Course Introduction
Macroeconomics Exam Materials
Macroeconomics is the study of the overall functioning and structure of a national or global economy. This course examines key concepts such as economic growth, inflation, unemployment, national income, fiscal and monetary policy, and the roles of government and central banks in stabilizing the economy. Students will analyze how different sectors interact within the economy and explore models that explain aggregate demand and supply. Through real-world examples, the course aims to provide an understanding of macroeconomic indicators, policy responses to economic fluctuations, and their impacts on societal welfare.
Recommended Textbook
Economics The Basics 2nd Edition by Michael Mandel
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19 Chapters
1210 Verified Questions
1210 Flashcards
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Page 2
Chapter 1: Introduction
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Sample Questions
Q1) Can economic competition be viewed as a positive force for growth and progress?
A) No, economic competition historically had neither a positive nor a negative effect.
B) No, because there is more poverty today than in the past.
C) Yes, because economic competition of any type always leads to growth and progress.
D) Yes, as long as it is conducted within a fair set of rules.
Answer: D
Q2) Which of the following is NOT part of an economy's financial market?
A) The residential mortgage market.
B) The stock market.
C) Banks and brokerage firms.
D) Political action committees.
Answer: D
Q3) Closed economies generally do ______ open economies,in the long run.
A) slightly better than
B) worse than
C) about the same as
D) at least five times better than
Answer: B
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Page 3
Chapter 2: Demand and Supply: The Basics of the Market Economy
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Sample Questions
Q1) Households are generally buyers in the markets for products and sellers in ________ markets.
A) goods
B) service
C) natural resource
D) labor
Answer: D
Q2) Sale prices mean that the price is lowered for a _________ period of time.
A) limited
B) long
C) extended
D) prolonged
Answer: A
Q3) A vertical supply curve would mean that
A) as price decreases, quantity supplied decreases.
B) as price decreases, quantity supplied increases.
C) the price does not affect the quantity supplied.
D) market equilibrium has been reached.
Answer: C
Page 4
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Chapter 3: Market Equilibrium and Shifts
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Sample Questions
Q1) If supply increases,equilibrium price
A) falls.
B) rises.
C) remains stable.
D) reaches equilibrium quantity.
Answer: A
Q2) A luxury good is one whose demand ______ as income increases.
A) rises slightly
B) rises sharply
C) decreases
D) stays flat
Answer: B
Q3) A demand shift to the right generally leads to
A) higher prices and lower quantities.
B) lower prices and higher quantities.
C) higher prices and higher output.
D) lower prices and higher output.
Answer: C
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Chapter 4: How Businesses Work
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Sample Questions
Q1) Outputs are always goods.
A)True
B)False
Q2) The long-lived physical equipment and structures that a business uses in its production process are called A) boot.
B) land.
C) capital.
D) function.
Q3) Inputs to production do NOT include A) labor.
B) land.
C) average product.
D) business know-how.
Q4) Profit is the difference between revenue and A) marginal product.
B) average product.
C) long-term costs.
D) cost.
Q5) Explain how marginal product can be negative.
Page 6
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Chapter 5: Competition and Market Power
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Sample Questions
Q1) The four main types of market structure are
A) perfect competition, monopolistic competition, oligopoly, and monopoly.
B) land, labor, capital, and business know-how.
C) average market, market balance, equilibrium, and marginal product.
D) marginal cost, revenue, product, and price.
Q2) In perfect competition,P = MC means
A) Profit equals marginal cost.
B) Price equals market cost.
C) Price equals marginal cost.
D) Profit equals market cost.
Q3) In the long run,monopolistic competition starts to look like
A) Perfect competition.
B) Market satiation.
C) Market balance.
D) An equalized market.
Q4) Microsoft's two main products,Windows and Office,could be examples of A) perfect competition.
B) monopolistic competition.
C) a natural monopoly.
D) an oligopoly.
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Chapter 6: Government and the Economy
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Sample Questions
Q1) The U.S.Consumer Product Safety Commission is responsible for A) cell phone company billing practices.
B) regulating the flammability of mattresses.
C) regulating the safety of aircraft.
D) regulating consumer financial protection.
Q2) The inefficiency of taxation means that
A) governments tax only specific industries.
B) taxes are applied more on consumers than businesses.
C) imposing a tax on goods typically reduces the amount produced.
D) imposing a tax on goods reduces prices that buyers pay and decreases supply.
Q3) In 1971 President Richard Nixon announced a 90-day freeze on wage and price increases to stem economic stagflation.
A)True
B)False
Q4) What happened to government regulation in the aftermath of the oil shock of 1973?
Q5) An example of the command approach is public education.
A)True
B)False
Q6) What is income redistribution?
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Chapter 7: The First Step Into Macroeconomics
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Sample Questions
Q1) Which is NOT an example of an intermediate input?
A) A new chair for a restaurant dining room.
B) Toilet paper used in an office.
C) A computer chip factory built in Arizona.
D) Electricity used in a school.
Q2) Government investment includes all purchases of long-lived assets such as tanks and planes.
A)True
B)False
Q3) The GDP per capita tells us
A) the amount of output each person would get if the economic pie were sliced evenly.
B) the amount of output each worker would get if the economic pie were sliced evenly.
C) the ratio of the maximum amount of output any person gets to the minimum amount of output each person gets.
D) the average amount of output each person gets, adjusted for inequality.
Q4) Macroeconomics is the study of specific parts of the economy.
A)True
B)False
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Chapter 8: Inflation
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68 Flashcards
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Sample Questions
Q1) Which goods did NOT decrease in price between 2000 and 2010?
A) Personal computers and peripherals.
B) Alcoholic beverages away from home.
C) Televisions.
D) New vehicles.
Q2) Why does core inflation not include energy or food prices?
Q3) Some goods have become less expensive due to
A) globalization and technology.
B) government deregulation.
C) government regulation.
D) GDP growth.
Q4) In the United States,inflation peaked around A) 1980.
B) 1982-1984.
C) 1929.
D)1973.
Q5) Nominal increases take into account inflation adjustments over a period of time. A)True
B)False
Q6) What is one way to avoid money illusion?
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Chapter 9: Growth
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Sample Questions
Q1) An increase in living standards is measured by which of the following?
A) The number of workers employed.
B) The number of televisions in a household.
C) The increase in GDP.
D) The increase in real GDP per capita.
Q2) Economic growth generally leads to
A) inflation.
B) deflation.
C) disinflation.
D) higher living standards.
Q3) What is the purpose of the productivity number reported by the Bureau of Labor Statistics,and what does it not include?
Q4) Output rises as workers become more educated and skilled.
A)True
B)False
Q5) A zero-sum economy means that there is
A) excessive growth after adjusting for inflation rates.
B) no growth of the economy.
C) moderate growth of the economy.
D) real GDP growth.
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Chapter 10: Business Cycles, unemployment and Inflation
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Sample Questions
Q1) The date a recession bottoms out is called the A) peak.
B) expansion.
C) trough.
D) equilibrium.
Q2) The periods of temporary unemployment that correspond to short gaps between jobs create
A) Frictional unemployment.
B) Cyclical unemployment.
C) Per capita unemployment.
D) Superficial unemployment.
Q3) An important cause of recessions is an unexpected negative supply shift,such as higher oil prices.
A)True
B)False
Q4) The potential growth rate is sometimes also called the A) breaking point.
B) speed limit.
C) stop point.
D) peak.
Page 12
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Chapter 11: Fiscal Policy
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Sample Questions
Q1) The two factors that determine the size of the multiplier are the
A) marginal propensity to consume and the amount of overseas leakage.
B) amount of imports and the amount of exports.
C) amount of spending and the number of jobs.
D) unemployment rate and the inflation rate.
Q2) An increase in government spending in the short term lowers unemployment and increases the GDP.
A)True
B)False
Q3) The government's decisions about spending and taxation that affect employment,output,and inflation are called
A) fiscal policy.
B) multiplier policy.
C) short-term policy.
D) Keynesian policy.
Q4) The excess of the federal government's spending over its revenues is called the A) surplus deficit.
B) budget deficit.
C) surplus effect.
D) budget surplus.
Page 13
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Chapter 12: Monetary Policy
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Sample Questions
Q1) If the Federal Reserve increases the federal funds rate dramatically,which of the following would we expect to happen?
A) The price of houses would increase.
B) The amount of credit card borrowing would increase.
C) The price of cars would decrease.
D) People with adjustable-rate mortgages would be better off.
Q2) The Federal Reserve is under the ultimate direction of the Congress of the United States because Congress can cut the budget of the Federal Reserve if the Federal Reserve Board of Governors does not follow the instructions of Congress.
A)True
B)False
Q3) If the Federal Reserve raises the federal funds rate,which one of the following will not tend to happen as a result?
A) Economic activity will decrease.
B) Car loan and home mortgage rates will rise.
C) Businesses will find it easier to obtain funds to expand.
D) Inflation will decline.
Q4) What advantages does monetary policy have over fiscal policy?
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Page 14
Chapter 13: The Financial Markets
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Sample Questions
Q1) Which of the following would you tend to see in a growing economy?
A) The demand curve for loans shifting to the right.
B) The supply curve for loans shifting to the left.
C) The interest rate falling.
D) The quantity of loans falling.
Q2) Suppose the ABC Corporation had a stock price of $56.80 on December 31,2006.On December 30,2007,it has a stock price of $60.15.Over the year,it paid $2.00 in dividends per share.Calculate the total return of a share of ABC Corporation stock in 2007,showing your work.
Q3) The supply curve for loans to high-risk borrowers is _________ the supply curve for loans to low-risk borrowers.
A) below
B) more elastic than C) to the right of D) to the left of
Q4) In the United States,bank deposits up to a certain amount are insured by the FDIC. A)True
B)False
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Page 15
Chapter 14: International Trade
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Sample Questions
Q1) A nation has a comparative advantage in producing a good,if
A) it has a higher standard of living than its trading partners.
B) more people in the country are employed in the production of the good than its trading partners.
C) it also has an absolute advantage in producing the good.
D) it has either a greater productivity advantage or a smaller productivity disadvantage.
Q2) Which country received the most U.S.exports in 2010?
A) Japan.
B) China.
C) Mexico.
D) Canada.
Q3) If the United States were to grow all of its own flowers rather than importing them from other nations,the effect of this would be to
A) improve consumer well-being.
B) lower flower prices because they would not have to be transported as far.
C) improve the well-being of foreign flower producers because they would not have to ship flowers all the way to the United States.
D) draw resources necessary to grow flowers away from the rest of the economy.
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Page 16
Chapter 15: Technological Change
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Sample Questions
Q1) Locations like Silicon Valley,California; Cambridge,Massachusetts; and Bangalore,India have generated a large number of technological innovations,partly due to the concentration of people and capital that are specialized in innovative activities.These regions are known as
A) innovation clusters.
B) information nodes.
C) technology cells.
D) human capital districts.
Q2) The immigration of skilled scientists and engineers from other nations raises the wages of scientists and engineers.
A)True
B)False
Q3) Which of the following would tend to narrow the gap between the private return to innovation and the social return to innovation?
A) More spending on research and development.
B) More competition in the production of newly created goods and services.
C) A patent.
D) An increase in overall scientific productivity.
Q4) What is a patent,and how does it encourage innovation?
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Chapter 16: Economics of the Labor Market
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Sample Questions
Q1) College-educated workers tend to reach their peak earnings between the ages of 45 and 54.
A)True
B)False
Q2) Which of the following best describes the marginal revenue from an additional salesperson at a car dealership?
A) The additional profits the firm earns because of that employee.
B) The number of additional cars the firm sells because of that employee.
C) The increase in revenue to the dealership because of that employee.
D) The increase in wages, benefits, and other costs incurred by the dealership because of hiring that additional person.
Q3) As the wage rate rises,firms will respond by
A) hiring more workers because a higher wage rate will make workers work harder, thus increasing profits for the firm.
B) hiring fewer workers because the labor demand curve slopes downward.
C) selling more output to cover the additional costs of the labor force.
D) selling the same amount of output, but passing on the higher labor costs to the customer in the form of higher prices.
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Chapter 17: The Distribution of Income
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Sample Questions
Q1) People who oppose government intervention to reduce income inequality have sometimes argued that allowing large income gaps can be beneficial because
A) people with large incomes will feel guiltier about their financial advantages and be motivated to give more to the poor.
B) large income gaps increase the incentive to support a market-based economy.
C) the poor will have a shorter life expectancy, leaving more wealth for the successful few.
D) it increases the incentive to work harder to be successful, thereby increasing economic growth.
Q2) If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $20,000 in taxes,then the tax system is
A) regressive.
B) progressive.
C) neither regressive nor progressive.
D) redistributive.
Q3) How has global trade affected income inequality? Explain briefly.
Q4) Why might people object to a regressive tax structure?
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Chapter 18: Economics of Retirement and Healthcare
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Sample Questions
Q1) Which of the following best describes the group of Americans covered by the Social Security program?
A) Those who are disabled, elderly, or dependents of a deceased Social Security participant.
B) Those who are over the age of 65 and retired.
C) Those who are over the age of 65 and unable to work due to a disability, or over the age of 72 with or without a disability.
D) Those who are unemployed and over the age of 55, and everyone over the age of 65.
Q2) Which of the following statements about Social Security is true?
A) The Social Security program offers retirees retirement benefits for up to 20 years after retirement.
B) Social Security is funded with income tax revenues.
C) Social Security requires workers to contribute to an account that is held in their name at the Treasury and invested in government and highly rated private sector bonds.
D) Social Security transfers income from current workers to current retirees.
Q3) List the four possible responses to the Social Security financing gap.
Q4) Describe the problem demographic change presents for Social Security.
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Chapter 19: Economics of Energy, the Environment, and Global Climate Change Glossary
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Sample Questions
Q1) Briefly describe revealed preference and stated preference as means of determining the value of a statistical life.
Q2) Which of the following is NOT a reason why Japanese per capita energy consumption is significantly lower than American per capita energy consumption?
A) Japanese homes tend to be smaller.
B) Japanese homes are more likely to have energy-efficient appliances.
C) Japanese consumers pay hefty fees for overuse of energy.
D) Japan is a smaller country, so less travel is required.
Q3) Windmills are an alternative energy source that creates no negative externalities.
A)True B)False
Q4) Concerns about running out of oil are legitimate because it has been several decades since oil companies have found new oil fields.
A)True
B)False
Q5) List and briefly describe the four types of negative impacts from pollution.
Q6) Describe the two main categories of responses to global climate change.
Page 21
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