Principles of Macroeconomics Final Exam
Course Introduction
Principles of Macroeconomics introduces students to the fundamental concepts and tools used to analyze the economy as a whole. The course explores key topics such as national income, economic growth, unemployment, inflation, and the role of government policy in influencing economic performance. Students will learn how aggregate demand and aggregate supply determine output and prices, examine the impact of fiscal and monetary policies, and consider macroeconomic issues in both domestic and global contexts. By the end of the course, students will be equipped with the analytical skills needed to interpret macroeconomic data and understand the broader economic environment.
Recommended Textbook
Macroeconomics 14th Canadian Edition by Campbell R. McConnell
Available Study Resources on Quizplus
18 Chapters
3156 Verified Questions
3156 Flashcards
Source URL: https://quizplus.com/study-set/3441 Page 2
Chapter 1: Limits, Alternatives, and Choices
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/68350
Sample Questions
Q1) When an economy is operating with maximum efficiency,the production of more of commodity A will mean the production of less of commodity B because:
A) of the law of decreasing opportunity costs.
B) material wants are insatiable.
C) resources are limited.
D) resources are not specialized and are imperfectly substitutable.
Answer: C
Q2) A country can achieve some combination of goods outside its production possibilities curve by:
A) idling some of its resources.
B) specializing and engaging in international trade.
C) buying the debt (bonds and stocks)of foreign nations.
D) producing more consumption goods and fewer capital goods.
Answer: B
Q3) Recessions are characterised by points that are not attainable on the production possibilities curve.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: The Market System and the Circular Flow
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/68340
Sample Questions
Q1) For whom is a given mix of goods and services to be produced? How,in other words,is the product to be distributed among people when such commodities and services are available? In a market economy,this problem is resolved primarily in the:
A) public sector through the mechanism of central planning.
B) business sector through the mechanism of advertising.
C) private sector through the earning and spending of income.
D) money market through borrowing and saving by households and businesses.
Answer: C
Q2) In a market system,well-defined property rights are important because they:
A) increase unnecessary investment.
B) limit destructive economic growth.
C) create economic problems.
D) encourage economic activity.
Answer: D
Q3) In a capitalistic economy:
A) consumers can never be sovereign.
B) markets can never be competitive.
C) there is a reliance on the market system.
D) the government owns the means of production.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Demand, Supply, and Market Equilibrium
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/68339
Sample Questions
Q1) As a result of a decrease in the price of a hamburger,consumers buy more hamburgers and fewer frankfurters.This is an illustration of:
A) consumer sovereignty.
B) the income effect.
C) the substitution effect.
D) changing tastes and preferences.
Answer: C
Q2) With a downward sloping demand curve and an upward sloping supply curve for a product,an increase in incomes will:
A) increase equilibrium price and quantity if the product is a normal good.
B) decrease equilibrium price and quantity if the product is a normal good.
C) have no effect on equilibrium price and quantity.
D) reduce the quantity demanded,but not shift the demand curve.
Answer: A
Q3) An increase in the supply of product X,with demand held constant,will increase the price of product X.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Market Failures: Public Goods and Externalities
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/68338
Sample Questions
Q1) Cost-benefit analysis is frequently difficult to apply because it is difficult to quantify the full benefits of a public good or service.
A)True
B)False
Q2) A public good:
A) is not subject to rivalry and excludability.
B) entails no externalities.
C) is subject to rivalry and excludability.
D) can not be produced by private firms.
Q3) For which one of the following would we need to sum individual demand curves vertically to obtain the total demand curve?
A) frozen yogurt
B) bubble gum
C) microwave popcorn
D) courts of law
Q4) There is a positive relationship between equilibrium price and the amount of producer surplus.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Governments Role and Government Failure
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/68337
Sample Questions
Q1) Chronic budget deficits can be attributed to:
A) unfunded liabilities.
B) voters wanting government programs but not wanting to pay taxes.
C) inappropriate monetary policy.
D) state budget laws.
Q2) The principal-agent problem is a problem for the private sector but does not apply to political decision making.
A)True
B)False
Q3) Regulatory capture often occurs because of which of the following?
A) Government officials want stronger control over industry regulation.
B) Nearly everyone with expertise works in the regulated industry.
C) Patent law allows firms to gain monopoly power easily and therefore control a market.
D) Consumer groups are effective at lobbying the government for industry regulation.
Q4) Changes in tax rates are a form of monetary policy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: An Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/68336
Sample Questions
Q1) The higher is the current level of saving:
A) the higher is the current level of investment and higher the future level of consumption.
B) the lower is the current level of investment and lower the future level of consumption.
C) the higher is the current level of investment and lower the future level of consumption.
D) the lower is the current level of investment and higher the future level of consumption.
Q2) Knowing that in the real world,the demand for goods and services could change unexpectedly,firms would attempt to deal with it by:
A) producing different levels of goods and services according to the changes in demand.
B) switching to the production of another product in the short-run.
C) maintaining an inventory.
D) closing down the production in the short-run with the hope that the situation would change in the future.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Measuring the Economys Output
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/68335
Sample Questions
Q1) GDP includes:
A) neither intermediate nor final goods.
B) both intermediate and final goods.
C) intermediate,but not final,goods.
D) final,but not intermediate,goods.
Q2) The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940);personal consumption expenditures ($4,920);imports ($170);exports ($133);gross investment ($640).What is GDP in this economy?
A) $6,463 billion
B) $6,500 billion
C) $6,537 billion
D) $6,633 billion
Q3) Welfare payments to families with dependent children are included in GDP.
A)True
B)False
Q4) If real GDP is 50 and nominal GDP is 100,the GDP price index is 200.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Economic Growth
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/68334
Sample Questions
Q1) The slowdown of a nation's rate of productivity growth may:
A) slow the growth of its standard of living.
B) contribute to deflation.
C) make its industries more competitive in world markets.
D) reduce real wages.
Q2) Economies of scale indicates:
A) the idea that proprietorships are less bureaucratic and therefore more efficient than corporations.
B) public investments in highways,schools,utilities,and such.
C) the fact that large producers may be able to use more efficient technologies than smaller producers.
D) the reallocation of labour from less-productive to more-productive uses.
Q3) Assume that in 2012 the nominal GDP was $350 billion and in 2013 it was $375 billion.On the basis of this information we:
A) cannot make a meaningful comparison of the economy's performance in 2013 relative to 2012.
B) can conclude that the economy was achieving real economic growth.
C) can conclude that real GDP was higher in 2012 than in 2013.
D) can conclude that real GDP was lower in 2012 than in 2013.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Business Cycles, Unemployment, and Inflation
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/68333
Sample Questions
Q1) If the actual GDP is less than potential GDP:
A) potential GDP will fall.
B) the price level will rise.
C) investment spending will fall.
D) the actual unemployment rate will be higher than the natural unemployment rate.
Q2) Refer to the above information.The unemployment rate is:
A) 18.8 percent.
B) 12.5 percent.
C) 16.7 percent.
D) 25 percent.
Q3) Unanticipated inflation:
A) hurts people whose income is fixed.
B) hurts borrowers and helps lenders.
C) helps people whose income is fixed.
D) helps savers.
Q4) Unanticipated inflation benefits creditors and savers.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Basic Macroeconomic Relationships
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/68349
Sample Questions
Q1) As aggregate income decreases,the APC:
A) and APS will both increase.
B) will decrease,but the APS will increase.
C) will increase,but the APS will decrease.
D) and APS will both decrease.
Q2) The MPC can be defined as the fraction of a:
A) change in income which is not spent.
B) change in income which is spent.
C) given total income which is not consumed.
D) given total income which is consumed.
Q3) Dissaving means:
A) the same thing as disinvesting.
B) that households are spending in excess of their current incomes.
C) that saving and investment are equal.
D) that disposable income is less than zero.
Q4) The multiplier:
A) varies directly with the slope of the investment-demand schedule.
B) is unrelated to the slope of the saving schedule.
C) will be greater,the smaller the slope of the saving schedule.
D) will be greater,the steeper the slope of the saving schedule.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: The Aggregate Expenditures Model
Available Study Resources on Quizplus for this Chatper
230 Verified Questions
230 Flashcards
Source URL: https://quizplus.com/quiz/68348
Sample Questions
Q1) Refer to the above information.The addition of a $100 billion lump-sum tax:
A) reduces the MPC and increases the multiplier.
B) increases the MPC and decreases the multiplier.
C) increases both the MPC and the multiplier.
D) has no effect on either the MPC or the multiplier.
Q2) If the MPC is .9,a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.
A)True
B)False
Q3) Refer to the above table.If net exports increased by $10 billion at each level of GDP,the equilibrium real GDP would be:
A) $550
B) $600
C) $650
D) $700
Q4) In the aggregate expenditures model,a reduction in taxes may:
A) increase saving.
B) increase real GDP.
C) reduce unemployment.
D) do all of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Aggregate Demand and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
229 Verified Questions
229 Flashcards
Source URL: https://quizplus.com/quiz/68347
Sample Questions
Q1) An increase in aggregate demand is most likely to be caused by a decrease in:
A) the wealth of consumers.
B) consumer confidence.
C) business confidence.
D) the tax rates on household income.
Q2) In terms of aggregate supply,the difference between the long run and the short run is that in the long run:
A) the price level is variable.
B) employment is variable.
C) real output is variable.
D) nominal wages and other input prices are variable.
Q3) The aggregate expenditures model and the aggregate demand curve can be reconciled because,other things being equal,in the aggregate expenditures model:
A) changes in the price level have no effect on the equilibrium level of GDP.
B) an increase in the price level increases the real value of wealth.
C) the level of aggregate expenditures and therefore the level of real GDP vary inversely with the price level.
D) the level of aggregate expenditures and therefore the level of real GDP vary directly with the price level.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Fiscal Policy, Deficits, Surpluses, and Debt
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/68346
Sample Questions
Q1) Which of the following best describes the notion of a "political business cycle"?
A) Politicians are more willing to cut taxes and increase government spending than they are to do the reverse.
B) Fiscal policy will result in alternating budget deficits and surpluses.
C) Politicians will use fiscal policy to cause output,real incomes,and employment to be rising prior to elections.
D) Despite good intentions,various timing lags will cause fiscal policy to reinforce the business cycle.
Q2) If the full-employment surplus as a percentage of GDP is zero in one year,and 2 percent of GDP the next year,it can be concluded that:
A) fiscal policy is expansionary.
B) fiscal policy is contractionary.
C) the federal government is borrowing money.
D) the federal government is lending money.
Q3) If taxation becomes more progressive,the built-in stability in the economy will increase.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Money, Banking, and Money Creation
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/68345
Sample Questions
Q1) Refer to the above information.Which of the following is not included in any of the official definitions of money?
A) item 1
B) items 1 and 4
C) no item
D) item 5
Q2) A chartered bank's demand-deposit liabilities can be calculated by:
A) dividing its desired reserve by its excess reserves.
B) dividing its desired reserve by the reserve ratio.
C) multiplying its desired reserve by its excess reserves.
D) multiplying its desired reserve by the reserve ratio.
Q3) Actual cash reserves equal desired reserves plus excess reserves.
A)True
B)False
Q4) Chartered banks create money in the form of chequable deposits when they make loans.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Interest Rates and Monetary Policy
Available Study Resources on Quizplus for this Chatper
238 Verified Questions
238 Flashcards
Source URL: https://quizplus.com/quiz/68344
Sample Questions
Q1) In the consolidated balance sheet of the Bank of Canada,loans to chartered banks are:
A) a liability of the Bank of Canada and chartered banks.
B) an asset of the Bank of Canada and chartered banks.
C) a liability of the Bank of Canada and an asset for chartered banks.
D) an asset of the Bank of Canada and a liability for chartered banks.
Q2) Which line in the above graph would best reflect the slope of the transactions demand for money curve?
A) line 1
B) line 2
C) line 3
D) line 4
Q3) The strengths of monetary policy compared to fiscal policy are generally thought to include all of the following except greater:
A) speed.
B) flexibility.
C) impact on taxation.
D) isolation from political pressure.
To view all questions and flashcards with answers, click on the resource link above.
17
Chapter 16: Long-Run Macroeconomic Adjustments
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/68343
Sample Questions
Q1) The Laffer Curve underlies the contention that lower tax rates need not reduce tax revenues.
A)True
B)False
Q2) Refer to the above diagram.If tax rates are between b and d,then supply-side economists are of the opinion that a(n):
A) increase in tax revenues will increase tax rates.
B) decrease in tax rates will increase tax revenues.
C) increase in tax rates will increase tax revenues.
D) decrease in tax revenues will decrease tax rates.
Q3) In the long-run,any inflation that occurs in the economy is the result of:
A) the reduction in the rate of increase in money supply.
B) the growth of aggregate supply.
C) the growth of aggregate demand.
D) the growth of real GDP.
Q4) Adverse aggregate supply shocks would result in:
A) a lower rate of inflation and a higher rate of unemployment.
B) a higher rate of inflation and a lower rate of unemployment.
C) a lower rate of inflation and a lower rate of unemployment.
D) a higher rate of inflation and a higher rate of unemployment.
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: International Trade
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/68342
Sample Questions
Q1) Which of the following is one of the trade liberalizations proposed by the World Trade Organization (WTO)?
A) better use of strategic trade policy
B) more widespread use of diversification-for-stability as the case for protection
C) increase in the use of quotas to replace tariffs to improve economic efficiency.
D) reduction in agricultural subsidies that distort trade.
Q2) Which is not a commonly heard argument for protectionism?
A) A strong national defense requires that some military products be produced domestically.
B) Infant industries need short-run,but not long-run,protection from foreign competition.
C) Specialization along the lines of comparative advantage can lead to greater economic instability for a nation.
D) When other nations' economies grow they typically import fewer goods and services.
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 18: Exchange Rates and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/68341
Sample Questions
Q1) Refer to the above data.Zabella's balance on capital account shows a:
A) deficit of $10 billion.
B) surplus of $5 billion.
C) deficit of $28 billion.
D) surplus of $13 billion.
Q2) Which of the following is not included in the current account of a nation's balance of payments?
A) its merchandise exports
B) its merchandise imports
C) its net investment income
D) its capital inflows
Q3) A deficit on the current account:
A) normally causes a surplus on the capital account.
B) normally causes a deficit on the capital account.
C) has no relationship to the capital account.
D) means that a nation is not making any international transfers.
Q4) The sum of a nation's current account balance and its capital account balance in any year is always equal to zero.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.