Macroeconomics I

In 2014, the average cost of a house in France was 125,000 euros. In 2022, the average cost is 160,000 euros. Given the price of the average house for reference, the inflation rate of the euro can be said to have increased by a factor of __________ in 8 years. (a) 1.28 (b) 0.78 (c) 1.35 (d) 0.28

(a) 1.28

Which of the statements below is false? (a) A recession cannot usually be seen in GDP. (b) The NBER provides data regarding when recessions start and end. (c) Sometimes, GDP can shrink quite a bit. (d) A recession is a significant decline in economic activity.

(a) A recession cannot usually be seen in GDP.

What do economic indicators provide? (a) A view of the whole economy at a specific point in time (b) A look into specific industries only (c) Data that can be used for decades to come, as indicators are slow to change (d) The ability to predict with certainty what will happen next in the economy

(a) A view of the whole economy at a specific point in time

Which statement below regarding economic indicators is true? (a) Economic indicators are inherently macroeconomic. (b) Trends, patterns, or situations that assist in forecasting the economy are considered lagging indicators. (c) Economic indicators provide a view of the economy over an extended period of time. (d) It is common practice to only look at one indicator when analyzing the macroeconomy.

(a) Economic indicators are inherently macroeconomic.

Naomi has a degree in a field with a great deal of growth at the moment, but she is having a difficult time finding work because she just moved to a new city and does not know anyone yet. Which kind of unemployment is Naomi experiencing? (a) Frictional (b) Seasonal (c) Structural (d) Cyclical

(a) Frictional

Which statement below regarding recessions is true? (a) It is a decline in economic activity. (b) It refers to a moment when the economy is expanding rapidly. (c) We cannot see the effects of recession in industrial production. (d) It is not present in wholesale/retail sales.

(a) It is a decline in economic activity.

Which statement below about economics is NOT true? (a) It only considers the choices that take place at an individual level. (b) It uses both conceptual analysis and a mathematical framework to explain decision-making processes. (c) It considers the optimizing activities of individuals and entities. (d) It is a social science.

(a) It only considers the choices that take place at an individual level.

In the circular flow model, what do firms purchase? (a) Labor from households (b) Goods from tax revenue (c) Factors of production from the government (d) Final goods and services

(a) Labor from households

According to this circular flow diagram, which of the following flows FROM the government TO firms? (a) Purchases of goods and services (b) Taxes (c) Imports (d) Wages, interest, and transfer payments

(a) Purchases of goods and services

Which of the following is true regarding the consumer price index (CPI)? (a) Shows the change in prices for a market's basket of goods (b) Includes measures of intermediate goods (c) Shows the inflation rate for all goods in an economy (d) Changes monthly as consumer spending changes

(a) Shows the change in prices for a market's basket of goods

Which of the following topics can macroeconomics help a person understand? (a) The impact of global trade (b) How to handle your personal finances responsibly (c) What makes a good investment (d) Decision-making on an individual level

(a) The impact of global trade

Macroeconomists look at __________ to study the overall health of the economy. (a) economic indicators (b) monetary policy (c) capital flow (d) global trade

(a) economic indicators

A person who leaves employment and moves to a new state where their skills are marketable to find work is considered to be undergoing __________ unemployment. (a) frictional (b) cyclical (c) structural (d) seasonal

(a) frictional

Macroeconomics would include the study of __________. (a) national infrastructures (b) prices of individual goods (c) small firms (d) household spending

(a) national infrastructures

A __________ is a decline in economic activity that lasts more than a few months and is visible in __________. (a) recession; real GDP (b) trough; expansion (c) trough; real GDP (d) recession; expansion

(a) recession; real GDP

The confirm payroll is _________________. (a) the number of people employed outside of the farming sector (b) the labor force that is looking for work outside of the farming sector (c) the number of people unemployed outside of the farming sector (d) the amount of money earned by workers outside of the farming sector

(a) the number of people employed outside of the farming sector

Which statement below about the business cycle is true? (a) Although it goes up and down at times, overall, it remains constant. (b) Although it experiences periods of expansion and recession, overall, the trend is growing. (c) It tends to be in an overall state of recession. (d) It is impossible to make generalized statements about the business cycle.

(b) Although it experiences periods of expansion and recession, overall, the trend is growing.

Which of these is NOT revealed by labor force participation rates of a country? (a) Standard o living (b) Availability of resources (c) Birth rate (d) Overall economic well-being

(b) Availability of resources

Select the statement below that is true of only CPI. (a) Provides a way to measure inflation (b) Captures the price variation between consumer goods, with goods held constant (c) Published by the Bureau of Labor Statistics (d) Divided up into crude, intermediate, and finished goods

(b) Captures the price variation between consumer goods, with goods held constant

Which of the following correctly lists the three principal parties in an economy? (a) Wages, interest, and transfer payments (b) Consumers, businesses, and the government (c) Dividends, profit, and rent (d) Taxes, subsidies, and regulations

(b) Consumers, businesses, and the government

Jim can't find a job as the store at which he was the manager just closed because of a recession. What type of unemployment does this represent? (a) Natural (b) Cyclical (c) Structural (d) Frictional

(b) Cyclical

Which of the following statements regarding GDP is true? (a) When comparing GDP from different time periods, price level is not a factor. (b) GDP is not a good indicator of wealth distribution. (c) GDP counts the value of all goods and services at all stages of production. (d) GDP is a strong indicator of general population well-being

(b) GDP is not a good indicator of wealth distribution.

Which statement below is NOT true about GDP? (a) It attempts to measure all economic activity that takes place inside a country in a given year. (b) It includes value from leisure. (c) There are different ways to calculate GDP. (d) It is one of the most common measures of the health of the macroeconomy.

(b) It includes value from leisure.

Which statement below regarding the circular flow diagram is false? (a) A household is an initial holder of resources in an economy. (b) It is a common misconception that the circular flow diagram and GDP are related. (c) It depicts the interaction between the three main parties in the economy. (d) It is a simple model that gives a big-picture view of economic activity.

(b) It is a common misconception that the circular flow diagram and GDP are related.

Which of the following statements describes macroeconomics? (a) It is an academic discipline that looks at variables that affect the quality of human life. (b) It looks at the overall ups and downs of the economy. (c) It looks at how individuals and entities optimize the decisions they make. (d) It considers the behavior of individuals and firms on an individual level.

(b) It looks at the overall ups and downs of the economy.

Which of the following is NOT part of the expenditure approach to calculating GDP? (a) Exports (b) Labor income (c) Income (d) Business investments

(b) Labor income

Which of the following related to consumer confidence is FALSE? (a) Collected and evaluated by the Conference Board (b) Measures growth in an economy by looking at how well stores perform from one year to the next (c) A type of coincident indicator (d) Highly responsive to the influence of media and marketing

(b) Measures growth in an economy by looking at how well stores perform from one year to the next

When GDP growth is at its maximum, given current resources, the business cycle is said to be in which phase? (a) Trough (b) Peak (c) Expansion (d) Contraction

(b) Peak

Which of the following is a leading economic indicator? (a) Consumer credit (b) Retail sales (c) Consumer confidence (d) Unemployment

(b) Retail sales

Which of the following is true of data on labor force participation rates by gender from a macroeconomics perspective? (a) They match the Gini coefficient. (b) They are associated with access and availability of jobs. (c) They are used to calculate GDP. (d) They show a country's level of education attainment.

(b) They are associated with access and availability of jobs.

Which of the following examples corresponds with frictional unemployment? (a) This type of unemployment occurs only when the economy is at a peak. (b) This type of unemployment occurs when college students graduate and look for full-time work. (c) This type of unemployment occurs only during a recession. (d) This type of unemployment occurs when the economy changes and people with skills that were once desirable can no longer find work.

(b) This type of unemployment occurs when college students graduate and look for full-time work.

Microeconomics involves decisions made by __________. (a) governments and economies (b) firms and households (c) governments and societies (d) countries and international organizations

(b) firms and households

In the circular flow model, governments _____________. (a) act as only consumers of goods and services (b) produce some final goods and services (c) do not interact with firms and households (d) consume intermediate goods before they are taxes

(b) produce some final goods and services

In the circular flow diagram, households __________. (a) places taxes on goods and services (b) purchase final goods and services (c) purchase factors of production (d) act only as consumers

(b) purchase final goods and services

The CPI and PPI are measured by __________. (a) the Internal Revenue Service (b) the Bureau of Labor Statistics (c) the Congressional Budget Committee (d) a compilation of state assessments made each month

(b) the Bureau of Labor Statistics

In 2020, the yearly tuition at a state university was $30,000. In 2025, the yearly tuition at the same state university will be $37,000. Given the price of tuition for reference, the inflation rate of the U.S. dollar can be said to have increased by a factor of __________ in 5 years. (a) 0.23 (b) 0.81 (c) 1.23 (d) 1.7

(c) 1.23

If a new car cost $1,250 in 1950 and $30,000 in 2013, by what factor have prices increased? (a) 20 (b) 12 (c) 24 (d) 48

(c) 24

Which statement is true regarding women's participation in the labor market? (a) More men than women are employed in the informal sector. (b) Women are no longer responsible for most domestic work because they have increased their labor force participation. (c) Standards of living increase as women's participation in the workforce increases. (d) Birth rates have increased as women's employment rates have increased.

(c) Birth rates have increased as women's employment rates have increased.

Which of the following statements regarding the PPI and the CPI is true? (a) The PPI is a lagging indicator and the CPI is a leading indicator. (b) Both the PPI and the CPI are leading indicators. (c) Both the PPI and the CPI are lagging indicators. (d) The PPI is a leading indicator and the CPI is a lagging indicator.

(c) Both the PPI and the CPI are lagging indicators.

Which definition below corresponds to economic indicators? (a) The movement of the market through periods of expansion, recession, peaks, and troughs (b) Exchange transactions that occur across nations (c) Data that indicate past, present, and future activity (d) The movement of money in and out of a country or other entity

(c) Data that indicate past, present, and future activity

Which of the following accurately describes the labor force? (a) Employed individuals only (b) Employed individuals, excluding those not in the labor force (c) Employed as well as unemployed individuals (d) Employed individuals as well as discouraged workers

(c) Employed as well as unemployed individuals

What is the total amount of economic product that a country produces? (a) NBER (b) Federal Reserve (c) GDP (d) The business cycle

(c) GDP

Which of the following is often associated with an increase in employment rate of women in living-wage occupations? (a) Lower access to education (b) Fewer resources for children (c) Higher standard of living for families (d) Increased population growth

(c) Higher standard of living for families

Which of the following is a benefit of women employed in occupations that pay a living wage? (a) Increase in birth rate (b) Increase in income inequality (c) Increased resource availability to children (d) Increased home responsibilities

(c) Increased resource availability to children

GDP is useful in evaluating which of the following? (a) The quality of life or the well-being of a population (b) The economy of a country producing a significant amount abroad (c) Increases in domestic consumption (d) The production of firms that are owned by domestic nationals but located overseas

(c) Increases in domestic consumption

Which of the following describes real GDP? (a) Is the best measure of per capita standard of living (b) Shows changes in the prices of goods based on inflation (c) Is adjusted for inflation to show growth in output (d) Considers the nominal prices of goods/services

(c) Is adjusted for inflation to show growth in output

Which of the following describes how consumer confidence is measured? (a) It is measured over the time period between the next 6 and 12 months (b) It is measured over the time period between the present and next 12 months (c) It is measured over the time period between the present and next 6 months. (d) It is measured over the time period between the past 6 months and the present

(c) It is measured over the time period between the present and next 6 months.

Which of the following statements regarding economic indicators is false? (a) Most indicators provide a snapshot view of the economy. (b) Lagging indicators provides us with a look at what just happened in our economy. (c) Macroeconomic indicators are 100% accurate all of the time. (d) Stock market performance is a leading indicator.

(c) Macroeconomic indicators are 100% accurate all of the time.

n the circular flow diagram, which of the following flows from households to firms? (a) Purchase of foreign-made goods (b) Wages and interest (c) Money for the purchase of goods and services (d) Taxes

(c) Money for the purchase of good and services

Which of the following can be expected if retail sales increase? (a) Imports will decrease (b) Interest rates will fall (c) The economy will grow (d) Unemployment will increase

(c) The economy will grow

Which of the following descriptions related to retail sales is true? (a) They exclude growth of new stores in a chain and are conducted weekly (b) They include growth of new stores in a chain and are conducted yearly (c) They exclude growth of new stores in a chain and are conducted yearly (d) They include growth of new stores in a chain and are conducted weekly

(c) They exclude growth of new stores in a chain and are conducted yearly

Since it takes businesses time to respond to economic events in hiring or laying off workers, the unemployment rate is generally considered __________. (a) a coincident indicator (b) a perfect indicator (c) a lagging indicator (d) a leading indicator

(c) a lagging indicator

GDP measures change in ____________________. (a) wealth distribution (b) standard of living (c) economic growth (d) general well-being

(c) economic growth

The business cycle period in which the economy shows growth is the period of __________. (a) trough (b) contraction (c) expansion (d) peak

(c) expansion

Studying macroeconomics helps us learn about the value and limitations of __________, which occurs across nations, typically involving foreign exchange transactions. (a) fiscal policy (b) economic indicators (c) global trade (d) business cycles

(c) global trade

A discouraged worker is _______________. (a) reflected in the measured unemployment rate (b) one who is underemployed (c) one who has given up looking for work (d) considered part of the labor force

(c) one who has given up looking for work

Consumer confidence is ___________. (a) a comprehensive indicator and good predictor of the economy (b) immune to time lags (c) sensitive to marketing campaigns (d) not sensitive to media reports

(c) sensitive to marketing campaigns

GDP is best described as __________. (a) the value of economic activity by all U.S. citizens around the world (b) the amount of intermediate goods produced in a country in a given year (c) the value of economic activity that takes place in a country in a given year (d) the amount of goods and services produced in a country in a given year

(c) the value of economic activity that takes place in a country in a given year

In January 2022, a bag of rice cost 5 million Zimbabwean dollars. Several months later, the same bag of rice cost 250 million Zimbabwean dollars .Given the price of rice as reference, the inflation rate of the Zimbabwean dollar can be said to have increased by a factor of __________ over the months. (a) 20 (b) 2 (c) 5 (d) 50

(d) 50

If a gallon of milk costed 5 cents in 1930 and today costs $4.50, prices have increased by which of the following factors? (a) 0.9 (b) 900 (c) 0.01 (d) 90

(d) 90

With more women being employed, which of the following has decreased? (a) Economic development (b) The labor force (c) Standard of living (d) Birth rate

(d) Birth rate

Which of the following is NOT a good reason to study macroeconomics? (a) It can explain the mechanics of economic policy. (b) It can explain the economic impact of global trade. (c) It can increase knowledge on key economic indicators. (d) It can help someone understand choices made at the individual level.

(d) It can help someone understand choices made at the individual level.

Which statement below is true of GDP? (a) It is more of an indicator of quality of life than consumption. (b) It measures the sum of the value of goods and services imported into a country. (c) It is a rarely used tool in comparisons of the economies of different countries. (d) It describes the past state of the economy instead of present conditions.

(d) It describes the past state of the economy instead of present conditions.

Select the statement below that is FALSE regarding labor force participation by gender. (a) GDP indirectly accounts for labor force participation. (b) The employment of women in living-wage occupations raises the standard of living for families. (c) The employment of women in living-wage occupations leads to lower birth rates. (d) Labor force participation rates are not a good indicator of a country's economic health.

(d) Labor force participation rates are not a good indicator of a country's economic health.

Which statement below about economics is false? (a) Microeconomics studies decision-making at the individual level. (b) Macroeconomics studies the application of economics across an economy. (c) Economics is part of the humanities because it studies human decision-making. (d) Most questions about economics address the central banking system and financial economics.

(d) Most questions about economics address the central banking system and financial economics.

Which of the following statements about the unemployment rate is true? (a) The unemployment rate is a leading indicator. (b) The unemployment rate is measured by the General Services Administration. (c) There is no margin of error involved with the unemployment rate. (d) The unemployment rate is determined through a survey process.

(d) The unemployment rate is determined through a survey process.

Which statement below applies to the expenditure approach when calculating GDP? (a) Counts income received from the purchase of goods and services (b) More practical approach (c) Uses the acronym WRIP (d) Typically easier to understand than other approaches

(d) Typically easier to understand than other approaches

How does macroeconomic analysis utilize economic indicators? (a) Uses coincident indicators only in policy making (b) Looks to lagging indicators as the best source of information (c) Considers leading indicators to be the most comprehensive (d) Uses multiple indicators because of the complexity of the economy

(d) Uses multiple indicators because of the complexity of the economy

The producer price index (PPI) contains measures of all of the following except __________. (a) final goods (b) crude goods (c) intermediate goods (d) exported goods

(d) exported goods

GDP per capita is often used to measure the __________. (a) gross national product (b) overall GDP growth rate for an economy (c) GDP adjusted for inflation (d) standard of living

(d) standard of living

Unemployment as a result of people's skills not matching those needed for jobs in a changing economy is known as __________ unemployment. (a) full (b) cyclical (c) frictional (d) structural

(d) structural

Retail sales are measured by __________. (a) collecting self-reported data from all retail outlets with over 10 employees (b) the Bureau of Labor Statistics (c) collecting self-reported data from chains of over 40 stores (d) the Census Bureau

(d) the Census Bureau