Chapter 12
C
Q: . Historical evidence shows that for determining a country's living standards, over: A. an extended period, long-run growth is just as important as the business cycle. B. short periods, long-run growth is less important than the business cycle. C. an extended period, long-run growth is much more important than the business cycle. D. long periods, it is difficult to determine whether the business cycle or long-run growth is more important.
B
Q: An economic recovery encompasses all of the following EXCEPT: A. a short-run increase in aggregate production. B. the end of the business cycle. C. a time of increasing employment. D. sustained economic growth.
A
Q: If a country has a trade deficit, does it indicate that the country has a serious problem? a. No. Trade deficits occur when a country's investment spending is higher than its level of saving. b. Yes. Trade deficits occur when a country does not have a comparative advantage in production. c. Yes. Trade deficits occur when a country has a high budget surplus. d. Yes. Trade deficits occur when a country has low productivity.
A
Q: If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as: A. the paradox of thrift. B. the quantity theory. C. the crowding-out theory. D. the permanent income hypothesis.
B
Q: If an economy is open: a. anyone can immigrate to the country. b. trading with other countries makes up a portion of its economy. c. its real GDP will drop. d. it does not trade with other countries.
D
Q: If the value of a country's exports is greater than the value of its imports, it is: A. likely to find its investment spending greater than its level of saving. B. running a trade deficit. C. in an economic contraction. D. running a trade surplus.
D
Q: In a typical business cycle, the trough is immediately followed by the: A. depression. B. peak. C. recession. D. expansion.
C
Q: In the long run the overall price level is mainly determined by: A. the business cycle. B. the government's budgetary policies. C. changes in the money supply. D .the price of crude oil.
B
Q: Keynesian economics stressed: A. the long run. B. the importance of total spending. C. that the Depression should run its course to bring down the high cost of living. D. the self-correcting power of free markets.
A
Q: Long-run economic growth is best measured by: A. a sustained rise in the production of goods and services. B. trade surpluses in the long run. C. the growth of the money supply. D. the rate of private saving.
C
Q: Look at the figure The Business Cycle. Point B on this graph shows a(n): A. expansion. B. recession. C. trough. D. peak.
C
Q: Monetary policy attempts to affect the overall level of spending through: A. changes in tax policy or government spending. B. changes in the inflation rate. C. changes in the quantity of money and the interest rate. D. discretionary regulation of profits and wages.
D
Q: One normally expects that unemployment increases while aggregate output and aggregate incomes decrease during: A .an expansion. B. the peak of the business cycle. C. government intervention. D. a recession.
B
Q: One of the issues of importance to macroeconomists is: A. the behavior of individuals and their allocation of income. B. understanding how living standards change over time. C. how firms determine the profit-maximizing level of output. D. the behavior of individual markets.
B
Q: One role of government policy is: A. to avoid Keynesian economics. B. to attempt to manage short-run macroeconomic fluctuations. C. to provide insurance to cover damages from macroeconomic fluctuations. D. to subsidize private insurance for businesses to cover harm from macroeconomic fluctuations.
B
Q: The relation between a country's level of saving and investment: A. pertains to trade surpluses only B. affects its trade balances. C. has often been used to correct a trade deficit but not a trade surplus. D. does not affect an open economy.
B
Q: The trade balance is the difference between the value of: A. the exchange rates of two countries that are engaged in international trade. B. exports and the imports. C. the trade deficit and the budget deficit. D. the national debt and the foreign debt.
C
Q: The trough of the business cycle: A. comes before the recession phase. B. comes right after the expansion phase. C. is a temporary minimum level of real GDP. D. is a temporary maximum level of real GDP.
C
Q: Which is most likely a macroeconomic, not microeconomic, question? A. Are consumers buying more bottled water and less fruit juice? B. Should a tax be levied on each ton of carbon dioxide a factory emits? C. Is the national unemployment rate rising or falling? D. Are salaries for nurses rising or falling?
A
Q: Which of the following is TRUE? A. Inflation means an increase in the overall level of prices. B. During inflation most people enjoy an increase in their standard of living even if their wages don't increase. C. Inflation was a problem for the first time in the recession of 1929-1933. D. Deflation refers to a decrease in prices only in the energy and transportation sectors.
