Intermediate Macroeconomics
Midterm Exam
Course Introduction
Intermediate Macroeconomics explores the functioning of the aggregate economy by building upon basic macroeconomic concepts. The course delves into the determinants of national income, output, and employment, analyzing issues such as economic growth, inflation, unemployment, and cycles. Students study both classical and modern theories, including the IS-LM model, aggregate demand and supply, and the impact of monetary and fiscal policies. Emphasis is placed on understanding real-world macroeconomic issues, policy debates, and how these models are applied to interpret economic data and inform government policy. The course encourages analytical and critical thinking through quantitative exercises, graphical analysis, and the evaluation of contemporary economic challenges.
Recommended Textbook
Macroeconomics 4th Australian Edition by Glenn Hubbard
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15 Chapters
2116 Verified Questions
2116 Flashcards
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Page 2
Chapter 1: Economics: Foundations and Models
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160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/28152
Sample Questions
Q1) Abigail's Auto Art is a company that applies pinstripes to vehicles. Abigail's cost for a basic 1-colour pinstriping job is $40, and she charges $100 for this service. For a total price of $185, Abigail will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $50 to the total cost of the package. What is the marginal cost of moving up from the 1-colour application to the 3-colour application?
A)$40
B)$50
C)$100
D)$175
Answer: B
Q2) The government makes all economic decisions in a market economy.
A)True
B)False
Answer: False
Q3) 'The distribution of income should be left to the market' is an example of a positive economic statement.
A)True
B)False
Answer: False
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Chapter 2: Choices and Trade Offs in the Market
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192 Verified Questions
192 Flashcards
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Sample Questions
Q1) Refer to Table 2.6. China has a comparative advantage in the production of:
A)wheat
B)digital cameras
C)both products
D)neither product
Answer: B
Q2) Refer to Figure 2.4. If the economy is currently producing at point Y, what is the opportunity cost of moving to point W?
A)2 million tonnes of steel
B)zero
C)9 million tonnes of paper
D)16 million tonnes of paper
Answer: B
Q3) In a free market, there are virtually no restrictions or, at best, few restrictions on how factors of production can be employed.
A)True
B)False
Answer: True
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4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) What is the 'law of supply'? What does this law imply about the shape of the supply curve?
Answer: The law of supply states that, holding everything else constant, an increase in price causes an increase in quantity supplied. The positive relationship between price and quantity supplied gives rise to an upward-sloping supply curve.
Q2) The income effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.
A)True
B)False
Answer: True
Q3) A positive technological change will cause the supply of a good to increase.
A)True
B)False
Answer: True
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Chapter 4: Gdp: Measuring Total Production, Income and Economic Growth
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123 Verified Questions
123 Flashcards
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Sample Questions
Q1) Refer to Table 4.1. What is nominal GDP in 2017?
A)$3 320
B)$3 690
C)$6 360
D)$7 035
Q2) How are 'intermediate goods' treated in the calculation of GDP?
A)Their value is not counted separately, but included as part of the value of the final good of which they are an input.
B)Their value is counted separately, and their value is also included as part of the value of the final good of which they are an input.
C)They are included in the year that they are produced.
D)They are included only if they are imported.
Q3) The GDP deflator only measures the prices of the consumer and investment components of GDP, and does not include the prices of government goods and services.
A)True
B)False
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6
Chapter 5: Economic Growth, the Financial System and Business Cycles
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) How does the existence of financial intermediaries affect liquidity in the financial market?
Q2) What are financial securities that represent partial ownership of a firm?
A)bonds
B)shares
C)treasury bills
D)certificates of deposit
Q3) Outline the various actions the government sector could take to promote growth.
Q4) A period of economic expansion ends with a business cycle trough.
A)True
B)False
Page 7
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Chapter 6: Long-Run Economic Growth: Sources and Policies
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) Which of the following countries actually experienced negative economic growth from 1960 to 2011?
A)Israel
B)South Korea
C)Niger
D)Malaysia
Q2) Economically, the best measure of a country's standard of living is:
A)GDP per unit of capital.
B)GDP per capita.
C)GDP Per hour of labour.
D)total GDP.
Q3) Which of the following describes the Soviet Union's economy between 1950 and the 1980s?
A)The Soviet economy grew rapidly due to an increase in capital per worker.
B)The Soviet economy increased capital per worker very slowly from 1950 through 1980.
C)The Soviet economy grew slowly because of the slow rate of technological change.
D)The Soviet economy grew because it added labour through immigration - its policy in the 1950s.
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Chapter 7: Unemployment
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.
A)True
B)False
Q2) The unemployment rate is calculated by adding up the number of people receiving unemployment benefit payments from the government.
A)True
B)False
Q3) Explain the changes that have occurred in the level of regulation in the Australian labour market over the past 100 years and discuss the arguments in favour of and against these changes.
Q4) Eliminating 'structural unemployment' would be good for the economy.
A)True
B)False
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Page 9
Chapter 8: Inflation
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) The formula for calculating the CPI is:
A)(Expenditures in the current year/Expenditures in the base year)× 100.
B)(Expenditures in the current year × Expenditures in the base year)/100.
C)(Expenditures in the base year/Expenditures in the current year).
D)(Expenditures in the base year × 100)/(Expenditures in the current year).
Q2) Inflation that is ________ than what is expected benefits ________ and hurts
A)less; lenders; borrowers
B)less; borrowers; lenders
C)greater; lenders; borrowers
D)greater; lenders; no-one
Q3) Hyperinflation occurred in Germany after World War I, when its inflation rate rose to 3.25 million per cent.
A)True
B)False
Q4) 'Anticipated inflation' increases the amount of taxation paid by firms and individuals. A)True B)False
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Page 10
Chapter 9: Aggregate Expenditure and Output in the Short Run
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) What are inventories? What usually happens to inventories at the beginning of a 'contraction' and what usually happens to inventories at the beginning of an 'expansion'?
Q2) The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run, assuming ________ is constant.
A)total production; total income; real GDP
B)total spending; real GDP; total income
C)total spending; real GDP; the price level
D)total income; real GDP; the price level
Q3) Which of the following leads to a decrease in real GDP?
A)An increase in government spending.
B)An increase in the inflation rate in other countries, relative to the inflation in Australia.
C)An increase in interest rates.
D)Households have increasingly optimistic expectations about future income.
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Page 11
Chapter 10: Aggregate Demand and Aggregate Supply Analysis
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) What happens if technological change occurs in the economy?
A)The long-run aggregate supply curve will shift to the left.
B)The long-run aggregate supply curve will shift to the right.
C)The economy will move up along the long-run aggregate supply curve.
D)The economy will move down along the long-run aggregate supply curve.
Q2) The main result of which of the following models is that the quantity of money should be increased at a constant rate?
A)monetarist model
B)new classical model
C)real business cycle model
D)new Keynesian model
Q3) During an economic expansion or boom, it is possible for a short-run equilibrium to occur at a point that exceeds potential GDP.
A)True
B)False
Q4) At a long-run macroeconomic equilibrium, real GDP is always equal to potential GDP.
A)True
B)False
12
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Chapter 11: Money, Banks and the Reserve Bank of Australia
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123 Verified Questions
123 Flashcards
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Sample Questions
Q1) When Gina Rinehart is described as 'the richest woman in Australia and worth over $9 billion', this statement is referring to her:
A)income.
B)demand deposit accounts.
C)money.
D)wealth.
Q2) What is 'commodity money'? Give an example.
Q3) 'Liquidity' is defined as the ease with which a given asset can be converted to a:
A)store of value.
B)unit of account.
C)medium of exchange.
D)standard of deferred payment.
Q4) If banks increase their reserve ratios, the deposit multiplier increases.
A)True
B)False
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Chapter 12: Monetary Policy
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116 Verified Questions
116 Flashcards
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Sample
Questions
Q1) If interest rates rise, this will _________ the cost of buying new homes, so ________ new homes will be purchased thereby reducing ___________ expenditures.
A)lower; more; consumption
B)raise; fewer; consumption
C)raise; fewer; investment
D)lower; more; investment
Q2) What economic objectives are the Reserve Bank of Australia required to pursue in its conduct of monetary policy and what relative importance is placed on these objectives?
Q3) The Reserve Bank of Australia uses open market operations: A)usually every day.
B)once a month when the Reserve Bank Board meets to discuss monetary policy. C)only when it wants to increase or decrease the cash rate.
D)only when it is conducting monetary policy.
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14
Chapter 13: Fiscal Policy
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) Government expenditure in Australia as a percentage of GDP has consistently trended upward since the 1960s.
A)True
B)False
Q2) The increase in revenue taxation received by the government during an economic boom is due to discretionary fiscal policy.
A)True
B)False
Q3) Government budget deficits can lead to higher real interest rates, which will reduce private investment.
A)True
B)False
Q4) In Australia in 2005/06, the federal government had zero net debt for the first time in over:
A)5 years.
B)15 years.
C)20 years.
D)30 years.
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Page 15
Chapter 14: Macroeconomics in an Open Economy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) A goods trade deficit indicates that a:
A)country imports more than it exports.
B)country imports less than it exports.
C)country's imports equal its exports.
D)country's trade has decreased on average.
Q2) Net foreign investment is a measure of net capital outflows, equal to capital outflows minus capital inflows in a given period of accounting.
A)True
B)False
Q3) What is the savings and investment equation? If S > I, then what is true of net foreign investment? Explain, using the savings and investment equation.
Q4) When imports are greater than exports, there will be a net capital outflow. A)True
B)False
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Chapter 15: The International Financial System
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per United States (US)dollar, as shown in Figure 15.3. If the Thai central bank pursues a contractionary monetary policy, how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?
A)They must purchase more than 100 million baht per day with US dollars.
B)They must purchase less than 100 million baht per day with US dollars.
C)They must purchase exactly 100 million baht per day with US dollars.
D)They do not have to do anything.
Q2) The European Union countries that have adopted the euro still conduct independent monetary policies within their countries.
A)True
B)False
Q3) Under a 'floating exchange rate', the exchange rate:
A)will change whenever the price of gold changes.
B)is controlled by central bank intervention.
C)is determined by the interaction of supply of the currency and demand for the currency.
D)is pegged against the euro.
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