Macroeconomics
Midterm Exam
Course Introduction
Macroeconomics is the study of the economy as a whole, focusing on broad phenomena such as inflation, unemployment, economic growth, and the overall level of national income. This course explores how governments and central banks use monetary and fiscal policies to manage economic performance and achieve goals like price stability and full employment. Key concepts include aggregate supply and demand, business cycles, the role of government intervention, the measurement of economic indicators, and the impact of international trade and finance. By analyzing real-world issues and utilizing economic models, students gain a deeper understanding of the forces that drive national and global economies.
Recommended Textbook Essentials of Economics 1st Edition by Dirk Mateer
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19 Chapters
2713 Verified Questions
2713 Flashcards
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Chapter 1: Thinking Like an Economist
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97 Flashcards
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Sample Questions
Q1) Instead of taking an economics course,you could have taken a history course that meets at the exact same time.The total cost of taking the economics course would be the:
A) tuition cost for the economics course.
B) fact that you could not take the history course at the same time.
C) tuition cost for the economics course plus the price of the textbook and a notebook for the economics course.
D) tuition cost, the cost of the textbook and notebook, and the fact that you could not take the history course at the same time.
E) price of the textbook and a notebook for the economics course.
Answer: D
Q2) An example of a direct,positive incentive is:
A) a prison sentence for committing a crime.
B) unemployment insurance for those who are laid off.
C) providing a workplace safety program.
D) providing a commission for sales.
E) threatening to fire those who do not perform well.
Answer: D
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Page 3
Chapter 2: Economic Models and Gains From Trade
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called:
A) external factors.
B) ceteris paribus.
C) normative analysis.
D) positive analysis.
E) faulty assumptions.
Answer: B
Q2) According to the figure,a new technology that makes it easier to peel,core,and prepare apples will cause the:
A) entire production possibilities frontier (PPF) to shift outward.
B) entire PPF to shift inward.
C) PPF to rotate outward to a larger maximum quantity of apple pies with no change in maximum blueberry pies.
D) PPF to rotate outward to a larger maximum quantity of blueberry pies with no change in maximum apple pies.
E) PPF to stay exactly the same because there is no change in resources.
Answer: C
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4
Chapter 3: The Market at Work: Supply and Demand
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160 Flashcards
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Sample Questions
Q1) Many consumer items eventually go out of style,and because fewer people want these items,demand for them drops.When this happens,we usually see production of these items stop.What happens to the equilibrium price and equilibrium quantity in a market like this?
A) The equilibrium price goes up and equilibrium quantity goes up.
B) The equilibrium price is indeterminate and equilibrium quantity goes up.
C) The equilibrium price goes down and equilibrium quantity is indeterminate.
D) The equilibrium price is indeterminate and equilibrium quantity goes down.
E) The equilibrium price goes up and equilibrium quantity is indeterminate.
Answer: D
Q2) The demand curve shift shown in the figure was caused by a(n):
A) increase in the input cost of the good.
B) increase in the price of a substitute of the good.
C) decrease in the number of firms selling the good.
D) decrease in the number of buyers in the market for the good.
E) expectation that the future price of this good will be higher than it is currently.
Answer: D
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Chapter 4: Market Efficiency
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Sample
Questions
Q1) Why is it often difficult to remove a binding price floor after it exists?
A) in general, because consumers benefit from the lower prices and would lobby their elected officials to keep the price control
B) in general, because consumers benefit from higher-quality products and would lobby their elected officials to keep the price control
C) in general, because consumers benefit from larger products and would lobby their elected officials to keep the price control
D) in general, because sellers benefit from higher prices and would lobby their elected officials to keep the price control
E) in general, because it has little effect on the market price and people forget about it
Q2) Which of the following is an accurate statement about the consequence of non-binding price ceilings?
A) They prevent the seller from receiving the equilibrium price.
B) They require the seller to advertise the product at the equilibrium price.
C) They create a surplus in the legal market.
D) They do not change the quantity of goods bought or sold in the legal market.
E) They increase the quantity demanded of the good in question.
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Page 6
Chapter 5: Costs and Production: How Do Businesses Work?
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117 Flashcards
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Sample Questions
Q1) The market for candles is perfectly competitive and is currently in equilibrium.What will happen if candles are later linked to more houses catching on fire?
A) In the short run, firms will experience economic profits, but in the long run, firms will leave the market, lowering economic profits.
B) In the short run, firms will experience economic profits, but in the long run, firms will enter the market, lowering economic profits.
C) In the short run, firms will incur economic losses, but in the long run, firms will leave the market, raising economic profits.
D) In the short run, firms will incur economic losses, but in the long run, firms will enter the market, raising economic profits.
E) In both the short run and the long run, firms will experience zero economic profits.
Q2) What is an implicit cost?
Q3) Firms in a competitive market make zero economic profits in the long run.Why would firms choose to remain in the market if they make zero economic profits?
Q4) How are long-run costs different from short-run costs?
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Chapter 6: Market Structures
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183 Flashcards
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Sample Questions
Q1) Many economists believe that the market for wheat in the United States is an almost perfectly competitive market.If one firm discovers a technology that makes its wheat taste better and have fewer calories than all other wheat offered in the market,the wheat market would become less competitive because:
A) there would no longer be many buyers and many sellers of wheat.
B) it would no longer be easy to enter and exit the existing wheat market.
C) the products would no longer be similar in the wheat market.
D) the government would want to intervene.
E) individuals would not want to switch products.
Q2) The deadweight loss associated with this profit-maximizing monopoly is equal to:
A) $900.
B) $600.
C) $300.
D) $100.
E) $450.
Q3) In the year 2576,intergalactic travel is possible.A firm on Earth,Plantorium,produces 95% of Earth's jetpacks.A planet with easy access to Earth,Xerckyia,is coming out with new technology that will allow it to produce jetpacks at a lower cost.Describe a scenario in which Plantorium will engage in rent seeking.
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Page 8
Chapter 7: Behavioral Economics and Game Theory
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144 Flashcards
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Sample Questions
Q1) In January 2011,Coca-Cola and Pepsi agreed to reduce their yearly advertising budgets by $1 million each,and neither firm reneged on the agreement throughout the year.In January 2012,Coca-Cola and Pepsi each announced that their companies' 2011 profits had increased by $1 million.Which of the following is a likely explanation for this increase?
A) A new entrant in the market caused Coca-Cola and Pepsi to lose substantial market share.
B) The government imposed a punitive tax on both firms for producing a beverage that is a danger to public health.
C) The firms had previously been in a prisoner's dilemma situation where one firm's advertisements were effectively canceling the other firm's advertisements.
D) Coca-Cola drastically reduced the price of its soda relative to the price of Pepsi's soda.
E) Pepsi drastically reduced the price of its soda relative to the price of Coca-Cola's soda.
Q2) What are the three ways that bounded rationality,or limited reasoning,can be explained?
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Page 9
Chapter 8: Labor Markets and Earnings
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) The basic tools of supply and demand apply to:
A) both markets for goods and services and markets for labor services.
B) markets for goods and services but not to markets for labor services.
C) markets for goods and services but not to markets for factors of production.
D) all markets except those in which demand is derived demand.
E) only markets where demand is derived.
Q2) To have no surplus or shortage of workers in Zendar,what does the wage rate have to be?
A) $5
B) $10
C) $15
D) $20
E) $25
Q3) Which of the following situations does NOT represent derived demand?
A) the demand for bakers
B) the demand for home ovens
C) the demand for fast-food fryers
D) the demand for office space
E) the demand for trainers
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Page 10
Chapter 9: Government in the Economy
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Consider a market with a positive externality.The market will tend to ________ the good because the market participants tend to ignore the ________ of their decision.
A) over-produce; external benefit
B) under-produce; internal benefit
C) over-produce; external cost
D) under-produce; external cost
E) under-produce; external benefit
Q2) An internal cost is best defined as the cost of an activity paid for by:
A) the individual who is engaged in the activity.
B) the government.
C) a third party.
D) a free-rider.
E) the individual and the third party.
Q3) Which rule would NOT protect fish populations?
A) limiting the length of the fishing season
B) limiting the number of fish that can be caught
C) not allowing female fish to be caught
D) not allowing young fish to be caught
E) catching any fish except males
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Page 11
Chapter 10: What Is Macroeconomics?
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) During healthy economic periods,only _________ unemployment exist(s).
A) frictional and structural
B) cyclical
C) frictional
D) structural
E) structural and cyclical
Q2) Which of the following lists the three types of unemployment?
A) frictional, structural, and practical
B) practical, structural, and cyclical
C) frictional, unavailable, and structural
D) cyclical, practical, and unavailable
E) frictional, structural, and cyclical
Q3) Explain why real GDP is preferred to non-adjusted GDP as a measure of economic growth.
Q4) If non-adjusted GDP is declining,then it must be the case that:
A) fewer goods and services are being produced.
B) prices must be lower on average.
C) prices must be increasing more rapidly than production.
D) prices are falling at a greater rate than production is rising.
E) production is rising at a greater rate than prices are falling.
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Chapter 11: Measuring the Macroeconomy, Inflation, and Unemployment
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Sample Questions
Q1) Individuals who are NOT working but are willing to work and who have looked for a job in the past 12 months but have NOT sought employment in the past 4 weeks are defined as:
A) unemployed.
B) employed.
C) unhappy workers.
D) discouraged workers.
E) retired.
Q2) From 1950 through 2012,what happened to the gap between the labor-force participation rates for males and females? What are some reasons for this trend?
Q3) The sale of American-grown corn to China is included in the ________ category of GDP.
A) consumption
B) investment
C) government purchases
D) export
E) import
Q4) Identify three reasons why GDP is not a perfect measure of a nation's well-being.
Page 13
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Chapter 12: Aggregate Demand and Aggregate Supply
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) The Great Recession began in ________ and lasted for ________ months.
A) June 2011; 12
B) August 1929; 44
C) December 2007; 18
D) May 1937; 14
E) March 2001; 8
Q2) Between quarter 2 and quarter 3,real GDP grew by what percentage?
A) 4%
B) 3%
C) 1%
D) 2%
E) -2%
Q3) You read in the paper that there has been a significant increase in the consumer confidence index.Having taken an economics class,you predict that spending in the economy will ________ and aggregate demand will ________.
A) decrease; increase
B) decrease; decrease
C) increase; be unaffected
D) increase; decrease
E) increase; increase
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Chapter 13: Economic Growth and the Wealth of Nations
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138 Flashcards
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Sample Questions
Q1) An increase in human capital would tend to:
A) decrease worker productivity.
B) decrease employee wages.
C) increase worker productivity.
D) decrease the number of people working.
E) have no effect on worker productivity.
Q2) Nominal gross domestic product (GDP)is a poor measure of economic growth because it:
A) does not count investment by private businesses.
B) overstates the importance of consumer spending.
C) does not include government spending.
D) ignores imports and exports.
E) does not consider changes in prices or population growth.
Q3) From 2012 to 2013,U.S.real GDP increased by 1.8% and the U.S.population grew by 0.7%.Therefore,per capita real GDP in the United States increased by:
A) 2.8%.
B) 1.1%.
C) 3.8%.
D) 1.8%.
E) 5.4%.
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Chapter 14: Savings, Investment, and the Market for Loanable Funds
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Sample Questions
Q1) If interest rates rise:
A) firms are willing to borrow more money because their rates of return have increased.
B) households are willing to borrow more money because their rates of return have increased.
C) firms are willing to borrow less money because their cost of borrowing has increased.
D) foreign entities are willing to borrow more money because their rates of return have increased.
E) it must mean that inflation has decreased because nominal rates have increased.
Q2) We could best describe the:
A) nominal rate of interest as the inflation-adjusted rate of interest.
B) real rate of interest as the inflation-adjusted rate of interest.
C) rate of inflation as the nominal interest rate.
D) loanable funds market as the market where only governments make loans.
E) supply of loanable funds as upward-sloping, with the slope equaling the rate of inflation.
Q3) Is it easy to "catch up" if one does not start saving until later in life? Explain your answer.
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Page 16
Chapter 15: Money and the Federal Reserve
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Sample Questions
Q1) Dave Macy decides to sell his gold jewelry and deposits the cash at his local bank.How would this be recorded on the bank's balance sheet?
A) The money supply will fall because consumers have less gold.
B) The money supply will rise because consumers have more cash.
C) The money supply will fall when the gold is sold but will increase once the deposit is made.
D) There will be no change to the money supply.
E) The money supply will rise when the gold is sold but then fall once the deposit is made.
Q2) The bank in your hometown has decided to double the number of its local branch offices.How will this affect the bank's balance sheet?
A) Assets and liabilities will increase.
B) Assets will increase and liabilities will decrease.
C) Assets and liabilities will decrease.
D) Assets will decrease and liabilities will increase.
E) Doubling the number of offices would not appear on the balance sheet.
Q3) Calculate the portion of M2 that was NOT included in M1.
Q4) Briefly describe the three functions of the Federal Reserve.
Q5) Why are credit cards excluded from the equation for money supply?
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Chapter 16: Monetary Policy
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Sample Questions
Q1) To avoid the negative effects of unexpected inflation,workers have an incentive to:
A) lock in their current wages for years.
B) stay unemployed during years of inflation.
C) never negotiate wage contracts.
D) change jobs regularly.
E) expect a certain level of inflation and to negotiate their contracts accordingly.
Q2) Which of the following explains why resource prices are often the slowest prices to adjust?
A) Resource prices are not affected by inflation.
B) Resource prices are often set by lengthy contracts.
C) Resource prices are often set by governments.
D) Resource prices are not reported in the consumer price index (CPI).
E) Resource prices are all tied to inflation.
Q3) What are the reasons behind why the Federal Reserve uses government bonds for open market operations?
Q4) Why does changing the reserve requirement prove less effective than open market operations?
Q5) Explain why workers have an incentive to expect a certain level of inflation.
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Page 18
Chapter 17: Fiscal Policy and Budget Deficits
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Sample Questions
Q1) Budget deficits tend to:
A) increase over time.
B) decrease over time.
C) increase during recessions.
D) increase during expansions.
E) grow as the economy grows and shrink as the economy shrinks.
Q2) Which of the following is an example of something that contains an excise tax?
A) property
B) income
C) clothing made and sold in Oregon (where the sales tax rate is 0%)
D) clothing imported from China and sold in Oregon
E) tobacco products
Q3) When the government borrows,the ________ loanable funds shifts to the right,causing the interest rate to ________,which causes private investment to
A) demand for; rise; fall
B) demand for; fall; rise
C) supply of; rise; fall
D) supply of; fall; rise
E) demand for; rise; rise
Q4) Why may a budget deficit be considered undesirable?
Page 19
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Chapter 18: International Economics
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148 Flashcards
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Sample Questions
Q1) To maximize total output,Smith should specialize in producing ________,whereas Ricardo should specialize in producing ________.
A) computers; smartphones
B) smartphones; computers
C) computers; computers
D) smartphones; smartphones
E) smartphones and computers; neither good
Q2) Based on the scenario,Esther's opportunity cost of one hot dog is ________ hamburgers.
A) 3
B) 1.5
C) 6
D) 4
E) 8
Q3) An increase in U.S.consumer demand for British goods is consistent with:
A) both Figures A and B.
B) neither Figure A nor Figure B.
C) Figure A but not Figure B.
D) Figure B but not Figure A.
E) the supply curve being upward-sloping in both Figures A and B.
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Chapter 19: Personal Finance
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156 Flashcards
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Sample Questions
Q1) ________ would be a reasonable investment that has only moderate risk.
A) Growth stocks
B) Junk bonds
C) Mutual funds
D) Commodity futures, such as oil
E) Precious metals
Q2) Which type of financial records includes stock and bond reports?
A) investment
B) insurance
C) estate planning
D) tax
E) consumer purchase
Q3) Before a two-for-one stock split,Len's stock was valued at $50 per share.What is his per-share value after the split?
A) $25
B) $50
C) $100
D) $125
E) $150
Q4) What are some repayment options of student loans?
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