the result of increases in:
A) population.
B) the money supply.
C) government budget surpluses.
D) average labor productivity.
Q2) Additional economic growth should be pursued when:
A) new technologies are discovered.
B) scarcity exists.
C) the marginal costs of growth exceed the marginal benefits.
D) the marginal costs of growth are less than the marginal benefits.
Q3) In Macroland, 500,000 of the 1 million people in the country are employed. Average labor productivity in Macroland is $20,000 per worker. Real GDP per person in Macroland totals:
A) $1,000.
B) $10,000.
C) $15,000.
D) $40,000.
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Chapter 8: Workers, Wages, and Unemployment
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134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/58095
Sample Questions
Q1) The data below describe the economy of Econland:
\[\begin{array} { l r }
\text { Business and household saving } & 58 \\
\text { Government transfers and interest payments } & 12 \\
\text { Government purchases of goods and services } & 25\\
\text { Tax collections } & 42 \\
\end{array}\] Public saving in Econland equals:
A) -5
B) 5
C) 16
D) 17
Q2) Ted and Alice want to make sure that their children will inherit lots of money when they die, so that their children do not have to struggle the way that they themselves did. Saving more in response to this is a ______ reason for saving.
A) life-cycle
B) bequest
C) private
D) precautionary
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Page 10
Chapter 9: Saving and Capital Formation
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Banks help savers find productive uses for their funds because banks have specialized in:
A) gathering information about and evaluating potential borrowers.
B) obtaining preferential tax treatment for savers.
C) securing government guarantees for loans.
D) evaluating the riskiness of stocks.
Q2) Stock prices increase when expected future dividends ____, interest rates _____, and/or the risk premium ______.
A) increase; increase; increases
B) increase; increase; decreases
C) decrease; decrease; increases
D) increase; decrease; decreases
Q3) Financial intermediaries, such as commercial banks, help borrowers, particularly small borrowers, by:
A) providing information to evaluate potential lenders.
B) offering tax-preferred borrowing opportunities.
C) eliminating the risk of borrowing.
D) providing credit that might otherwise not be available.
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11
Chapter 10: Money, Prices, and the Federal Reserve
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118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/58107
Sample Questions
Q1) Recession in the United States typically are:
A) limited to a few industries.
B) limited to specific regions of the country.
C) widely felt outside the United States.
D) confined to the domestic economy.
Q2) In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 5 percent, then real GDP must be:
A) $98 trillion.
B) $99 trillion.
C) $101 trillion.
D) $102 trillion.
Q3) The end of a recession is called the:
A) trough.
B) expansion.
C) peak.
D) boom.
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12
Chapter 11: Financial Markets and International Capital Flows
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133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/58106
Sample Questions
Q1) If firms sell more output than expected, planned investment:
A) is greater than actual investment.
B) is less than actual investment.
C) equals actual investment.
D) equals zero.
Q2) Expansionary policies are government stabilization policy actions intended to increase:
A) population.
B) unemployment.
C) average labor productivity.
D) planned spending.
Q3) Provisions in the law that imply automatic increases in government spending or decreases in taxes when real output declines are called:
A) autonomous stabilizers.
B) automatic stabilizers.
C) the marginal propensity to consume.
D) the income-expenditure multiplier.
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Page 13
Chapter 12: Short-Term Economics Fluctuations: An Introduction
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100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/58105
Sample Questions
Q1) If commercial banks are maintaining a 5 percent reserve/deposit ratio and the Fed lowers the required reserve ratio to 3 percent, then banks may ______ their loans and deposits, and the money supply may _____.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Q2) The money demand curve will shift to the right if:
A) the nominal interest rate increases.
B) real income increases.
C) ATM machines are introduced.
D) the price level decreases.
Q3) Prior to January 2000, the demand for money increased as people anticipated Y2K problems. To offset this increase in money demand, the Fed would have had to ______ the money supply, which would have put ______ pressure on nominal interest rates.
A) increase; downward
B) increase; upward
C) decrease; downward
D) decrease; upward
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Chapter 13: Spending and Output in the Short Run
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90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/58104
Sample Questions
Q1) The economy is in short-run equilibrium:
A) when the AD and AS curves intersect at potential output Y*.
B) when the AD and AS curves intersect at a level of real GDP that is above or below Y*.
C) when the AD and AS curves become vertical.
D) at the peak of the business cycle.
Q2) When the interest rate in the U.S. falls, U.S. financial assets:
A) become more attractive to foreign buyers.
B) become less attractive to both foreign and domestic buyers.
C) become more attractive to both foreign and domestic buyers.
D) become less attractive to domestic buyers and more attractive to foreign buyers.
Q3) The self-correcting property of the economy means that output gaps are eventually eliminated by:
A) rising or falling prices.
B) falling prices only.
C) increasing or decreasing potential output.
D) government policy.
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Chapter 14: Stabilizing the Economy: the Role of the Fed
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75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/58103
Sample Questions
Q1) If inflation equals zero, then a worker's real wage will fall when:
A) the nominal wage increases by less than 1% per year.
B) the nominal wage decreases.
C) the nominal wage is constant.
D) relative prices increase.
Q2) Reduced macroeconomic variability in the U.S. since the 1981 has all of the following benefits EXCEPT:
A) improving market functioning.
B) making business planning easier.
C) reducing resources devoted to managing inflation risks.
D) allowing the Fed to pursue accommodating policy.
Q3) All of the following central banks have announced numerical targets for inflation EXCEPT the:
A) United States Federal Reserve System.
B) Bank of Canada.
C) Bank of England.
D) Central Bank of Brazil.
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Chapter 15: Aggregate Demand, Aggregate Supply, and Inflation
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130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/58102
Sample Questions
Q1) Holding constant risk and the real returns available abroad, lower domestic real interest rates ______ capital inflows, ______ capital outflows, and ______ net capital inflows.
A) increase; increase; increase
B) increase; increase; decrease
C) increase; decrease; increase
D) decrease; increase; decrease
Q2) According to the theory of purchasing power parity, the real exchange rate between two currencies will equal ______ in the long run.
A) the nominal exchange rate
B) the ratio of the rates of inflation of the two currencies
C) 0
D) 1
Q3) The impact of monetary policy through exchange rates tends to ______ the impact of monetary policy through real interest rates.
A) reinforce
B) contradict
C) totally negate
D) be exactly the same as
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