Course Introduction
Macroeconomic Theory
Textbook Exam Questions
Macroeconomic Theory explores the fundamental principles and models that describe the behavior of an economy as a whole. The course examines topics such as national income determination, economic growth, unemployment, inflation, business cycles, and the roles of fiscal and monetary policy. Emphasis is placed on developing analytical tools to understand aggregate demand and supply, the measurement of key economic indicators, and the impact of government interventions. Students will gain a comprehensive understanding of how macroeconomic variables interact and influence policy decisions, both domestically and in a global context.
Recommended Textbook
Macroeconomics 5th Edition by R. Glenn Hubbard
Available Study Resources on Quizplus
19 Chapters
4854 Verified Questions
4854 Flashcards
Source URL: https://quizplus.com/study-set/3590
Page 2
Chapter 1: Economics: Foundations and Models
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/71289
Sample Questions
Q1) Which of the following is a positive economic statement?
A)Everyone should live at the same standard of living.
B)If the price of gasoline rises,a smaller quantity of it will be bought.
C)The government should close income tax loopholes.
D)U.S.firms should not be allowed to outsource production of goods and services.
Answer: B
Q2) When voluntary exchange takes place,neither party usually gains from the exchange.
A)True
B)False
Answer: False
Q3) ________ occurs when economic benefits are distributed fairly.
A)Productive efficiency
B)Allocative efficiency
C)Equality
D)Equity
Answer: D
Q4) Explain the term "economics."
Answer: Economics is the study of the choices people make to attain their goals,given their scarce resources.
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Trade-Offs,comparative Advantage,and the Market System
Available Study Resources on Quizplus for this Chatper
239 Verified Questions
239 Flashcards
Source URL: https://quizplus.com/quiz/71278
Sample Questions
Q1) Refer to Figure 2-4.Consider the following events: a.an increase in the patent protection period to 75 years
B.a hurricane that destroys a substantial portion of a nation's capital stock
C.the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z?
A)a only
B)a and b only
C)a and c only
D)b and c only
E)a,b,and c
Answer: C
Q2) List the four broad categories of factors of production.
Answer: labor,capital,natural resources,and entrepreneurship
Q3) Refer to Figure 2-5.If the economy is currently producing at point W,what is the opportunity cost of moving to point Y?
A)2 million tons of steel
B)14 million tons of steel
C)2 million tons of paper
D)9 million tons of paper
Answer: A
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/71277
Sample Questions
Q1) Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.If the price of cashews rises from $4 to $6,the market quantity demanded would
A)decrease by 33 lbs.
B)increase by 39 lbs.
C)increase by 33 lbs.
D)decrease by 39 lbs.
Answer: D
Q2) Which of the following describes a characteristic of a perfectly competitive market?
A)There are many buyers but few sellers.
B)There are many sellers but few buyers.
C)There are many buyers and sellers.
D)Equilibrium is achieved when demand for the product sold in the market equals the supply.
Answer: C
Q3) An decrease in supply is caused by a decrease in the price of the product.
A)True
B)False
Answer: False
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Economic Efficiency, government Price Setting, and Taxes
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/71276
Sample Questions
Q1) Refer to Figure 4-3.What area represents producer surplus at the equilibrium price of P<sub>1</sub>?
A)A + B + D
B)D + E
C)D + E + G + H
D)A + B + C + D + E
Q2) Which of the follow is a result of imposing a rent ceiling?
A)Some consumer surplus is converted to producer surplus.
B)There is an increase in the quantity of apartments supplied.
C)There is an increase in the quantity of apartments demanded.
D)The marginal benefit of the last apartment rented is less than the marginal cost of supplying it.
Q3) Price floors are illegal in the United States.
A)True
B)False
Q4) Refer to Figure 4-7 which shows the market for watermelons.Suppose the government imposes a price floor of P<sub>w</sub>.How will the price floor affect the quantity supplied,quantity demanded and quantity exchanged?
Q5) What is deadweight loss? When is deadweight loss equal to zero?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Economics of Health Care
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/71275
Sample Questions
Q1) In the United States in 2011,over 50 percent of people without health insurance were below the age of 34.
A)True
B)False
Q2) Some economists have argued that certain characteristics of the delivery of health care justify government intervention.One of these characteristics is
A)health care is a public good.
B)health care is nonrivalrous and nonexcludable.
C)health care generates negative externalities.
D)health care generates positive externalities.
Q3) The number of people receiving Medicare is expected to grow to 80 million by the year
A)2105.
B)2020.
C)2030.
D)2075.
Q4) Briefly describe the types of health care systems in Canada,Japan,and the United Kingdom.
Q5) How can increases in a country's total income improve health?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Firms,the Stock Market,and Corporate Governance
Available Study Resources on Quizplus for this Chatper
276 Verified Questions
276 Flashcards
Source URL: https://quizplus.com/quiz/71274
Sample Questions
Q1) Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?
A)You are liable for organizing the business.
B)You could stand to lose your personal wealth if the business goes bankrupt.
C)There is no legal responsibility of the business in case a customer sues,as the business is legally untouchable.
D)None of these explain what unlimited liability means.
Q2) Dividing the dividend payment by the stock's closing market price determines the A)coupon payment.
B)dividend yield.
C)price-earnings ratio.
D)selling price of the stock.
Q3) A firm's net worth is calculated as
A)the difference between a firm's revenues and explicit costs.
B)the difference between a firm's revenues and implicit costs.
C)the difference between a firm's assets and liabilities.
D)the difference between a firm's liabilities and outstanding equities.
Q4) How is accounting profit found?
Q5) How is economic profit found?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
190 Verified Questions
190 Flashcards
Source URL: https://quizplus.com/quiz/71273
Sample Questions
Q1) Which of the following is common to both tariffs and quotas?
A)Tariffs and quotas are both used as a means to increase government revenue.
B)Tariffs and quotas both increase economic efficiency.
C)Tariffs and quotas are both designed to reduce foreign competition faced by domestic firms.
D)Tariffs and quotas are both examples of voluntary export restraints.
Q2) Refer to Table 7-6.Prior to trade,what was the opportunity cost to produce 1 belt in Estonia?
A)1/2 of a sword
B)4/5 of a sword
C)1.25 swords
D)2 swords
Q3) Refer to Table 7-6.All of the following are terms of trade that could possibly benefit both countries except
A)1 belt : 1.33 swords
B)1 belt : 1.5 swords
C)1 belt : 1.75 swords
D)1 belt : 2.25 swords
Q4) What are terms of trade?
Page 9
Q5) What was the GATT,why was it established,and why and with what was it replaced?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: GDP: Measuring Total Production and Income
Available Study Resources on Quizplus for this Chatper
266 Verified Questions
266 Flashcards
Source URL: https://quizplus.com/quiz/71272
Sample Questions
Q1) A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will
A)increase GDP and increase well being in the economy.
B)increase GDP and decrease well being in the economy.
C)decrease GDP and increase well being in the economy.
D)decrease GDP and decrease well being in the economy.
Q2) Refer to Table 8-27.What is the level of personal income for this economy?
A)$1,140 billion
B)$1,010 billion
C)$990 billion
D)$860 billion
Q3) Between 2013 and 2014,if an economy's exports rise by $8 billion and its imports fall by $8 billion,by how much will GDP change between the two years,all else equal?
A)Net exports will increase GDP by $8 billion.
B)The increase in exports is offset by the decrease in imports,so there is no change in net exports and no effect on GDP.
C)Net exports will increase GDP by $16 billion.
D)Net exports will decrease GDP by $8 billion.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
292 Verified Questions
292 Flashcards
Source URL: https://quizplus.com/quiz/71271
Sample Questions
Q1) Suppose that at the beginning of a loan contract,the real interest rate is 4% and expected inflation is currently 6%.If actual inflation turns out to be 7% over the loan contract period,then
A)borrowers gain 1% of the loan value.
B)lenders gain 1% of the loan value.
C)borrowers lose 3% of the loan value.
D)lenders gain 3% of the loan value.
Q2) If inflation increases unexpectedly,then
A)borrowers pay a higher real interest rate than they expected.
B)lenders receive a lower real interest rate than they expected.
C)lenders gain and borrowers gain.
D)neither borrowers nor lenders lose.
Q3) An increase in cyclical unemployment will result in
A)an increase in the natural rate of unemployment.
B)an increase in the unemployment rate.
C)an increase in structural unemployment.
D)a decrease in frictional unemployment.
Q4) Eliminating frictional unemployment would be good for the economy.
A)True
B)False
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Economic Growth, the Financial System, and Business Cycles
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/71288
Sample Questions
Q1) Carefully define the two categories of saving in the economy.
Q2) Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2012 to 2013?
A)-2%
B)-1%
C)1%
D)2%
Q3) Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.
Q4) The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.
A)government
B)households
C)banks
D)firms
Q5) What factors increase potential GDP? Include a definition of potential GDP in your answer.
Q6) Explain why the demand curve for loanable funds has a negative slope.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Long-Run Economic Growth: Sources and Policies
Available Study Resources on Quizplus for this Chatper
268 Verified Questions
268 Flashcards
Source URL: https://quizplus.com/quiz/71287
Sample Questions
Q1) Refer to Figure 11-4.Suppose the economy gains more capital per hour worked and experiences technological change.This is shown in the figure above by the movement from
A)E to B to D.
B)A to B to C.
C)A to E.
D)A to D.
Q2) Your friend owns a snow cone stand that he works by himself.He produces about 25 snow cones per hour.He wants to be able to produce twice as many snow cones per hour so he buys a second machine.He notices that he can only produce 10 more snow cones an hour.He jokes that he could have doubled his output with the second machine if he only had four hands.Using your knowledge of the production process,explain to your friend what you think has happened when he added more capital to his production process.
Q3) The purchase by an individual or firm of stock or bonds issued in another country is called
A)foreign exchange arbitrage.
B)foreign direct investment.
C)foreign portfolio investment.
D)global stock exchange.
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Aggregate Expenditure and Output in the Short Run
Available Study Resources on Quizplus for this Chatper
306 Verified Questions
306 Flashcards
Source URL: https://quizplus.com/quiz/71286
Sample Questions
Q1) Refer to Table 12-15.Using the table above,answer the following questions.The numbers in the table are in billions of dollars.
a.What is the equilibrium level of real GDP?
b.What is the MPC?
c.If investment spending declines by $10 billion,what will happen to equilibrium GDP?
Q2) An unplanned increase in inventories results from
A)an increase in planned investment.
B)a decrease in planned investment.
C)actual investment that is greater than planned investment.
D)actual investment that is less than planned investment.
Q3) If aggregate expenditure is greater than GDP,how will the economy reach macroeconomic equilibrium?
A)Inventories will decline,and GDP and employment will decline.
B)Inventories will rise,and GDP and employment will decline.
C)Inventories will decline,and GDP and employment will rise.
D)Inventories will rise,and GDP and employment will rise.
Q4) What are the four categories of aggregate expenditure?
Q5) What is the main reason for changes in GDP in the short run?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Q6) What is the difference between aggregate expenditure and consumption spending?
Chapter 13: Aggregate Demand and Aggregate Supply Analysis
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/71285
Sample Questions
Q1) If workers and firms have rational expectations,they form their expectations using A)all the information available to them.
B)only information from the past.
C)only information provided to them by the government.
D)only information gathered from random sources.
Q2) If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?
A)It is a horizontal line at $600 billion of GDP.
B)It is a vertical line at a level of GDP below $600 billion.
C)It is a vertical line at $600 billion of GDP.
D)It is a vertical line at a level of GDP above $600 billion.
Q3) Refer to Figure 13-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from
A)AD<sub>1</sub> to AD<sub>2</sub>.
B)AD<sub>2</sub> to AD<sub>1</sub>.
C)point A to point B.
D)point B to point A.
Q4) Explain why the long-run aggregate supply curve is vertical.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Money, banks, and the Federal Reserve System
Available Study Resources on Quizplus for this Chatper
280 Verified Questions
280 Flashcards
Source URL: https://quizplus.com/quiz/71284
Sample Questions
Q1) The M1 measure of the money supply equals
A)paper money plus coins in circulation.
B)currency plus checking account balances.
C)currency plus checking account balances plus traveler's checks.
D)currency plus checking account balances plus traveler's checks plus savings account balances.
Q2) The M2 measure of the money supply equals
A)savings account balances plus small-denomination time deposits plus traveler's checks.
B)savings account balances plus small-denomination time deposits plus noninstitutional money market fund shares.
C)M1 plus savings account balances plus small-denomination time deposits.
D)M1 plus savings account balances plus small-denomination time deposits plus noninstitutional money market fund shares.
Q3) A bank's liabilities are
A)things owned by or owed to the bank.
B)things the bank owes to someone else.
C)a measure of the bank's net losses.
D)included as part of the bank's reserves.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Monetary Policy
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/71283
Sample Questions
Q1) Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?
A)Potential GDP is forecasted to be higher than equilibrium GDP.
B)Potential GDP is forecasted to be lower than equilibrium GDP.
C)Aggregate demand is growing too fast to keep the economy at full employment.
D)Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.
Q2) The Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association were established by Congress in order to regulate banks that buy and sell mortgage-backed securities.
A)True
B)False
Q3) A monetary policy target is a variable that
A)the Fed can affect directly.
B)equals one of the Fed's main policy goals.
C)the Fed has no ability to change.
D)the Fed cannot affect directly.
Q4) What actions should the Fed take if it believes the economy is about to fall into recession?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
303 Verified Questions
303 Flashcards
Source URL: https://quizplus.com/quiz/71282
Sample Questions
Q1) Assume a country is required by law to balance the budget every year.Suppose aggregate demand falls,causing a recession and a budget deficit.To balance the budget,what would the government need to do with the level of government spending and taxes? How would these changes in government spending and taxes affect aggregate demand and the economy?
Q2) The three categories of federal government expenditures,in addition to government purchases,are
A)interest on the national debt,grants to state and local governments,and transfer payments.
B)interest on the national debt,defense spending,and transfer payments.
C)defense spending,budgets of federal agencies,and transfer payments.
D)defense spending,Social Security,and Medicare.
Q3) If policy makers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply,the appropriate fiscal policy response is to
A)increase taxes.
B)increase government spending.
C)use expansionary fiscal policy.
D)increase interest rates.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Inflation, unemployment, and Federal Reserve Policy
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/71281
Sample Questions
Q1) Two actions by the Fed during Alan Greenspan's term as chairman have been identified as possibly contributing to the financial crisis in 2008.Which of the following was one of those actions?
A)decreasing the money supply to fight the possibility of disinflation
B)the decision during 1998 to help save the hedge fund Long Term Capital Management
C)working in concert with the European Central Bank to stabilize the dollar / euro exchange rate
D)financing the war in Afghanistan by printing money and generating rapid inflation
Q2) Last year,the unemployment rate was 4 percent and the inflation rate was 3 percent.If the natural rate of unemployment is 3 percent,how do you expect inflation to change?
Q3) If firms and workers have rational expectations,including knowledge of the policy being used by the Federal Reserve,the short-run Phillips curve will be
A)negatively sloped.
B)positively sloped.
C)vertical.
D)flatter in the long run than it is in the short run.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Macroeconomics in an Open Economy
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/71280
Sample Questions
Q1) How will an increase in federal government spending without an increase in taxes affect real GDP and the price level in the short run in a closed economy and in an open economy?
Q2) If net exports are negative,
A)net foreign investment is also negative.
B)capital inflows must be less than capital outflows.
C)net foreign investment is positive.
D)Both A and B are correct.
Q3) An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.
A)True
B)False
Q4) Which of the following will shift the demand for the euro to the right?
A)an increase in interest rates in the European Union
B)an increase in incomes in countries that buy goods from the European Union
C)expectations among speculators that the price of the euro will rise in the future
D)All of the above will shift the demand for the euro to the right.
Q5) What is the difference between net exports and the current account balance?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: The International Financial System
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/71279
Sample Questions
Q1) Refer to Figure 19-6.Which of the following would cause the change depicted in the figure above?
A)An increase in investment in infrastructure causes U.S.productivity to rise relative to Mexican productivity.
B)A growing preference for Margaritas causes U.S.consumers to increase their preferences for Mexican tequila relative to American-produced alcohol.
C)Dumping accusations result in the United States placing tariffs on produce imported from Mexico.
D)A contractionary monetary policy causes a decrease in the price level of U.S.goods relative to Mexican goods.
Q2) Refer to Figure 19-5.The Chinese government pegs the yuan to the dollar,at one of the specified exchange rates on the graph,such that it undervalues its currency.Using the figure above,this would generate
A)a shortage of yuan equal to 400 million.
B)a shortage of yuan equal to 200 million.
C)a surplus of yuan equal to 200 million.
D)a surplus of yuan equal to 400 million.
E)a surplus of yuan equal to 300 million.
To view all questions and flashcards with answers, click on the resource link above.
Page 21