Principles of Macroeconomics Test
Bank
Course Introduction
Principles of Macroeconomics introduces students to the fundamental concepts and theories that explain the behavior of the economy as a whole. Topics include national income determination, economic growth, unemployment, inflation, monetary and fiscal policies, and the role of government in managing economic stability. Through real-world examples and analytical tools, students learn how macroeconomic indicators are measured and interpreted, and how economic policies impact both domestic and global economies. This course provides a foundation for understanding key issues such as business cycles, international trade, and economic development.
Recommended Textbook
Understanding Economics 7th Edition by Mark Lovewell
Available Study Resources on Quizplus
15 Chapters
935 Verified Questions
935 Flashcards
Source URL: https://quizplus.com/study-set/2972
Page 2
Chapter 1: The Economic Problem
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/59106
Sample Questions
Q1) Which of the following is a normative statement?
A)The temperature is high today.
B)The humidity is high today.
C)It is too hot to play tennis today.
D)It will cool off later this evening.
E)I think it will be hot today.
Answer: C
Q2) The achievement of full employment frequently conflicts with the economic goal of:
A)economic efficiency
B)economic growth
C)income equity
D)a viable balance of payments
E)price stability
Answer: E
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Demand and Supply
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/59099
Sample Questions
Q1) Equilibrium price will be:
A)$5
B)$4
C)$3
D)$2
E)$1
Answer: D
Q2) Digital music players and digital music are:
A)free products
B)substitute products
C)independent products
D)inferior products
E)complementary products
Answer: E
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Elasticity
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/59098
Sample Questions
Q1) A drop in a town's average monthly incomes from $2000 to $1000 causes sales of canned meat to rise from 10 000 to 15 000 cans.The numerical value of the income elasticity of this item is:
A)-1.0
B)1.0
C)-0.6
D)0.6
E)1.67
Answer: C
Q2) The price elasticity of supply measures how:
A)easily labour and capital can be substituted for one another in the production process
B)responsive the quantity supplied of X is to changes in the price of X
C)responsive the quantity supplied of Y is to changes in the price of X
D)responsive quantity supplied is to a change in incomes
E)responsive the quantity supplied of X is to changes in resource prices
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Costs of Production
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/59097
Sample Questions
Q1) Suppose your firm is in a range of production where it is experiencing increasing returns to scale.Knowing this,we can predict that:
A)the long-run average cost curve is upward-sloping
B)the firm operates within a primary industry
C)the method of production used is characterized by the repetition of exactly the same tasks
D)production techniques may include the use of assembly lines
E)the long-run average cost curve is horizontal
Q2) Average variable cost:
A)may be found for any output level by adding average cost and average fixed cost
B)decreases as output rises
C)increases as output rises
D)equals fixed costs divided by total product
E)graphs as a saucer-shaped curve
Q3) One possible explanation for increasing returns to scale is:
A)the use of more inputs in production
B)a decrease in the price of inputs
C)an increase in the price of inputs
D)increased specialization in production tasks
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Perfect Competition
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/59096
Sample Questions
Q1) A perfectly competitive business's demand curve is a(n):
A)downward-sloping straight line reflecting the law of demand
B)straight line parallel to the horizontal axis
C)upward-sloping straight line reflecting the constant value of price as output increases
D)straight line parallel to the vertical axis
E)downward-sloping convex curve
Q2) A perfectly competitive business's average revenue equals:
A)its total revenue
B)its marginal revenue divided by price
C)total revenue divided by price
D)its marginal revenue
E)its price divided by total revenue
Q3) Entry barriers can be the result of:
A)inelastic demand
B)legal obstacles
C)perfectly competitive markets
D)the availability of close substitutes
E)perfectly elastic demand
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Monopoly and Imperfect Competition
Available Study Resources on Quizplus for this Chatper
78 Verified Questions
78 Flashcards
Source URL: https://quizplus.com/quiz/59095
Sample Questions
Q1) Based on this table,if Doug and Alf both stay silent,then they:
A)each receive a sentence of one year
B)each receive a sentence of 4 years
C)each receive a sentence of 9 years
D)are both set free
E)each receive a sentence of 13 years
Q2) If this industry is perfectly competitive,the profit-maximizing price and quantity will be:
A)P<sub>3</sub> and Q<sub>3</sub>
B)P<sub>1</sub> and Q<sub>1</sub>
C)P<sub>2</sub> and Q<sub>2</sub>
D)P<sub>1</sub> and Q<sub>3</sub>
E)indeterminate on the basis of the information given
Q3) This business will realize an economic:
A)loss of $320
B)loss of $280
C)profit of $600
D)loss of $300
E)profit of $480
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Economic Welfare and Income Distribution
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/59094
Sample Questions
Q1) If agricultural price supports are combined with an output restriction,then there is:
A)a transfer of consumer surplus to producer surplus due to the higher price
B)a transfer of producer surplus to consumer surplus due to the higher price
C)a transfer of producer surplus to consumer surplus due to the lower price
D)a transfer of consumer surplus to producer surplus due to the lower price
E)no change in the consumer surplus or producer surplus
Q2) Which of the following statements is correct?
A)Private goods yield direct benefits to the purchaser and are financed by government.
B)Public goods yield widespread spillover benefits and are purchased by government with tax revenues.
C)Public goods are bought voluntarily out of private incomes and yield no significant spillover benefits.
D)Public goods are bought voluntarily out of private incomes and yield widespread spillover benefits.
E)Private goods are often public goods as well.
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Measures of Economic Activity
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/59093
Sample Questions
Q1) The amount of after-tax income received by households is measured by:
A)GDP
B)personal consumption expenditures
C)GNI
D)GDP plus transfer payments
E)DI
Q2) If depreciation exceeds gross investment,it can be concluded that:
A)GDP is rising, but GNI is declining
B)net investment is negative
C)the economy is importing more than it is exporting
D)the economy's capital stock is expanding
E)GNI is declining, but GDP is rising
Q3) Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:
A)$110
B)$30
C)$40
D)$70
E)-$40
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Inflation and Unemployment
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/59092
Sample Questions
Q1) Recently a labour union argued that the standard of living of its members was falling.A critic of the union argued that this could not possibly be true,because the union had been acquiring increases in the nominal incomes of its members through collective bargaining.Is the critic correct?
A)Yes, because when you have an increase in nominal income, your standard of living automatically increases.
B)No, because real income may fall if price increases are proportionally greater than the increases in nominal income.
C)No, because real income may fall if price increases are proportionally less than the increases in nominal income.
D)Yes, because real income may fall if price increases are proportionally less than the increases in nominal income.
E)Yes, because real income may fall if price increases are proportionally greater than the increases in nominal income.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Economic Fluctuations
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/59105
Sample Questions
Q1) A recessionary gap can best be described as the amount by which:
A)equilibrium output exceeds potential output
B)equilibrium output falls short of potential output
C)injections exceed withdrawals at the level of potential output
D)real expenditures exceed potential output
E)withdrawals exceed injections at the level of potential output
Q2) The factors that affect the amounts that consumers,businesses,government,and foreigners wish to purchase at each price level are:
A)the sole determinants of personal income
B)aggregate supply factors
C)aggregate demand factors
D)the sole determinants of the equilibrium price level and equilibrium real output
E)the economy's injections and withdrawals
Q3) Which of the following would not shift the aggregate supply curve?
A)an increase in labour productivity
B)a decline in the price of imported oil
C)a decline in business taxes
D)an increase in the price level
E)a rise in wages
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/59104
Sample Questions
Q1) Which of the following statements is not correct?
A)Provincial and territorial deficits were lower in the early 2010s than they were in the early 2000s.
B)There is a tendency for the public debt to grow during recessions.
C)The public debt has usually increased during wartime.
D)About a fifth of all Canadian government debt is held by foreigners.
E)Public debt fell between the mid-1990s and mid-2000s.
Q2) When equilibrium occurs at point d,the economy is exhibiting a(n):
A)recessionary gap of cd, which calls for expansionary fiscal policy
B)recessionary gap of cd, which calls for contractionary fiscal policy
C)inflationary gap of cd, which calls for expansionary fiscal policy
D)inflationary gap of cd, which calls for contractionary fiscal policy
E)state in which there is no recessionary gap or inflationary gap
Q3) Before the shift of the aggregate demand curve from AD<sub>0</sub> to AD<sub>1</sub>,the economy is facing a(n):
A)recessionary gap of ef
B)recessionary gap of de
C)inflationary gap of cd
D)inflationary gap of de
E)state where there is no recessionary gap or inflationary gap
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Money
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/59103
Sample Questions
Q1) Stock market price quotations best exemplify money serving as a(n):
A)store of purchasing power
B)an income-earning asset
C)means of exchange
D)index of satisfaction
E)standard of deferred payments
Q2) The asset demand for money:
A)varies directly with the interest rate
B)varies inversely with the interest rate
C)varies inversely with the level of real output
D)varies inversely with the price level
E)varies directly with the amount of money demanded for transactions purposes
Q3) As monetarists view the equation of exchange:
A)V changes erratically, in that it may either rise or fall in response to a given change in M
B)V is quite stable
C)V usually changes in the same direction of any given change in M
D)V usually changes in the opposite direction of any given change in M
E)V changes in the same direction as M when M is increasing, but in the opposite direction when M is decreasing
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Monetary Policy
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/59102
Sample Questions
Q1) The money supply (M),the interest rate (r),and aggregate demand (AD)are related such that a(n):
A)reduction in M reduces r and the reduction in r increases AD
B)reduction in M increases r and the increase in r decreases AD
C)increase in M increases r and the increase in r decreases AD
D)increase in M reduces r and the reduction in r decreases AD
E)increase in M increases r and the increase in r increases AD
Q2) If the demand for money increases and the monetary authorities want interest rates to remain unchanged,which of the following would be the most appropriate policy?
A)recall currency from circulation
B)reduce tax rates
C)buy bonds in the open market
D)raise the target overnight rate
E)sell bonds in the open market
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: The Foreign Sector
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/59101
Sample Questions
Q1) Assume that,under a system of flexible exchange rates,Mexicans decide to increase their financial investment in Canada.As a result:
A)Canadians will want to buy fewer Mexican products at the new exchange rate
B)the peso and the Canadian dollar will both depreciate in value
C)the peso and the Canadian dollar will both appreciate in value
D)the peso will depreciate and the Canadian dollar will appreciate in value
E)there will be no change in the values of the two currencies
Q2) If the equilibrium exchange rate changes so that more British pounds are required to buy a Canadian dollar,then:
A)Canadians will buy fewer British goods and services
B)the pound has appreciated in value
C)fewer Canadian goods and services will be demanded by the British
D)the dollar has depreciated in value
E)the Canadian interest rate necessarily rises
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Foreign Trade
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/59100
Sample Questions
Q1) If Paul can mow a lawn in 1 hours and weed a vegetable garden in 3 hours and Mary can mow a lawn in 2 hours and weed a vegetable garden in 1 hour,then:
A)on the basis of absolute advantage Mary should mow the lawn and Paul should weed the vegetable garden
B)on the basis of absolute advantage Paul should mow the lawn and Mary should weed the vegetable garden
C)on the basis of comparative advantage Mary should mow the lawn and Paul should weed the vegetable garden
D)on the basis of comparative advantage Paul should mow the lawn and Mary should weed the garden
E)Paul and Mary do not have an absolute or comparative advantage in either activity
Q2) The terms of trade show:
A)the ratio at which regions or nations exchange two products
B)how the gains from trade can be shared equally
C)the value of one nation's currency in terms of another nation's currency
D)the opportunity cost of one product in terms of another in a single country
E)the potential losses from trade
To view all questions and flashcards with answers, click on the resource link above.
Page 17