Macroeconomics Test Bank https://quizplus.com/study-set/437 15 Chapters 1417 Verified Questions
Macroeconomics Test Bank Course Introduction Macroeconomics is an introductory course that explores the behavior and performance of an economy as a whole. It examines aggregate measures such as national income, gross domestic product (GDP), unemployment rates, inflation, and economic growth. Students will analyze how fiscal and monetary policies influence economic activity, and study concepts such as aggregate demand and supply, business cycles, and international trade. The course also addresses the role of government and central banks in stabilizing the economy, aiming to equip students with a comprehensive understanding of the factors that shape overall economic health.
Recommended Textbook Macroeconomics 8th Edition by Andrew Abel
Available Study Resources on Quizplus 15 Chapters 1417 Verified Questions 1417 Flashcards Source URL: https://quizplus.com/study-set/437
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Chapter 1: Introduction to Macroeconomics Available Study Resources on Quizplus for this Chatper 67 Verified Questions 67 Flashcards Source URL: https://quizplus.com/quiz/7693
Sample Questions Q1) The number of unemployed divided by the labor force equals A)the inflation rate. B)the labor force participation rate. C)the unemployment rate. D)the misery index. Answer: C Q2) In the United States,monetary policy is determined by A)the Federal Reserve. B)the president. C)private citizens. D)the Treasury Department. Answer: A Q3) During recessions,the unemployment rate ________ and output ________. A)rises; falls B)rises; rises C)falls; rises D)falls; falls Answer: A To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: The Measurement and Structure of the National Economy Available Study Resources on Quizplus for this Chatper 100 Verified Questions 100 Flashcards Source URL: https://quizplus.com/quiz/7700
Sample Questions Q1) What is the difference between nominal and real economic variables? Why do economists tend to concentrate on changes in real magnitudes? Answer: Nominal variables are in units of money,while real variables are in physical quantities of output.We measure nominal variables using current market prices and real variables using market prices in a given base year.Nominal variables may increase,but you don't know if the increase is due to higher prices and the same quantity,or a higher quantity with unchanged prices; real variables reflect just quantity changes.For the most part,real variables (consumption,investment,and the capital stock)affect each other in the economy,with lesser roles played by nominal variables (money supply,and price level). Q2) The U.S.inflation rate ________ in the 1960s and 1970s,________ in the 1980s,and ________ in the 1990s and 2000s. A)was steady; rose sharply; fell B)was steady; rose sharply; remained high C)rose; fell sharply; remained low D)rose; fell sharply; rose again Answer: C To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Productivity, Output, and Employment Available Study Resources on Quizplus for this Chatper 99 Verified Questions 99 Flashcards Source URL: https://quizplus.com/quiz/7701
Sample Questions Q1) An adverse supply shock,such as a reduced supply of raw materials,would A)increase the marginal product of labor. B)decrease the marginal product of labor. C)decrease the marginal product of capital,but have no effect on the marginal product of labor. D)not affect the marginal product of labor. Answer: B Q2) A decrease in the number of workers hired by a firm could result from A)an increase in the marginal product of labor. B)an increase in the marginal revenue product of labor. C)an increase in the real wage. D)a decrease in the real wage. Answer: C Q3) The ________ is the number of unemployed divided by the labor force and the ________ is the number of employed divided by the adult population. A)unemployment rate; employment rate B)unemployment rate; employment ratio C)unemployment ratio; participation rate D)discouraged worker ratio; employment rate Answer: B To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Consumption, Saving, and Investment Available Study Resources on Quizplus for this Chatper 98 Verified Questions 98 Flashcards Source URL: https://quizplus.com/quiz/7702
Sample Questions Q1) The fraction of additional current income that a person consumes in the current period is known as the A)consumption-smoothing motive. B)consumption deficit. C)saving rate. D)marginal propensity to consume. Q2) Three factors that cause interest rates among different financial instruments to vary are A)default risk,expected inflation,and taxability. B)default risk,current inflation,and taxability. C)default risk,maturity,and taxability. D)default risk,expected inflation,and maturity. Q3) Calculate the user cost of capital of a machine that costs $5,000 and depreciates at a rate of 25%,when the expected real interest rate is 5%. A)$150 B)$500 C)$1500 D)$5000 Q4) What is the marginal propensity to consume,and why is it always less than one? To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Saving and Investment in the Open Economy Available Study Resources on Quizplus for this Chatper 107 Verified Questions 107 Flashcards Source URL: https://quizplus.com/quiz/7703
Sample Questions Q1) The government of a small open economy announces a tax cut of $100 this year,combined with a tax increase of $110 next year,when the interest rate is 10%.What are the effects of this change on the world real interest rate,national saving,investment,and the current account balance in equilibrium when (a)Ricardian equivalence holds? (b)Ricardian equivalence does not hold? Q2) When future labor income falls in a large open economy,it causes the current account to ________ and investment to ________. A)fall; rise B)rise; remain unchanged C)fall; fall D)rise; rise Q3) What were the principal causes of the U.S.government budget deficits of the 1980s? How did these budget deficits lead to the twin deficits? According to the Ricardian equivalence proposition,should twin deficits arise as a result of tax cuts? Q4) How did the United States become a net debtor in the 1980s? Is our foreign debt a significant problem? Explain. Q5) What determines the interest rate in a small open economy? To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Long-Run Economic Growth Available Study Resources on Quizplus for this Chatper 81 Verified Questions 81 Flashcards Source URL: https://quizplus.com/quiz/7704
Sample Questions Q1) In the Solow model,if f(k)= 2k0.5,s = 0.1,n = 0.1,and d = 0.05,what is the value of f(k)at equilibrium? A)2/3 B)4/3 C)2 D)8/3 Q2) The bowed shape of the per-worker production function is caused by A)wealth effects that reduce labor supply. B)diminishing marginal productivity of capital. C)increasing marginal productivity of labor. D)increasing marginal productivity of capital. Q3) Over the past year,productivity grew 2%,capital grew 1%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.2 and 0.8,respectively,how much did output grow? A)1% B)2% C)3% D)4% Q4) What types of government policies can increase long-run living standards? To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Asset Market, Money, and Prices Available Study Resources on Quizplus for this Chatper 100 Verified Questions 100 Flashcards Source URL: https://quizplus.com/quiz/7705
Sample Questions Q1) If the nominal money supply grows 10%,the inflation rate is 6%,and the income elasticity of money demand is 1.0,then real income growth equals A)1%. B)2%. C)3%. D)4%. Q2) Which of the following is most likely to lead to a decrease of 10% in the nominal demand for money? A)An increase in real income of 5% B)A decrease in real income of 5% C)A decline of 10% in the price level D)An increase of 10% in the price level Q3) Why do people keep currency in their pockets when bank deposits pay interest? A)Because banks might steal your money. B)Because currency is more liquid. C)Because bank deposits lose value due to inflation. D)Because bank deposits lose value due to changes in interest rates. Q4) Define asset market equilibrium and state the asset market equilibrium condition. To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Business Cycles Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/7706
Sample Questions Q1) When aggregate economic activity is increasing,the economy is said to be in A)an expansion. B)a contraction. C)a peak. D)a turning point. Q2) Which group within the National Bureau of Economic Research officially determines whether the economy is in a recession or expansion? A)The G-4 B)The Business Cycle Dating Committee C)The Business Cycle Governors D)The Turning Point Group Q3) When aggregate economic activity is declining,the economy is said to be in A)a contraction. B)an expansion. C)a trough. D)a turning point. Q4) How has the severity and duration of business cycles changed over time in the United States? Q5) Define the following characteristics of business cycles: recurrence and persistence. 10 click on the resource link above. To view all questions and flashcards withPage answers,
Chapter 9: The IS-LM/AD-AS Model Available Study Resources on Quizplus for this Chatper 99 Verified Questions 99 Flashcards Source URL: https://quizplus.com/quiz/7707
Sample Questions Q1) An increase in labor supply would cause the IS curve to A)shift up and to the right. B)shift down and to the left. C)remain unchanged. D)shift up and to the right only if people face borrowing constraints. Q2) Which of the following changes shifts the SRAS curve up? A)A decrease in the labor force B)A decrease in the money supply C)An increase in government purchases D)An increase in firms' costs Q3) When all markets in the economy are simultaneously in equilibrium,we say A)markets are complete. B)markets are perfect. C)there is disequilibrium. D)there is general equilibrium. Q4) Looking only at the asset market,an increase in output would cause A)the LM curve to shift down and to the right. B)the LM curve to shift up and to the left. C)an increase in the real interest rate along the LM curve. D)a decrease in the real interest rate along the LM curve. Page 11 To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Classical Business Cycle Analysis Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/7694
Sample Questions Q1) The misperceptions theory was originally proposed by ________ and rigorously formulated by ________. A)Milton Friedman; Robert Lucas B)John Maynard Keynes; Robert Solow C)Edward Prescott; Robert King D)James Tobin; Greg Mankiw Q2) Suppose the money demand of individuals and firms depends on what they perceive to be the probabilities that the economy will expand or contract over the following six months.Suppose their money demand is given by the equation L = 0.5Y 100i + 20z,where z is the probability that the economy is expanding six months in the future.If z = 1,the economy will certainly be in recovery,if z = 0,the economy will certainly be in recession,and for z between 0 and 1 there is some uncertainty about the future state of the economy.Use a classical (RBC)model of the economy.If the Fed moves the money supply to target the price level,how does the money supply relate to the expected future state of the economy? Is this an example of reverse causation? Q3) Analyze the short-run and long-run effects of an unanticipated decrease in the money supply in the misperceptions model.Tell what happens to output,the price level,and the expected price level in both the short run and long run. To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Keynesianism: The Macroeconomics of Wage and Price Rigidity Available Study Resources on Quizplus for this Chatper 90 Verified Questions 90 Flashcards Source URL: https://quizplus.com/quiz/7695
Sample Questions Q1) The effort curve is A)horizontal,because work effort is independent of the real wage. B)negatively sloped,because of diminishing marginal returns to labor. C)positively sloped,because of the law of increasing cost. D)s-shaped,because a small increase in the real wage will increase work effort more at an intermediate wage than at a low wage or at a high wage. Q2) The gift exchange motive suggests that A)workers value benefits like health insurance more than job security. B)workers prefer a nice work environment,even if they must accept lower wages. C)workers who feel well treated will work harder and more efficiently. D)workers will shirk if they are paid a low wage. Q3) A firm is a price taker if it A)always sells its output at the industry-determined price. B)takes consumer demand into consideration in setting its price. C)takes its production costs into consideration in setting its price. D)uses a pricing strategy to gain market share. Q4) Describe the situation of the Japanese economy in the 1990s.What should the Japanese government have done differently,according to critics,to improve the economy?
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Q5) Why might firms pay an efficiency wage rather than a market-clearing wage? To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Unemployment and Inflation Available Study Resources on Quizplus for this Chatper 91 Verified Questions 91 Flashcards Source URL: https://quizplus.com/quiz/7696
Sample Questions Q1) Ball's research on disinflation across different countries found that A)costs of disinflation were smaller for rapid disinflation than for gradual disinflation. B)costs of disinflation were larger for rapid disinflation than for gradual disinflation. C)costs of disinflation were about the same for both rapid and gradual disinflation. D)costs of disinflation were smaller when the central bank had a strong inflation-fighting reputation. Q2) Both classicals and Keynesians agree that policymakers A)can exploit the Phillips curve in the short run. B)cannot exploit the Phillips curve in the short run. C)can keep the unemployment rate permanently below the natural rate by permanently running a high rate of inflation. D)cannot keep the unemployment rate permanently below the natural rate by permanently running a high rate of inflation. Q3) Describe the major costs of inflation,being sure to distinguish between anticipated and unanticipated inflation. To view all questions and flashcards with answers, click on the resource link above.
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Chapter 13: Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/7697
Sample Questions Q1) When the British pound rises in value relative to other currencies,then A)goods imported into Britain rise in price. B)British exports rise in price. C)neither British exports nor imports rise in price. D)both British exports and imports rise in price. Q2) Describe the effects of contractionary monetary policy by the domestic central bank on output,the real interest rate,and net exports in both the domestic and foreign country,using a Keynesian model in the short run.What happens in the long run? Show a diagram to illustrate the short-run and long-run effects in both countries. Q3) Currency unions are rare because A)they're to no one's advantage. B)countries are reluctant to give up having their own currencies. C)having flexible exchange rates has the same benefits and none of the costs. D)speculative attacks are likely to occur. Q4) Relative purchasing power parity occurs when A)purchasing power parity holds between every two countries. B)purchasing power parity only holds in recessions. C)the nominal exchange rate is constant. D)the real exchange rate is constant.
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Chapter 14: Monetary Policy and the Federal Reserve System Available Study Resources on Quizplus for this Chatper 111 Verified Questions 111 Flashcards Source URL: https://quizplus.com/quiz/7698
Sample Questions Q1) A bank run is A)a large-scale,panicky withdrawal of deposits from a bank. B)the transfer of funds from one bank to another. C)a situation when a bank borrows from the Fed's discount window. D)a situation in which a bank borrows at the Federal funds rate. Q2) The current chairman of the Board of Governors of the Federal Reserve System is [NOTE: YOU MAY NEED TO UPDATE THIS QUESTION.] A)Milton Friedman. B)Alan Greenspan. C)Ben Bernanke. D)Paul Volcker. Q3) Monetarists suggest doing which of the following? A)Maintain a steady growth rate of the money supply. B)Use fiscal policy to combat unemployment in the short run. C)Use monetary policy to combat unemployment in the long run. D)Use fiscal policy to combat inflation in the long run. Q4) Describe the strategy of inflation targeting.Why have many countries begun to use this strategy instead of targeting money growth? What are the advantages and disadvantages of inflation targeting?
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Chapter 15: Government Spending and Its Financing Available Study Resources on Quizplus for this Chatper 86 Verified Questions 86 Flashcards Source URL: https://quizplus.com/quiz/7699
Sample Questions Q1) The stimulus package of 2009 had the effect of A)causing higher rates of inflation to occur. B)giving new foreign aid to help less developed countries. C)significantly raising the debt to GDP ratio. D)reducing the primary government deficit. Q2) According to the Ricardian equivalence proposition,current deficits A)will not affect consumption or national saving. B)will affect consumption but not national saving. C)will affect national saving but not consumption. D)will affect both consumption and national saving. Q3) How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level,to still higher levels? Q4) The primary deficit is equal to A)outlays - tax revenues. B)government purchases + transfers + net interest - tax revenues. C)outlays + net interest - tax revenues. D)government purchases + transfers - tax revenues. Q5) What are the main reasons (give at least three)that Ricardian equivalence might not hold?
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