Macro Economics

. In 2013, about what percentage of goods and services sold in the United States was imported? a. 5% b. 16% c. 22% d. 88%

16%

. In which of the following years was a tax cut ineffective in stimulating aggregate demand? a. 1964 b. 1975 c. 1981 d. 1999

1975

Which of the following should be subtracted while calculating aggregate demand of the U.S.? a. Pakistan's purchase of F-16s from the U.S. b. Computers imported by China from the U.S. c. Memorabilia purchases in the U.S. by a foreign tourist. d. A U.S. firm's purchase of German machinery.

A U.S. firm's purchase of German machinery.

China is the world's largest wheat producer. If China's domestic product grew by eleven percent in the previous year, it implies that a. production of wheat grew by more than eleven percent. b. products other than wheat grew by less than eleven percent. c. China's overall output grew by eleven percent. d. production of wheat is declining in China.

China's overall output grew by eleven percent.

If a U.S. citizen buys a car produced in Germany, this transaction will add to a. U.S. aggregate demand. b. U.S. aggregate supply. c. German aggregate demand. d. German imports

German aggregate demand

Melissa purchases shares in a government bond mutual fund. Is this included in the aggregate demand component "Investment"? a. Yes, if it is a domestic mutual fund. b. Yes, if the purchase is made out of current income. c. No, unless the funds are deposited in a domestic financial institution. d. No, it would never be included.

No, it would never be included.

Are money and income the same thing? a. No, money is measured at a point in time and income is measured for a period of time. b. No, money is measured for a period of time and income is measured at a point in time. c. Yes, they are just measured in different ways. d. Yes, the only difference is real versus nominal.

No, money is measured at a point in time and income is measured for a period of time

In a market system, the most dangerous types of bankruptcies involve a. industrial monopolies. b. multinational firms. c. employment agencies. d. financial institutions.

financial institutions.

The principal difference between income and money is that income is a ____ and money is a ____. a. schedule, curve b. point, line c. stock, flow d. flow, stock

flow, stock

Which of the following phrases indicates that income is being spoken of? a. Tuesday, at 12:30 p.m. b. July 14, 1948 c. from January 1 to March 30 d. yesterday afternoon

from January 1 to March 30

Governments can affect the level of aggregate demand in a direct way by changing a. government spending. b. exports. c. taxes. d. transfer payments.

government spending.

. Bankers' business decisions effect the money supply because bankers a. are respected men and women. b. have the ability to create money. c. use a special accounting system developed by the Federal Reserve Board. d. All of the above are correct.

have the ability to create money.

To an economist, the cost of a college education a. includes the income that the student could have earned during the time spent in college. b. can be measured solely by the dollar cost of tuition, books, and other fees. c. includes only the cost of schooling, not the cost of housing and food. d. excludes financial aid in computation of the cost of schooling. e. All of the above are correct.

includes the income that the student could have earned during the time spent in college.

An increase in the capital stock would be expected to a. decrease the labor force. b. increase the level of output. c. decrease real GDP per capita. d. increase real GDP per capita.

increase real GDP per capita.

. In general, as the amount of labor input decreases, the amount of output a. increases. b. decreases. c. remains constant. d. decreases only if the capital stock also decreases.

increases

In general, as the amount of labor input increases, the amount of output a. increases. b. decreases. c. remains constant. d. increases only if the capital stock also increases.

increases

If a macroeconomist aggregates many markets into one, then a. individual market differences are eliminated. b. one must not confuse ravioli and hot dogs. c. she is performing a meaningless exercise. d. differences between products must still be noted.

individual market differences are eliminated.

"Stagflation" refers to the unwelcome combination of a. inflation and rising prices. b. deflation and unemployment. c. inflation and unemployment. d. inflation and expansion.

inflation and unemployment

. Economists generally assume that there is a short-run trade-off between a. output and employment. b. inflation and employment. c. deflation and unemployment. d. inflation and unemployment. e. output and growth.

inflation and unemployment.

Macroeconomics stresses a. resource allocation and income distribution. b. inflation and unemployment. c. resource allocation and inflation. d. unemployment and income distribution.

inflation and unemployment.

When the expenditure schedule is too high, the result is a(n) a. unemployment surplus. b. inflationary gap. c. recessionary gap. d. budgetary gap.

inflationary gap.

Nowadays, most observers believe that monetary policy a. is less important than fiscal policy. b. is more important than fiscal policy. c. and fiscal policy are equally important. d. and fiscal policy are both unimportant.

is more important than fiscal policy.

. Potential GDP is an estimate of the economy's ability to produce goods and services if the a. labor force is fully employed. b. price level is stable. c. trade balance is zero. d. federal budget is balanced.

labor force is fully employed.

Imports from China represent ____ of total U.S. imports. a. less than 20% b. approximately 40% c. approximately 60% d. more than 80%

less than 20%

If the capital stock decreases, then the economy will produce ____ output with the ____ amount of labor. a. same, same b. less, same c. more, same d. more, decreased

less, same

In the period from 1996-2000, the United States economy experienced the unusual combination of a. high unemployment and high inflation. b. high unemployment and low inflation. c. low unemployment and high inflation. d. low unemployment and low inflation.

low unemployment and low inflation

One advantage of a money system compared to a barter system is that a. barter never works. b. money creates the need for banks. c. money is more efficient. d. everyone has money.

money is more efficient.

. Part of the reason that people confuse money and income is because a. money is tangible, but income is intangible. b. money serves as the unit of account. c. money is abstract, but income is concrete. d. income is almost impossible to measure.

money serves as the unit of account.

. If the capital stock increases, then the economy can produce ____ output with the ____ amount of labor. a. same, same b. less, same c. more, same d. less, less

more, same

The United States produces ____ of what it consumes, and consumes ____ of what it produces. a. little, little b. little, most c. most, little d. most, most

most, most

An increase in the number of hours worked would a. shift the production function upward. b. shift the production function downward. c. shift the production function outward. d. not shift the production function.

not shift the production function.

Bank failures in the U.S. a. occurred frequently through the 1960s and declined since then. b. occurred infrequently through the 1960s and have become more common since then. c. occurred frequently through the 1930s, declined after that time, and became more common in 2008. d. occurred infrequently through the 1930s, increased after that time, and became less common in 2008.

occurred frequently through the 1930s, declined after that time, and became more common in 2008.

A bank run involves a large flow of money a. into bank depositors' accounts. b. into checking and savings accounts. c. out of depositors' accounts. d. out of individuals' cash reserves into money market funds.

out of depositors' accounts.

The graph that relates hours of labor input to output is called the a. consumption function. b. conjunction function. c. capital function. d. production function.

production function.

When aggregate demand decreases rapidly, the economy is likely to experience a. inflation. b. an economic boom. c. economic growth. d. recession.

recession.

When the expenditure schedule is too low, the result is a(n) a. unemployment surplus. b. inflationary gap. c. recessionary gap. d. budgetary gap.

recessionary gap.

The main examples of macroeconomic coordination failures are a. profit declines. b. relative price changes. c. recessions and depressions. d. consumer taste changes.

recessions and depressions.

Economists are very good at explaining how individual markets work. Economists are less successful at explaining a. market pricing. b. recessions and inflation. c. central planning. d. business firm profits.

recessions and inflation.

Government ownership of property and resources in the United States is a. about as common as it is in European countries. b. widespread; the United States is a leader in the amount of government ownership of resources. c. relatively rare; the United States is mostly privatized. d. rare, but has been increasing rapidly as the United States catches up to other countries.

relatively rare; the United States is mostly privatized.

. The "investment" component of aggregate demand will include all of the following except a. expenditures of business firms on new plants. b. expenditures of business firms on new equipment. c. resales of existing physical assets. d. household spending on new homes.

resales of existing physical assets.

In 1975, Congress passed a tax rebate to spur consumer spending. Consumers: a. spent the entire amount of the tax savings, boosting the economy, as planned b. did not spend any of the amount of the tax savings c. saved a substantial share of the tax savings and spent the rest d. saved a small portion of the tax savings, and spent the rest

saved a substantial share of the tax savings and spent the rest

The concept of aggregate supply refers to a a. fixed number of output. b. list of products demanded. c. schedule of output. d. schedule of production costs.

schedule of output

Aggregate demand is a ____ rather than a ____. a. fixed number, concept b. schedule, fixed number c. set number, concept d. government aggregate, private aggregate

schedule, fixed number

People are often heard saying, "She makes good money." An economic interpretation of this statement would be that a. she has an honest job. b. she makes money that is not counterfeit. c. she has a high income. d. there is little inflation.

she has a high income.

Income is measured as a. average cash holdings per time period. b. change in cash holdings per time period. c. some amount per time period. d. some amount at a point in time.

some amount per time period.

The combination of high unemployment and high inflation is termed a. reflation. b. stagflation. c. depression. d. unflation.

stagflation

Money supply is to income as a. real is to ideal. b. stock is to flow. c. real is to nominal. d. flow is to stock.

stock is to flow

An increase in the capital stock has the same effect on the production function as an increase in a. labor. b. output. c. GDP. d. technology.

technology

Microeconomics focuses on ____; macroeconomics concentrates on ____. a. the basic tools of analysis; the use of abstractions and models b. the economies of various countries; the decisions of individual companies c. the decisions of individual units; the behavior of entire economies d. the economic aggregates; the decisions of individual units

the decisions of individual units; the behavior of entire economies

Macroeconomists think that a. most questions about individual markets are more important than the overall economy. b. questions of overall unemployment are less important than the jobs of particular workers. c. the details of resource allocation and individual market prices are less important than the amount of national output. d. the causes of unemployment usually lie with the personalities of individual workers. e. the price of particular products is more important than the overall price level.

the details of resource allocation and individual market prices are less important than the amount of national output.

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter? a. There is no opportunity cost, assuming that future earnings actually increase as expected. b. The opportunity cost is much less than it would appear, assuming that earnings increase. c. Opportunity cost is a meaningless concept in this situation. d. The college students are completely correct in all respects. e. There is still an opportunity cost, even if it is justified by higher future earnings.

There is still an opportunity cost, even if it is justified by higher future earnings.

Consumer spending represents about what fraction of total spending in the economy? a. one-fifth b. two-thirds c. one-third d. two-fifths e. three-fourths

two-thirds

A productivity increase is illustrated by a shift in the production function a. downward. b. leftward. c. upward. d. rightward.

upward

Opportunity cost can best be defined as the a. value of what must be given up in order to acquire an item. b. money cost to the buyer to acquire a good or service. c. total value of all the other items that otherwise could be acquired. d. cost to the seller to produce an item. e. time cost to obtain the money to buy an item.

value of what must be given up in order to acquire an item.

The major cost of production in the economy is a. interest expense. b. capital costs. c. rents. d. profits. e. wages.

wages

The demand curve for a good connects points describing how much consumers a. actually bought at different prices during a particular period. b. actually bought at different prices in different periods. c. would have been willing and able to buy at different prices during a particular period. d. would have been willing and able to buy at different prices in different periods.

would have been willing and able to buy at different prices during a particular period.

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that a. rational decisions are not always possible. b. you can allocate your resources to what gives you the highest value. c. you can create the supply to meet your own demand. d. you can maximize social welfare by making optimal decisions.

you can allocate your resources to what gives you the highest value.

Nothing raises the standard of living more than a greater a. abundance of goods. b. effort of production. c. population. d. number of import tariffs. e. All of the above are true.

abundance of goods.

The existence of an inflationary gap or an recessionary gap depends on the a. aggregate supply only. b. expenditure schedule. c. leakages schedule. d. injections schedule. e. aggregate demand and aggregate supply schedules.

aggregate demand and aggregate supply schedules.

Combining various goods and services into a convenient grouping is called a. conglomeration. b. blending. c. congregation. d. agglomeration. e. aggregation.

aggregation.

Aggregate demand is the total demand for a. all intermediate and final goods. b. all monetary investments. c. real and financial investments. d. all final goods and services.

all final goods and services.

College tuition expenses have risen from 1982 to 2012 by a. an amount equal to prices in general. b. an amount greater than average prices. c. an amount less than average prices. d. the amount of the percentage increase in the overall CPI.

an amount greater than average prices.

Which of the following would tend to shift the production function upward? a. an increase in the number of hours worked b. an increase in population c. an increase in the size of the labor force d. an increase in the level of technology

an increase in the level of technology

A rational decision is one that a. satisfies all desires. b. avoids the intentional allocation of resources. c. assigns available resources in the manner most preferred by decision makers. d. assigns available resources to the uses with the lowest opportunity costs.

assigns available resources in the manner most preferred by decision makers.

Economists before Keynes assumed that equilibrium GDP occurred a. automatically. b. only with the help of government stabilization. c. if spending was generally greater than output. d. only in socialist economies with central planning.

automatically

. If depositors become worried about the safety of their deposit accounts, they may trigger a a. deposit surplus. b. bank run. c. fiscal policy crisis. d. required reserve increase.

bank run

The banking industry is heavily regulated because a. banking is a monopoly industry. b. most banks are owned by government agencies. c. bankers do what is best for their stockholders, not necessarily what is best for the economy. d. All of the above are correct.

bankers do what is best for their stockholders, not necessarily what is best for the economy.

Agraria sends wheat to Cyberia in exchange for computers and technology goods. This is an example of a. unidirectional trade. b. joint venture. c. barter. d. monetary exchange.

barter

The most common form of trading goods for goods is a. bilateral trade. b. government commodity distribution. c. status-based trades. d. barter. e. payments in kind.

barter

An optimal decision is one that is selected based on an analysis of a. explicit costs but not implicit costs. b. implicit costs but not explicit costs. c. both explicit costs and implicit costs. d. neither explicit costs nor implicit costs.

both explicit costs and implicit costs.

During the American Revolution, Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices. The Continental Congress later passed a law which a. exhorted the public to obey the law and help supply food to the army. b. passed tax increases to punish those who refused to sell the food. c. revised the American Law of Supply and Demand. d. overrode local ordinances and essentially repealed the price controls. e. called for the repeal of other price control measures.

called for the repeal of other price control measures.

Rational choice requires that opportunity cost be a. ignored in making a decision. b. considered for individual choices, but not for societal choices. c. computed, but not actually used in making a decision. d. considered as part of making a decision. e. used as the sole decision criterion.

considered as part of making a decision.

In a market economy, the decisions about what to produce and how much of each good or service to produce are made by a. government officials. b. economic planners. c. central bankers. d. consumers and producers.

consumers and producers.

. In a simple macroeconomic model, only one component of expenditures is allowed to change: a. investment. b. consumption. c. net exports. d. government spending. e. transfer payments.

consumption.

Recessions and depressions are the principal examples of a. market failure. b. coordination failure. c. central planning. d. socialist contradictions.

coordination failure.

One of the primary functions of markets could be labeled a. stimulation. b. coordination. c. planification. d. decentralization.

coordination.

In spite of the fact that unemployment rates were at a 30-year low in 1996-2000, the United States economy also experienced a. declining inflation. b. balance of payments surpluses. c. large budget deficits. d. low growth.

declining inflation

A decrease in the capital stock would be expected to a. decrease the labor force. b. increase the level of output. c. decrease real GDP per capita. d. increase real GDP per capita.

decrease real GDP per capita.

Recessionary gap arises when a. inventory stock falls. b. government spending increases. c. when the general price level increases. d. there is less spending than desired.

there is less spending than desired.

Which of the following was a result of the Dodd-Frank Act? a. restricted bank activities b. established a new consumer protection agency c. tougher regulations for banks d. All of the above

All of the above

John Maynard Keynes concluded that investment spending is determined by a. business confidence. b. economic expectations. c. psychological perceptions about the economy. d. All of the above are correct.

All of the above are correct.

When a demand schedule is drawn as a graph, a. price is measured on the vertical axis. b. quantity is measured on the horizontal axis. c. the resulting curve has a negative slope. d. the other variables (besides price and quantity) are held constant. e. All of the above are correct.

All of the above are correct.

Which of the following are reasons that banks are so heavily regulated? a. Governments are concerned about the safety of deposits. b. The industry is a principal determinant of aggregate demand. c. Bank failures are contagious. d. All of the above are correct.

All of the above are correct.

Which of the following phrases would be used to describe an income amount? a. per year b. per month c. per week d. All of the above are correct.

All of the above are correct.

When constructing a basic macroeconomic model, several assumptions (not realistic, but necessary to simplify the analysis) are made. Which of the following are assumed to be constant? a. the price level b. the rate of interest c. the foreign exchange rate d. the level of government spending e. All of the above are held constant.

All of the above are held constant.

Which of the following questions are not answered by the process of demand side GDP determination? a. How large is equilibrium GDP? b. Does the economy have unemployment? c. Is demand side equilibrium consistent with supply side equilibrium? d. Does the economy have inflation? e. All of the above are not answered.

All of the above are not answered

Which of the following services have experienced declines in relative prices due to productivity increases? a. medical services b. restaurant meals c. theatrical performances d. Internet access services

Internet access services

Which of the following is considered to be an investment in economists' point of view? a. Serena buys bonds issued by Citibank. b. John purchases a new house. c. Venus invests hundred thousand dollars in Bear Stearns stock. d. Allen sells the old truck he used for transporting goods.

John purchases a new house

Which of the following would indicate that the dollar amount being analyzed is money? a. M1 money stock of $1.4 trillion at the end of 2010 b. Microsoft profits of $500 billion in 2010 c. The first quarter of 2002 d. Nominal GDP in 2010 of $14.7 trillion

M1 money stock of $1.4 trillion at the end of 2010

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)? a. Bill, who is unemployed. b. Jane, who is an unwed mother and earns $15,000 a year. c. Larry, who is a technician in the Navy earning $18,000 a year with free food and housing. d. Mary, who has a job earning $60,000 a year as a computer programmer. e. Unable to determine from the data given.

Mary, who has a job earning $60,000 a year as a computer programmer.

An economist who studies the sales and profits of a large corporation would be classified as a(n) a. macroeconomist. b. equity analyst. c. stock broker. d. Micro economist. e. social economist.

Micro economist

Which of the following is the best definition of openness? a. The average of imports expressed as a share of GDP. b. The average of goods traded in markets expressed as a share of GDP. c. The average of imports and exports expressed as a share of GDP. d. The average trade balance expressed as a share of GDP. e. The average of exports expressed as a share of GDP.

The average of imports and exports expressed as a share of GDP.

Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $1.50 to $1.25 per dozen, a. the demand for cookies will fall. b. the demand for cookies will rise. c. a larger quantity of cookies will be demanded. d. a smaller quantity of cookies will be demanded.

a larger quantity of cookies will be demanded.

The demand curve for a typical good has a. a negative slope because some consumers switch to other goods as the price of the good rises. b. a negative slope because the supply of the good rises as demand rises. c. a negative slope because the good has less "snob appeal" as its price falls. d. an inverse slope because as the price goes up, the good has more profitability. e. a positive slope because price is a clear indicator of need.

a negative slope because some consumers switch to other goods as the price of the good rises.

Economists define an aggregate as a. a concrete object. b. a specific principle. c. a representative good or service. d. a useful abstraction. e. something immeasurable.

a useful abstraction.

. In order for barter trades to occur, there must be a a. singularity of interests. b. bargaining intermediary. c. double coincidence of wants. d. sufficient supply of cash.

double coincidence of wants.

A productivity decrease would be illustrated by a shift in the production function a. downward. b. leftward. c. upward. d. rightward.

downward

The net export component of aggregate demand is defined as U.S. a. imports minus U.S. exports. b. imports plus U.S. exports. c. exports minus U.S. imports. d. exports minus taxes and customs duties.

exports minus U.S. imports.

Gross domestic product is a. the largest industry in an economy. b. the money value of all final goods and services produced in a year. c. the volume of goods and services which are subject to international trade. d. goods and services produced by private companies. e. non-market production of goods and services.

the money value of all final goods and services produced in a year.

How do macroeconomists differ from micro economists? a. the basic tools of analysis b. the underlying principles c. the use of abstractions and models d. the problems studied e. All of the above are correct.

the problems studied