Macroeconomics for Business Review
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Course Introduction
Macroeconomics for Business explores how large-scale economic factors affect business decisions and strategy. This course delves into national income, inflation, unemployment, monetary and fiscal policy, and international trade to provide students with the tools to analyze economic environments. Emphasis is placed on interpreting economic indicators and understanding economic cycles as they relate to business planning, investment, and operational decisions. Through case studies and real-world examples, students learn to apply macroeconomic concepts to contemporary business challenges, fostering informed decision-making and strategic thinking in a global context.
Recommended Textbook
ECON MACRO 5th Edition by
William A. McEachern
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19 Chapters
2883 Verified Questions
2883 Flashcards
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Chapter 1: The Art and Science of Economic Analysis
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Sample Questions
Q1) It is always rational to acquire more information before making a decision.
A)True
B)False
Answer: False
Q2) In economics,marginal means:
A)incremental.
B)unimportant.
C)level or size.
D)a borderline situation.
E)a bad alternative.
Answer: A
Q3) Your best friend buys you lunch on your birthday.You think this was not a free lunch because:
A)even if you didn't pay dollars for it,you paid for it in extra calories.
B)the resources used to produce the lunch were not available to satisfy other wants.
C)you disagree with the expression "The best things in life are free."
D)you can eat only if you work out first.
E)neither sea water nor air is free.
Answer: B
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Page 3
Chapter 2: Economic Tools and Economic Systems
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154 Flashcards
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Sample Questions
Q1) In a command economy,_____.
A)a dictator makes every economic decision
B)owners can sell their resources to the highest bidder
C)no individual or group coordinates the economy
D)in theory,individual choices are reflected in collective decisions and decisions are made by central planners.
E)public ownership of resources is combined with free markets to direct economic activity
Answer: D
Q2) Suppose you have a choice of working full-time during the summer or going full-time to summer school.Summer tuition and books are $2,200.If you worked,you could make $7,000.Your rent is $1,000 for the summer,regardless of your choice.If these are the only relevant costs to consider,the opportunity cost of going to summer school is:
A)$2,200.
B)$7,000.
C)$8,000.
D)$9,200.
E)$10,200.
Answer: D
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Page 4
Chapter 3: Economic Decision Makers
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Sample Questions
Q1) Since 1930,U.S.government spending as a percent of GDP has:
A)increased.
B)decreased.
C)stayed the same.
D)showed no particular trend.
E)increased by the same percent each year.
Answer: A
Q2) Which of the following is one of the chief reasons for the increased number of married women in the U.S.workforce?
A)The marginal cost of working in the labor force has increased.
B)Jobs provide greater independence and self-worth.
C)The opportunity cost of household work has increased.
D)The sunk cost of household appliances has risen to the point where women must work to make payments on them.
E)Women spend more time shopping as a result of the increasing division of labor in household production.
Answer: C
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Page 5
Chapter 4: Demand, supply, and Markets
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Sample Questions
Q1) Suppose a market is in equilibrium.An increase in demand in this market will lead to a(n):
A)increase in supply.
B)decrease in supply.
C)decrease in quantity supplied.
D)increase in quantity supplied.
E)decrease in equilibrium price.
Q2) Suppose the price of compact disks (CDs)increases,other things equal.Which of these is most likely to occur in the market for DVDs,a substitute?
A)The demand for DVDs is likely to decrease.
B)The demand for DVDs is likely to increase.
C)The quantity of DVDs demanded is likely to increase.
D)A decrease in the quantity of DVDs demanded is likely to decrease.
E)A decrease in the quantity of DVDs supplied is likely to decrease.
Q3) A decrease in demand for a good generally implies that:
A)consumers are willing to pay a higher price for each unit of the good.
B)consumers are willing to buy larger quantities of the good at each price.
C)the demand curve for the good has shifted to the right.
D)the demand curve for the good has become steeper.
E)the demand curve for the good has shifted to the left.
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Chapter 5: Introduction to Macroeconomics
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Sample Questions
Q1) Which of these is a supply-side approach to increase growth?
A)Spending on the construction and repair of state highways
B)Providing tax benefits to start-up companies
C)Investing in the production of arms and ammunitions
D)Replacing old aircrafts with new fighter planes
E)Increasing transfer payments to retirees
Q2) Keynesian policies are ineffective at combating stagflation because stagflation is caused by:
A)budget surpluses.
B)decreases in aggregate supply.
C)trade deficits.
D)decreases in aggregate demand.
E)budget deficits.
Q3) On a graph showing the aggregate demand and aggregate supply curves,stagflation can be represented by a:
A)leftward shift of the aggregate supply curve.
B)rightward shift of the aggregate supply curve.
C)upward movement along the aggregate supply curve.
D)rightward shift of the aggregate demand curve
E)upward movement along the aggregate demand curve.
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Chapter 6: Tracking the Useconomy
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Sample Questions
Q1) If real gross domestic product (GDP)for a particular year is $5 trillion and the GDP price index for that year is 136,the nominal gross domestic product (GDP)for that year is
A)$3.7 trillion
B)$4 trillion
C)$6.8 trillion
D)$27 trillion
E)$68 trillion
Q2) A fixed-weight price index uses a process that adjusts the weights continuously year by year.
A)True
B)False
Q3) Which of the following is included as government purchases in gross domestic product (GDP)?
A)Social Security payments to elderly citizens
B)Welfare benefits distributed to the poor
C)Outright grants from government to recipients
D)Payments to clerical workers hired by government
E)Unemployment compensation benefits
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Page 8
Chapter 7: Unemployment and Inflation
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Sample Questions
Q1) If the nominal interest rate is 5 percent and there is no inflation,_____.
A)the real interest rate exceeds 5 percent
B)the real interest rate is less than 5 percent
C)the real interest rate is 5 percent
D)there is not enough information to determine the real interest rate
E)the real interest rate is zero
Q2) The nominal interest rate is determined in the market for loanable funds.
A)True
B)False
Q3) The unemployment rate measures the:
A)number of people in the labor force divided by the adult population.
B)percentage of people in the labor force who are unemployed.
C)percentage of people in an economy who have dropped out of the labor force.
D)number of people in the adult population who are looking for work.
E)number of people in the labor force who are not working.
Q4) The labor force consists of all adults who are currently employed.
A)True
B)False
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Chapter 8: Productivity and Growth
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Sample Questions
Q1) The production possibilities frontier of an economy is based on the assumption that the:
A)amount of consumer goods produced in the economy is constant during a given year.
B)quality of labor available in the economy is variable during a given year.
C)patent laws applicable in the economy are constant during a given year.
D)level of technology available in the economy is variable during a given year.
E)economy can either produce capital goods or consumer goods during a given year.
Q2) Labor cost on an average accounts for about _____ percent of the total cost of production.
A)10
B)30
C)50
D)70
E)98
Q3) Basic research seeks to answer specific questions or to apply scientific discoveries to the development of specific products.
A)True
B)False
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Chapter 9: Aggregate Demand
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Sample Questions
Q1) If a household's income rises from $46,000 to $46,700 and its consumption spending rises from $35,800 to $36,400,then its:
A)marginal propensity to consume is 0.86.
B)marginal propensity to consume is 0.99.
C)marginal propensity to consume is 0.98.
D)marginal propensity to save is 0.01.
E)marginal propensity to save is 0.86.
Q2) In an economy without a government and without international transactions,aggregate expenditure at each level of income is equal to:
A)consumption plus saving.
B)planned investment plus saving.
C)disposable income plus the price level.
D)consumption plus planned investment.
E)planned investment minus saving.
Q3) The slope of the consumption function equals the marginal propensity to consume.
A)True B)False
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11
Chapter 10: Aggregate Supply
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Sample Questions
Q1) When the actual price level in an economy turns out to be lower than that expected in the short run,_____.
A)businesses cut back production
B)the potential output level decreases
C)the aggregate supply curve shifts leftward
D)the aggregate supply curve shifts rightward
E)an expansionary gap develops
Q2) Suppose the real wage of a worker remains unchanged between Year 1 and Year 2 but the nominal wage decreases from $20 in Year 1 to $18 in Year 2.This implies that the price level has:
A)increased by 20 percent.
B)increased by 25 percent.
C)remained unchanged.
D)fallen by 10 percent.
E)fallen by 20 percent.
Q3) An increase in the federal minimum wage will shift the long-run aggregate supply curve to the left.
A)True
B)False
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Page 12
Chapter 11: Fiscal Policy
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149 Flashcards
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Sample Questions
Q1) Which of the following is true about classical economists?
A)They argued that the sources of depressions and high unemployment lay within the market system.
B)They advocated laissez-faire policies to promote economic growth.
C)They believed the economy would naturally tend toward unemployment.
D)They believed prices and wages were rigid.
E)They encouraged government intervention in markets.
Q2) A decrease in government purchases can close an expansionary gap by shifting the aggregate demand curve.
A)True
B)False
Q3) All of the following are tools of fiscal policy except one.Which is the exception?
A)Taxes
B)Transfer payments
C)Interest rates
D)Government purchases of goods
E)Government purchases of services
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Chapter 12: Federal Budgets and Public Policy
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Sample Questions
Q1) The federal budget experienced surpluses from _____.
A)1998 to 2001
B)2002 to 2006
C)1970 to 1973
D)1991 to 1994
E)1985 to 1988
Q2) If a budget deficit is the result of expenditures for programs such as farm subsidies and Social Security,the burden on future generations is slight.
A)True
B)False
Q3) The functional finance philosophy is based on the idea that balancing the federal budget is less important than using it to promote an economy operating at its potential.
A)True
B)False
Q4) Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.
A)True
B)False
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Chapter 13: Money and the Financial System
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Sample Questions
Q1) The most effective mechanism for reducing runs on banks is _____.
A)the discount rate
B)deposit insurance
C)the reserve requirement
D)open-market operations
E)the Federal Reserve note
Q2) To minimize the effect of short-term political pressure on the Fed's Board of Governors,the governors are all appointed to their terms:
A)in different years,and their terms are long.
B)in different years,and their terms are short.
C)in the same year,and their terms are long.
D)in the same year,and their terms are short.
E)in the same year,and their terms are shorter than that of the chairman of the Federal Reserve Board.
Q3) Barter works best when:
A)there is an absence of a double coincidence of wants.
B)many different products are available in the economy.
C)money is readily available to establish relative prices.
D)each trader has what the other wants and wants what the other has.
E)highly developed economies achieve extensive specialization of labor.
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Chapter 14: Banking and the Money Supply
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Sample Questions
Q1) Suppose you borrow $1,000 to purchase a car.Which of the following correctly represents the changes in your personal balance sheet after the bank lends the money,but before you spend it?
A)Assets: loan,+$1,000; Liabilities and net worth: checking deposit,+$1,000
B)Assets: loan,-$1,000,checking deposit,+$1,000; Liabilities and net worth: no change
C)Assets: loan,+$1,000,checking deposit,-$1,000; Liabilities and net worth: no change
D)Assets: checking deposit,+$1,000; Liabilities and net worth: loan,+$1,000
E)Assets: checking deposit,+$1,000; Liabilities and net worth: loan,-$1,000
Q2) To increase the money supply,the Fed might:
A)increase the reserve requirement and the discount rate.
B)decrease the reserve requirement and the discount rate.
C)increase the reserve requirement and decrease the discount rate.
D)sell government securities and increase the discount rate.
E)sell bonds on the open market and increase the reserve requirement
Q3) One of the main functions of the Fed is minting U.S.coins.
A)True
B)False
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Page 16
Chapter 15: Monetary Theory and Policy
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Sample Questions
Q1) People prefer to hold less of their wealth in the form of financial assets like bonds and term deposits when:
A)real GDP is at an all-time low
B)the real interest rate is above 10 percent.
C)the price level is very low.
D)the nominal interest rate is close to zero.
E)the nominal interest rate is very high.
Q2) The money demand curve will shift when there is a change in the:
A)unemployment rate.
B)inflation rate.
C)money supply.
D)nominal interest rate.
E)price level.
Q3) In the aggregate demand-aggregate supply model in the short run,an increase in the money supply will lead to a(n):
A)increase in both the price level and real GDP.
B)decrease in both the price level and real GDP.
C)increase in real GDP and a decrease in the price level.
D)decrease in real GDP and an increase in the price level.
E)increase in the price level only.
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Chapter 16: Macro Policy Debate: Active or Passive
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Sample Questions
Q1) Which of the following statements supports the passive approach to close a recessionary gap?
A)It is likely that policies will be subject to time lags.
B)Prolonged unemployment may cause the economy's potential real GDP to fall.
C)Workers' skills may grow rusty during a prolonged recession.
D)It is likely that unemployed workers will drop out of the labor force.
E)Firms may neglect their capital stock during a prolonged recession.
Q2) According to the rational expectations school,if the Fed announces a policy of rapid growth in the money supply,but then puts the brakes on money expansion without any announcement,which of the following is likely to be the short-run result?
A)An unexpected surge in aggregate demand
B)An unexpected drop in aggregate demand.
C)An anticipated surge in aggregate demand.
D)An anticipated drop in aggregate demand.
E)No change in aggregate demand.
Q3) An economy that self-corrects an expansionary gap will experience stagflation.
A)True
B)False
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18
Chapter 17: International Trade
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Sample Questions
Q1) During a year,the government of a country imposed a tariff on imported steel.The rationale behind this policy was that lower-priced imports had put the country's established steel industries in jeopardy of closing.This government policy was based on:
A)the declining industries argument.
B)the antidumping argument.
C)the infant industry argument.
D)the national defense argument.
E)the jobs and income argument.
Q2) Differences in resource endowments are differences in:
A)tariffs charged by each country.
B)consumption patterns across nations.
C)production patterns across nations.
D)the quantity,but not the quality,of resources available in different nations.
E)the quality and quantity of resources available in different nations.
Q3) If a tariff increases,everybody loses except the government imposing the tariff.
A)True
B)False
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19
Chapter 18: International Finance
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Sample Questions
Q1) The Bretton Woods system:
A)pegged exchange rates in terms of U.S.dollars.
B)pegged exchange rates in terms of all major currencies in the world.
C)pegged exchange rates in terms of pounds.
D)established a system of flexible exchange rates.
E)established the European monetary system.
Q2) A rightward shift of a country's demand curve for foreign exchange will:
A)decrease the price of foreign exchange in the country.
B)decrease the value of its currency.
C)increase the value of its currency.
D)make foreign goods less expensive in the domestic market.
E)make its goods more expensive in foreign markets.
Q3) Prior to World War I,the international financial system had operated on:
A)a floating exchange rate system.
B)a managed exchange rate system.
C)a laissez-faire exchange rate system.
D)the gold standard.
E)the dollar standard.
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Page 20
Chapter 19: Economic Development
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Sample Questions
Q1) The United States Agency for International Development focuses on short-range plans to meet the basic needs of the poor.
A)True
B)False
Q2) Which of the following is at the end of the production chain that a typical economy moves up along?
A)Raw materials
B)Agriculture
C)Hunting and gathering
D)Services
E)Manufacturing
Q3) Studies by the World Bank have emphasized that countries that have adopted trade liberalization policies have been successful.
A)True
B)False
Q4) In 2014,high-income economies with only about one-fifth of the world's population produced more than half of the world's output.
A)True
B)False
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