Introduction to Macroeconomics
Final Test Solutions
Course Introduction
Introduction to Macroeconomics provides students with a foundational understanding of the behavior and performance of an economy as a whole. This course explores key economic concepts such as gross domestic product (GDP), inflation, unemployment, fiscal and monetary policy, and international trade. Students will examine how governments and central banks use policy tools to stabilize the economy, promote growth, and respond to economic challenges. By analyzing real-world data and contemporary economic issues, students will develop the analytical skills necessary to interpret macroeconomic trends and policy decisions in both domestic and global contexts.
Recommended Textbook
Macroeconomics A Contemporary Introduction 9th Edition by William A. McEachern
Available Study Resources on Quizplus
26 Chapters
3954 Verified Questions
3954 Flashcards
Source URL: https://quizplus.com/study-set/2473 Page 2
Chapter 1: The Art and Science of Economic Analysis
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/49101
Sample Questions
Q1) When constructing an economic model, economists
A)rely mostly on their own value judgments and ignore the far more complex world of facts
B)always try to duplicate reality by including all available information
C)use assumptions that are true for the individual but never true for the whole economy
D)must rely on simplifying assumptions that abstract from the complexity of the real world
E)are primarily concerned with making realistic assumptions
Answer: D
Q2) Economics is best described as the
A)study of choice when scarcity exists
B)study of the production of goods and services
C)theory of consumer behavior
D)science of money
E)art of spending money wisely
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Economic Tools and Economics Systems
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/49102
Sample Questions
Q1) Specialization often leads to gains in productivity for society as a whole.
A)True
B)False
Answer: True
Q2) A production possibilities frontier will be bowed out if
A)there is scarcity
B)resources are used efficiently
C)production of one good involves an opportunity cost
D)resources are not perfectly adaptable to making each good
E)technology is improving
Answer: D
Q3) If Jason can wash a car in 20 minutes and wash a dog in 10 minutes, and Megan can wash a car in 15 minutes and wash a dog in 15 minutes, which of the following statements is true?
A)The opportunity cost of washing a car is greater for Megan.
B)The opportunity cost of washing a car is one dog bath for Jason.
C)Megan could wash two cars in the time it takes to wash a dog.
D)Jason has both a comparative and an absolute advantage in washing a dog.
E)The opportunity cost of washing a dog is greater for Jason.
Answer: D
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
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/49103
Sample Questions
Q1) Which form of business organization accounts for the largest proportion of business sales in the United States?
A)sole proprietorship
B)partnership
C)corporation
D)nonprofit organization
E)conglomerate
Answer: C
Q2) Which of the following is a justification for taxes?
A)the ability-to-pay principle
B)the progressive tax principle
C)the proportional tax principle
D)the regressive tax principle
E)the desire of the government to spend more funds
Answer: A
Q3) A positive externality is one in which there is an external benefit bestowed on a third party>
A)True
B)False
Answer: True
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
232 Verified Questions
232 Flashcards
Source URL: https://quizplus.com/quiz/49104
Sample Questions
Q1) A leftward shift of a supply curve represents a decrease in supply.
A)True
B)False
Q2) If the price of potato chips increases, other things constant, demand for potato-chip dip will
A)not change; only quantity demanded will change
B)increase because the goods are substitutes
C)decrease because the goods are substitutes
D)decrease because the goods are complements
E)increase because the goods are complements
Q3) An increase in the number of producers of a good will
A)increase the market supply because the price will rise
B)increase the market supply only if market demand increases too
C)increase the market supply because market supply is the sum of all individual supply curves
D)increase the market supply only if all suppliers have an identical supply curves
E)decrease the market supply because firms compete with each other and each firm will supply more
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
165 Verified Questions
165 Flashcards
Source URL: https://quizplus.com/quiz/49105
Sample Questions
Q1) Which of the following is true of the aggregate supply curve?
A)It portrays an inverse relationship between the price level and quantity of aggregate output.
B)Resource utilization is constant along the curve.
C)A decrease in the price level encourages firms to expand production because the cost of production decreases.
D)The curve is upward-sloping.
E)As average prices in the United States rise relative to average prices in other countries, U.S. producers find export markets more attractive than domestic markets.
Q2) Stagflation refers to
A)a combination of rising unemployment and rising trade deficits
B)a combination of high unemployment and rising prices
C)high and rapidly increasing inflation
D)extremely high unemployment
E)a combination of rising trade deficits and rising federal government budget deficits
Q3) The Reagan tax cut of 1981 was an attempt at supply-side economics.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Tracking the Us Economy
Available Study Resources on Quizplus for this Chatper
213 Verified Questions
213 Flashcards
Source URL: https://quizplus.com/quiz/49107
Sample Questions
Q1) A firm run by a rational entrepreneur would want to hold inventories.
A)True
B)False
Q2) A farmer grows wheat and sells it to a bakery for $5. The bakery bakes the wheat into bread, which it sells to a distributor for $20. The distributor sells the bread to a supermarket for $30, which sells the bread to customers for $50. Which of the following is true?
A)The value added by the distributor is $30.
B)The supermarket contributed more, in value added, than the bakery.
C)As a result of this activity, GDP rises by $50 minus the value added at each stage of production.
D)Counting the value added at each stage instead of the final selling price creates a serious problem of double counting.
E)The value added by the farmer is $20 because the wheat, which is worth $5, is necessary for each of the three remaining stages of production.
Q3) The CPI tends to understate the true rate of inflation.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/49106
Sample Questions
Q1) In periods of high inflation,
A)people want to hold as much money as possible
B)the purchasing power of money is decreasing
C)nobody wants to work and earn income
D)low nominal interest rates are likely to result
E)nobody wants to buy goods and services
Q2) Most of the unemployment during the Great Depression was cyclical unemployment.
A)True
B)False
Q3) The higher you think the inflation rate is likely to be,
A)the higher the nominal interest rate you will offer as a borrower and want as a lender
B)the higher the nominal interest rate you will offer as a borrower, and the lower the rate you will want as a lender
C)the lower the nominal interest rate you will offer as a borrower and want as a lender
D)the higher the real interest rate you will want as a lender
E)the higher the real interest rate you will offer as a borrower
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
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/49108
Sample Questions
Q1) An increase in the amount of capital per worker is called
A)capital deepening
B)marginal capital
C)per-worker production function
D)human capital
E)diminishing marginal returns from capital
Q2) A country that has a higher percentage of younger adults with at least a college degree is
A)Norway
B)Canada
C)Japan
D)France
E)Italy
Q3) The diminishing slope of the per-worker production function reflects the law of diminishing marginal returns.
A)True
B)False
Q4) If labor productivity growth slows, the standard of living must decrease.
A)True
B)False
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Aggregate Expenditure
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/49109
Sample Questions
Q1) If the MPC < 1 and a household's disposable income increases by $2,000, the household's consumption will
A)increase by less than $2,000
B)increase by $2,000
C)decrease if the family was wealthy before the income change
D)remain the same unless the change in income significantly affects the household's wealth
E)remain the same
Q2) Expectations that the price level will rise in the future cause consumption to rise today.
A)True
B)False
Q3) The marginal propensity to save is the fraction of a change in income that is saved. A)True
B)False
Q4) A decline in the interest rate, other things constant, shifts the investment function downward.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Aggregate Expenditure and Aggregate Demand
Available Study Resources on Quizplus for this Chatper
160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/49110
Sample Questions
Q1) A decline in the U.S. price level, other things constant, would
A)stimulate U.S. exports, pushing the aggregate demand curve to the right
B)stimulate U.S. imports, pushing the aggregate demand curve to the right
C)stimulate U.S. exports but discourage imports, causing a rightward movement along a given aggregate demand curve
D)discourage U.S. exports but stimulate imports, causing a rightward movement along a given aggregate demand curve
E)not affect U.S. net exports, so aggregate quantity demanded would remain constant
Q2) The aggregate expenditure line shows
A)real GDP on the horizontal axis and aggregate expenditure on the vertical axis
B)aggregate expenditure on the horizontal axis and real GDP on the vertical axis
C)consumption on the horizontal axis and aggregate expenditure on the vertical axis
D)aggregate expenditure on the horizontal axis and consumption on the vertical axis
E)investment on the horizontal axis and aggregate expenditure on the vertical axis
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Aggregate Supply
Available Study Resources on Quizplus for this Chatper
213 Verified Questions
213 Flashcards
Source URL: https://quizplus.com/quiz/49111
Sample Questions
Q1) In the short run, but not in the long run,
A)actual output can equal potential output
B)cyclical unemployment can exist
C)structural unemployment can exist
D)frictional unemployment can exist
E)real and nominal GDP can differ
Q2) If nominal wages are sticky in the downward direction,
A)unemployment may persist for long periods of time
B)shortages of labor may persist for long periods of time
C)increases in real wages will happen too quickly to affect unemployment
D)nominal wage increases will reduce the price level
E)decreases in nominal wages will increase the inflation rate
Q3) An expansionary gap is closed in the long run by a(n)
A)rightward shift of the short-run aggregate supply curve
B)leftward shift of the short-run aggregate supply curve
C)movement to the right along a fixed short-run aggregate supply curve
D)increase in aggregate demand
E)decrease in aggregate demand
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/49112
Sample Questions
Q1) Expansionary and contractionary gaps are automatically eliminated by shifts in aggregate demand.
A)True
B)False
Q2) Which of the following will not increase when net taxes decrease?
A)saving
B)disposable income
C)consumption
D)government expenditure
E)GDP
Q3) A progressive income tax ensures that during expansionary periods,
A)consumption will increase by more than the increase in disposable income
B)consumption will increase by more than the decrease in disposable income
C)disposable income will increase by more than the increase in GDP
D)disposable income will increase by less than the increase in GDP
E)disposable income will increase by more than the decrease in GDP
Q4) According to Keynesian theory, the natural forces in the economy may not quickly move the economy toward potential real GDP.
A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Federal Budgets and Public Policy
Available Study Resources on Quizplus for this Chatper
158 Verified Questions
158 Flashcards
Source URL: https://quizplus.com/quiz/49113
Sample Questions
Q1) If the government increased defense spending by $1 million and laid off enough Justice Department employees to decrease the Department of Justice budget by $1 million, we would expect the net effect to be
A)an increase in the budget deficit and in transfer payments
B)an increase in the budget deficit and in net taxes
C)an increase in the budget deficit and in government spending
D)no change in the budget deficit because there is no net change in government spending
E)no change in the budget deficit because neither defense spending nor the Department of Justice is included in government spending
Q2) Bigger government budget deficits may be expected to increase interest rates because
A)all of the following B)prices increase
C)output increases
D)the demand for money increases as income increases
E)the government is selling more securities
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Money and the Financial System
Available Study Resources on Quizplus for this Chatper
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/49114
Sample Questions
Q1) The discount rate is
A)the interest rate charged by the Federal Reserve banks on loans to banking institutions
B)the interest rate banks charge each other for loans
C)the rate banks charge their best business customers
D)the rate of discount that banks use to determine the true mortgage rate
E)the fraction of deposits that banks hold as reserves
Q2) Which of the following is not thought to have contributed to the Great Depression?
A)interest rate competition
B)banks selling corporate stocks and bonds
C)fears about the safety of deposits
D)lack of bank liquidity
E)bank holiday
Q3) The reserve ratio is the ratio of
A)Federal Reserve member banks to nonmember banks
B)Federal Reserve nonmember banks to member banks
C)Federal Reserve member banks to all U.S. banks
D)Federal Reserve nonmember banks to all U.S. banks
E)a bank's reserves to its total deposits
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Banking and the Money Supply
Available Study Resources on Quizplus for this Chatper
229 Verified Questions
229 Flashcards
Source URL: https://quizplus.com/quiz/49115
Sample
Questions
Q1) Tony deposits $2,000 in cash at the Last National Bank and the bank credits Tony's checking account in the amount of $2,000. Which of the following is true immediately after this transaction?
A)The money supply, M1, increases by $2,000.
B)Only the composition of M1 changes, not its amount.
C)A $2,000 loan from the Last National Bank is an asset to Tony.
D)Both the assets and the liabilities of the Last National Bank fall by $2,000.
E)The immediate effect of this transaction is that M1 increases by $2,000 times the money multiplier.
Q2) Suppose the Fed wishes to make only a small change in the money supply. Which of its policy tools is it most likely to use?
A)the prime interest rate
B)loans made to the public
C)Fed Fund Rate
D)open market operations
E)the required reserve ratio
Q3) M1 is the narrowest measure of the money supply.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 25: The Algebra of Income and Expenditure
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/49099
Sample Questions
Q1) If Y = C + I + G + (X - M) (where C = $100, I = $50, G = $50, and X - M = -$10) the equilibrium level of Y equals
A)$150
B)$180
C)$190
D)$200
E)$210
Q2) The nation of Omega has an MPC of 0.70 and an MPM of 0.15. Therefore, Omega's spending multiplier is
A)1.18
B)2.22
C)3.33
D)1.43
E)This question cannot be answered without knowing the MPS
Q3) Increases in consumption that result from increases in investment are called induced consumption.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 16: Monetary Theory and Policy
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/49116
Sample Questions
Q1) The money demand curve describes how the quantity of money demanded varies with
A)nominal GDP
B)real GDP
C)the price level
D)the interest rate
E)consumption
Q2) Which of the following best explains why the demand for money depends upon the interest rate?
A)Money is an interest-earning asset.
B)Money is not an interest-earning asset.
C)The alternatives to holding money are not interest-earning assets.
D)The alternatives to holding money earn more interest than money does.
E)People must pay interest on loans.
Q3) The demand curve for investment is graphed with __________ on the vertical axis and __________ on the horizontal axis.
A)the interest rate; investment
B)investment; the interest rate
C)the price level; investment
D)investment; the price level
E)real GDP; investment
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 17: Macro Policy Debate: Active or Passive
Available Study Resources on Quizplus for this Chatper
190 Verified Questions
190 Flashcards
Source URL: https://quizplus.com/quiz/49117
Sample Questions
Q1) Some economists believe that in the long run the unemployment rate is independent of the inflation rate and so the Phillips curve becomes a vertical line.
A)True
B)False
Q2) The early Phillips curve showed a tradeoff between unemployment and inflation because it was drawn for a period in which the main source of instability was aggregate demand.
A)True
B)False
Q3) If an active approach to policy is followed, how would an expansionary gap eventually close?
A)The aggregate demand curve would shift rightward.
B)The aggregate demand curve would shift leftward.
C)The short-run aggregate supply curve would shift rightward.
D)The short-run aggregate supply curve would shift leftward.
E)There would be a movement up and to the left along the short-run supply curve.
Q4) The effectiveness lag for monetary policy is short.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 26: The Algebra of Demand-Side Equilibrium
Available Study Resources on Quizplus for this Chatper
22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/49121
Sample Questions
Q1) If the government raised transfer payments by $100 million while reducing its own purchases of computers by $100 million, we would expect the net effect of these actions to be
A)an increase in aggregate demand, which is a rightward shift of the aggregate demand curve
B)an increase in aggregate demand, which is a leftward shift of the aggregate demand curve
C)a decrease in aggregate demand, which is a rightward shift of the aggregate demand curve
D)a decrease in aggregate demand, which is a leftward shift of the aggregate demand curve
E)to leave the aggregate demand curve unchanged
Q2) An increase in autonomous government purchases will have exactly the same effect as an equal increase in
A)autonomous net taxes
B)proportional income taxes
C)autonomous investment
D)autonomous saving
E)transfer payments
To view all questions and flashcards with answers, click on the resource link above.
21
Chapter 18: International Trade
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/49118
Sample Questions
Q1) One reason for international specialization in production is
A)a high tariff imposed by a national government
B)a low tariff imposed by a national government
C)diminishing returns to a variable factor of production
D)the different resource endowments throughout the world
E)high fixed costs of production
Q2) Which of the following is not a type of trade restriction?
A)low-interest loans to foreign buyers
B)export subsidies to domestic producers
C)restrictive health and safety standards
D)domestic content requirements
E)economies of scale
Q3) Which of the following factors is the most significant in determining the pattern of international trade?
A)absolute advantage
B)diplomatic expertise
C)comparative advantage
D)overpowering military strength
E)a country's size relative to another country's
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 19: International Finance
Available Study Resources on Quizplus for this Chatper
231 Verified Questions
231 Flashcards
Source URL: https://quizplus.com/quiz/49119
Sample Questions
Q1) The merchandise trade balance does not include
A)exports of refrigerators
B)imports of automobiles
C)exports of agricultural products
D)shipping and insurance costs
E)imports of food items with heavy tariffs
Q2) If the U.S. demand for British pounds increases,
A)the dollar price of a British pound will increase
B)the dollar price of a British pound will decrease
C)the exchange rate between dollars and pounds will be out of equilibrium
D)the pound will fall in value against the dollar
E)there will be no change in either the value of the dollar or the pound
Q3) The exchange rate is the
A)total yearly amount of money changed from one country's currency to another country's currency
B)total monetary value of exports minus imports
C)amount of a country's currency that can be exchanged for one ounce of gold
D)sum of net unilateral transfers
E)price of one country's currency in terms of another country's currency
To view all questions and flashcards with answers, click on the resource link above.
Page 23
Chapter 20: Economic Development
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/49120
Sample Questions
Q1) The bulk of exports from industrial countries are
A)manufactured goods
B)primary products
C)agricultural goods
D)raw materials
E)raw sugar products
Q2) Labor productivity depends on the
A)quality of the labor
B)the effectiveness of government
C)the proportion of the labor force that is unionized
D)the size of the economy
E)All of the answers are correct
Q3) The group of countries more likely to have a high number of telephone lines per 1,000 people is
A)high-income countries
B)zero-income countries
C)infinite-income countries
D)low-income countries
E)middle-income countries
To view all questions and flashcards with answers, click on the resource link above.
Page 24
Chapter 21: National Income Accounts
Available Study Resources on Quizplus for this Chatper
34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/49097
Sample Questions
Q1) Personal income is
A)NDP minus indirect business taxes
B)NDP minus depreciation minus taxes
C)national income minus taxes
D)national income plus income received but not earned minus income earned but not received
E)national income minus income received but not earned plus income earned but not received
Q2) In Exhibit 6-4, Net Domestic Product equals
A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion
Q3) Disposable income is commonly referred to as take home pay.
A)True B)False
Q4) Disposable Income is Personal Income minus personal taxes.
A)True
B)False
Page 25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22:Understanding Graphs
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/49098
Sample Questions
Q1) A straight line tangent to a curved line at a point
A)crosses the curved line at that point
B)crosses the curved line at many points
C)has the same slope as the curved line at that point
D)is steeper than the curve at all other points
E)has a smaller slope than all other points on the curve
Q2) In Exhibit 1-3, for any value of x, the
A)value of y is larger on curve A than on curve B
B)value of y is smaller on curve A than on curve B
C)value of y is the same on curve A as on curve B
D)slope of line A is increasing
E)slope of line B is negative
Q3) Refer to exhibit 1-16. Which of the graphs illustrates an inverse or negative relationship between variable X and variable Y?
A)a
To view all questions and flashcards with answers, click on the resource link above. Page 26
Chapter 23:Variable Net Exports
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/49096
Sample Questions
Q1) U.S. net exports will increase if
A)U.S. income increases
B)the value of the U.S. dollar decreases relative to foreign currency
C)the value of the U.S. dollar increases relative to foreign currency
D)U.S. exports decrease
E)U.S. imports increase
Q2) An increase in the value of the U.S. dollar relative to other currencies will increase U.S. imports.
A)True
B)False
Q3) An increase in the value of the U.S. dollar relative to foreign currencies would lead to
A)an increase in U.S. exports and a decrease in U.S. imports
B)a decrease in U.S. exports and an increase in U.S. imports
C)an increase in both U.S. imports and U.S. exports
D)a decrease in both U.S. exports and U.S. imports
E)no change in exports and an increase in U.S. imports
Q4) As U.S. income rises, U.S. imports will rise.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 24: Variable Net Exports Revisited
Available Study Resources on Quizplus for this Chatper
35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/49100
Sample Questions
Q1) In a model which includes variable net exports, the spending multiplier equals 1/(MPS + MPM).
A)True
B)False
Q2) Imports are a leakage from the circular flow.
A)True
B)False
Q3) When net exports are included in the aggregate expenditure function, the spending multiplier
A)increases
B)decreases
C)is affected only if exports are greater than imports
D)is affected only if exports are less than imports
E)is affected only if exports are equal to imports
Q4) The marginal propensity to import
A)is negative
B)is positive
C)is likely to be larger than the MPC
D)depends on the value of domestic income
E)depends on the value of exports
To view all questions and flashcards with answers, click on the resource link above. Page 28