Macroeconomics Exam Practice Tests
Course Introduction
Macroeconomics is the branch of economics that studies the behavior, performance, and structure of an economy as a whole. It focuses on aggregate indicators and phenomena such as GDP, unemployment rates, inflation, national income, and overall economic growth. The course examines the roles of government policy, monetary and fiscal instruments, and international trade in influencing economic activity. Students will learn to analyze how economic cycles occur, why recessions and booms happen, and how policymakers strive to stabilize the economy and promote growth. Through theoretical frameworks and real-world examples, the course aims to equip students with the tools to understand and assess the broader economic environment.
Recommended Textbook
Principles of Macroeconomics A Streamlined Approach 3rd Edition by Robert H. Frank
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13 Chapters
2266 Verified Questions
2266 Flashcards
Source URL: https://quizplus.com/study-set/2479 Page 2
Chapter 1: Thinking Like an Economist
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135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/49257
Sample Questions
Q1) If individuals are rational, they should choose actions that yield the:
A) largest total benefits.
B) smallest total costs.
C) smallest economic surplus.
D) largest economic surplus.
Answer: D
Q2) Macroeconomics differs from microeconomics in that macroeconomics focuses on:
A) individual choices and group behavior in individual markets.
B) the performance of national economies and ways to improve that performance.
C) production in specific markets.
D) prices in specific markets.
Answer: B
Q3) The field of economics that would be most concerned with a recent fall in interest rates is:
A) microeconomics.
B) macroeconomics.
C) economic naturalism.
D) marginal economics.
Answer: B
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Page 3
Chapter 2: Supply and Demand
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173 Verified Questions
173 Flashcards
Source URL: https://quizplus.com/quiz/49258
Sample Questions
Q1) If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:
A) normal goods
B) complements
C) substitutes
D) inferior goods
Answer: C
Q2) Gertie saw a pair of jeans that she was willing to buy for $35. The price tag said they were $29.99. Therefore:
A) Gertie should not buy the jeans because they will be of lower quality than she expected.
B) Gertie should not buy the jeans because the price is not equal to her reservation price.
C) Gertie should buy the jeans because the price is less than her reservation price.
D) Gertie should buy the jeans because the price is more than her reservation price.
Answer: C
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Chapter 3: International Trade and Trade Policy
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/49259
Sample Questions
Q1) An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?
A) 1/5 radio
B) 1/3 radio
C) 3 radios
D) 12 radios
Answer: C
Q2) If a country is a net importer of a good, domestic suppliers will supply _____ of that good after it opens itself to international trade.
A) more
B) the same amount
C) none
D) less
Answer: D
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Chapter 4: Macroeconomics: the Birds-Eye View of the Economy
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155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/49260
Sample Questions
Q1) Which of the following statements is normative?
A) When the Federal Reserve increases the money supply, interest rates decrease.
B) A large budget surplus is likely to lower interest rates.
C) Large budget deficits should be avoided.
D) High taxes tend to decrease saving.
Q2) ALL of the following describe economic conditions during the Great Depression in the United States EXCEPT:
A) high rates of unemployment.
B) high rates of inflation.
C) low levels of production.
D) a sharp decline in stock prices.
Q3) A decision by a government to sell businesses that currently are operated by the government to private investors is an example of ________ policy.
A) aggregation
B) fiscal
C) monetary
D) structural
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Page 6
Chapter 5: Measuring Economic Activity: GDP, Unemployment,
and Inflation
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272 Verified Questions
272 Flashcards
Source URL: https://quizplus.com/quiz/49261
Sample Questions
Q1) Real GDP is not a perfect measure of economic well-being because it excludes the value of all of the following except:
A) leisure time.
B) goods and services available in the market economy.
C) nonmarket economic activity.
D) goods and services produced in the underground economy.
Q2) Which of the following would increase the consumption component of U.S. GDP?
A) You purchase a vacation at Disney World in Florida.
B) A business purchases Disney World vacations as rewards for the firm's best salespeople.
C) Disney World purchases tires for the monorail from a firm in Ohio.
D) A French man purchases a vacation at a Disney theme park in France.
Q3) A person 16 years or older who does not work, but is actively looking for work, is officially classified as:
A) employed.
B) unemployed.
C) chronically unemployed.
D) out of the labor force.
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Chapter 6: Economic Growth, Productivity, and Living Standards
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162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/49262
Sample Questions
Q1) Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:
A) crime, pollution, and economic inequality.
B) better education, health and life expectancy.
C) poverty, depletion of nonrenewable resources, and congestion.
D) unemployment, availability of goods and services, and better education.
Q2) Arguing that economic growth will eventually stop because we will run out of natural resources:
A) must be correct because scarcity exists.
B) will only be correct if growth takes the form of newer, more efficient goods and services.
C) ignores the power of markets to recognize shortages and induce changes in behavior.
D) is supported today by the fact that richer countries have fewer natural resources.
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Chapter 7: The Labor Market: Workers, Wages, and Unemployment
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/49263
Sample Questions
Q1) Which of the following labor market trends have occurred in both the U.S. and in most Western European countries?
A) continuous and substantial growth in real wages and substantial job growth
B) a substantial growth in real wages and double digit rates of unemployment in the 1990s
C) a substantial growth in real wages over the twentieth centaury
D) a pronounced decrease in wage inequality and double digit rates of unemployment in the 1990s
Q2) Periods of unusually low production in an economy result in ______ unemployment.
A) cyclical
B) environmental
C) structural
D) frictional
Q3) More rigid government regulations and union contracts in Western Europe contribute to greater _____ in Western Europe than in the United States.
A) real GDP per capita.
B) wage inequality
C) unemployment
D) real wage growth
Page 9
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Chapter 8: Saving and Capital Formation
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/49264
Sample Questions
Q1) A higher real rate of interest _____ the reward for saving and _____ the amount people need to save to reach a given target.
A) increases; increases B) decreases; decreases C) increases; decreases D) decreases; increases
Q2) To the extent that households are target savers who save to reach a specific goal, an increase in the interest rate ______ household saving and a decrease in the interest rate ______ household saving.
A) increases; decreases B) decreases; increases C) does not affect; increases D) increases; does not affect
Q3) The stock of wealth increases more rapidly the faster the flow of ______. A) income B) saving C) money D) assets
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10
Chapter 9: Money, The Federal Reserve, and Global
Financial Markets
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/49265
Sample Questions
Q1) The coupon rate on newly issued bonds is usually ______ for bonds with favorable tax treatment, such as municipal bonds, and ______ for bonds that are very risky, such as junk bonds.
A) higher; lower
B) higher; higher
C) lower; lower
D) lower; higher
Q2) Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries:
A) reduce the cost of gathering information about borrowers.
B) have a monopoly on lending.
C) increase the risk of lending.
D) offer higher rates of return than available elsewhere.
Q3) Banks help savers find productive uses for their funds because banks are 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.
Page 11
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Chapter 10: Short-Term Economic Fluctuations and Fiscal Policy
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190 Verified Questions
190 Flashcards
Source URL: https://quizplus.com/quiz/49266
Sample Questions
Q1) If the natural rate of unemployment equals 5 percent and the actual rate of unemployment equals 6 percent, then cyclical unemployment equals:
A) 11 percent.
B) 1.2 percent.
C) 1 percent.
D) -1 percent.
Q2) The longest and most severe recession in the United States since 1925 began in:
A) 1929.
B) 1945.
C) 1957.
D) 1982.
Q3) Autonomous expenditure is the portion of aggregate expenditure that: A) equals aggregate output. B) equals planned spending.
C) equals induced expenditure.
D) is independent of income.
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Chapter 11: Stabilizing the Economy: The Role of the Fed
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163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/49267
Sample Questions
Q1) The equilibrium quantity of money in circulation is determined by:
A) the interaction of an upward-sloping money supply curve and a downward-sloping money demand curve.
B) the nominal interest rate, real income, and the price level.
C) the Federal Reserve.
D) the decentralized interactions between households and businesses.
Q2) The Federal Reserve can:
A) simultaneously set independent money supply and nominal interest rate targets.
B) only target the nominal interest rate, not the money supply.
C) only set a money supply target that is consistent with a nominal interest rate target, and vice versa.
D) only target the money supply, not the nominal interest rate.
Q3) Lower nominal interest rates ______ the amount of money demanded and a lower price level ______ the amount of money demanded.
A) increase; increases
B) increase; decreases
C) increase; does not change
D) decrease; decreases
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13
Chapter 12: Inflation and Aggregate Supply
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163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/49268
Sample Questions
Q1) Because decreases in inflation increase aggregate spending and short-run equilibrium output:
A) the short-run aggregate supply line is downward sloping.
B) the aggregate demand curve is horizontal.
C) the aggregate demand curve is downward sloping.
D) the aggregate demand curve is upward sloping.
Q2) A downward shift in the Fed's policy reaction function is a _____ of monetary policy, and the aggregate demand curve _______.
A) tightening; shifts right
B) easing; shifts right
C) tightening; shifts left
D) easing; shifts left
Q3) When actual output exceeds potential output there is ____ output gap and the rate of inflation will tend to ____.
A) an expansionary; increase
B) an expansionary; decrease
C) no; remain the same
D) a recessionary; increase
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14
Chapter 13: Exchange Rates and the Open Economy
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168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/49269
Sample Questions
Q1) Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:
A) allows monetary policy to be used to stabilize the domestic economy.
B) increases trade and economic integration.
C) decreases trade and economic integration.
D) prevents exchange rate overvaluation.
Q2) The purchasing power parity theory is a reasonably good explanation for nominal exchange rate determination:
A) in the short run.
B) in the long run.
C) when there are significant volumes of non-traded goods and services.
D) when there are fixed exchange rates.
Q3) A fixed exchange rate is an exchange rate whose value:
A) is established annually by the International Monetary Fund.
B) varies according to supply and demand for the currency in the foreign exchange market.
C) is set by official government policy.
D) reflects the comparative advantage of the home country versus other foreign countries.
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