Question 1

Which of the following is a major macroeconomic goal?

Accepted Answer

A)   Low prices
B)   Fair prices
C)   Pure competition
D)   Low unemployment
E)   High prices

Question 2

The phase of the business cycle characterized by rising employment is called

Accepted Answer

A)   a recession
B)   a low-tax phase
C)   a high-inflation phase
D)   an expansion
E)   a depression

Question 3

If the unemployment rate is 6 percent,that means that 6 percent of

Accepted Answer

A)   the population is not working
B)   potential workers do not have jobs
C)   the workforce is searching for work but has not found a job at that time
D)   the individuals who are looking for work cannot find jobs
E)   the population is not looking for a job

Question 4

If two economists disagree on an issue and their disagreement is based on personal value judgments,then this controversy is a normative one.

Accepted Answer

A) True 
 B)False

Question 5

Aggregation is important in macroeconomics because

Accepted Answer

A)   it is a basic tool of reasoning
B)   we need a model with as much information as possible
C)   it allows us to comprehend the entire economy in all its detail
D)   it allows us to keep different markets separate in our minds
E)   we need to consider the entire economy at once with a model as simple as possible

Question 6

In cases of extreme annual inflation,the breakdown of the monetary system forces people to waste valuable time engaging in bartering.

Accepted Answer

A) True 
 B)False

Question 7

A laissez faire policy is one in which

Accepted Answer

A)   the government plays a major role in guiding economic activity
B)   the government prefers to control taxes rather than spending
C)   the government leaves things alone
D)   individuals rely on the government for guidance but not for active intervention in the economy
E)   businesses rely on the government for guidance but not for active intervention in the economy

Question 8

Microeconomics involves the analysis of smaller,less developed economies while macroeconomics is concerned with the analysis of larger developed economies.

Accepted Answer

A) True 
 B)False

Question 9

For the average living standard of a nation to rise,the only thing that needs to happen is for nominal GDP to increase faster than the price level.

Accepted Answer

A) True 
 B)False

Question 10

The 1978 Full Employment and Balanced Growth Act called for a target unemployment rate of

Accepted Answer

A)   0 percent
B)   5 percent
C)   1 percent
D)   2 percent
E)   4 percent

Question 11

-Refer to Figure 5-1 above.If the economy moves from point B to C on the graph,it is going through a(n)

Accepted Answer

A)   peak
B)   trough
C)   expansion
D)   slump
E)   recession

Question 12

Rapid economic growth,stable prices and __________ are the three important macroeconomic goals about which most economists agree.

Accepted Answer

A)   an unemployment rate of zero
B)   zero inflation
C)   full employment
D)   a high exchange rate
E)   low interest rates

Question 13

The occurrence of the Great Depression offered evidence that supported

Accepted Answer

A)   the classical theory of economics
B)   the need for the government to practice the policy of laissez faire
C)   the need for the government to control prices
D)   Congress to take action to stop rising prices
E)   the Keynesian idea that the government needed to guide the economy

Question 14

During the expansion phase of a business cycle

Accepted Answer

A)   employment and output are both at a peak
B)   employment and output are both rising
C)   employment is falling and output is rising
D)   unemployment is rising and output is falling
E)   employment is rising and output is falling

Question 15

Since 1959,the U.S.has experienced severe recessions in which three periods?

Accepted Answer

A)   1964-65,1981-82,and 1990-91
B)   1974-75,1981-82,and 2008-09
C)   1960-61,1974-75,and 2008-09
D)   1960-61,1981-82,and 2008-09
E)   1969-70,1981-82,and 2008-09

Question 16

The unemployment rate is usually zero except during recessions.

Accepted Answer

A) True 
 B)False

Question 17

In cases of extreme annual inflation,such as in thousands of percent or higher,people are no longer willing to hold currency or accept it from others.

Accepted Answer

A) True 
 B)False

Question 18

The term laissez faire can be translated

Accepted Answer

A)   "leave it alone"
B)   "make it equitable (fair) "
C)   "take an active role"
D)   "markets work"
E)   "free of problems"

Question 19

An understanding of macroeconomics is valuable because it can help

Accepted Answer

A)   in making purchase decisions
B)   us to understand the forces that determine how fast the economy grows
C)   us to understand why some firms earn more economic profit than others
D)   to minimize the amount of tax an individual owes
E)   minimize the opportunity cost of making poor decisions

Question 20

Periodic fluctuations in GDP are called business cycles.

Accepted Answer

A) True 
 B)False

Exam 5: What Macroeconomics Tries to Explain

Rapid economic growth,stable prices and __________ are the three important macroeconomic goals about which most economists agree.

Correct AnswerverifiedShow Answer

The 1978 Full Employment and Balanced Growth Act called for a target unemployment rate of

Correct AnswerverifiedShow Answer

-Refer to Figure 5-1 above.If the economy moves from point B to C on the graph,it is going through a(n)

Correct AnswerverifiedShow Answer

Which of the following is a major macroeconomic goal?

Correct AnswerverifiedShow Answer

Since 1959,the U.S.has experienced severe recessions in which three periods?

Correct AnswerverifiedShow Answer

In cases of extreme annual inflation,the breakdown of the monetary system forces people to waste valuable time engaging in bartering.

Correct AnswerverifiedShow Answer

In cases of extreme annual inflation,such as in thousands of percent or higher,people are no longer willing to hold currency or accept it from others.

Correct AnswerverifiedShow Answer

The term laissez faire can be translated

Correct AnswerverifiedShow Answer

The unemployment rate is usually zero except during recessions.

Correct AnswerverifiedShow Answer

During the expansion phase of a business cycle

Correct AnswerverifiedShow Answer

The phase of the business cycle characterized by rising employment is called

Correct AnswerverifiedShow Answer

If the unemployment rate is 6 percent,that means that 6 percent of

Correct AnswerverifiedShow Answer

Microeconomics involves the analysis of smaller,less developed economies while macroeconomics is concerned with the analysis of larger developed economies.

Correct AnswerverifiedShow Answer

A laissez faire policy is one in which

Correct AnswerverifiedShow Answer

For the average living standard of a nation to rise,the only thing that needs to happen is for nominal GDP to increase faster than the price level.

Correct AnswerverifiedShow Answer

Periodic fluctuations in GDP are called business cycles.

Correct AnswerverifiedShow Answer

If two economists disagree on an issue and their disagreement is based on personal value judgments,then this controversy is a normative one.

Correct AnswerverifiedShow Answer

An understanding of macroeconomics is valuable because it can help

Correct AnswerverifiedShow Answer

Aggregation is important in macroeconomics because

Correct AnswerverifiedShow Answer

The occurrence of the Great Depression offered evidence that supported

Correct AnswerverifiedShow Answer

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