Question 1

Which of the following results from firms holding inventories?

Accepted Answer

A)   The economy is much more susceptible to business cycle fluctuations.
B)   Demand shocks occur with greater frequency.
C)   Demand shocks occur less frequently.
D)   Firms can maintain production levels and adjust inventories in response to demand shocks.E) B) and D)
F) B) and C)

Question 2

Any person without a job is considered to be unemployed.

Accepted Answer

A) True 
 B)False

Question 3

If the prices of all goods and services rose,but the quantity produced remained unchanged,what would happen to nominal and real GDP?

Accepted Answer

A)   Nominal and real GDP would both rise.
B)   Nominal and real GDP would both be unchanged.
C)   Real GDP would rise,but nominal GDP would be unchanged.
D)   Nominal GDP would rise,but real GDP would be unchanged.E) All of the above
F) A) and D)

Question 4

In situations of sticky prices and negative demand shocks,we would expect firms to:

Accepted Answer

A)   deplete inventories before increasing production.
B)   reduce production before building up inventories.
C)   build up inventories before reducing production.
D)   lower prices before reducing production or building up inventories.E) A) and B)
F) C) and D)

Question 5

Modern economic growth refers to any situation where a nation's output increases.

Accepted Answer

A) True 
 B)False

Question 6

The "sticky price" model is the only one used by macroeconomists.

Accepted Answer

A) True 
 B)False

Question 7

(Consider This)The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories,tools,and warehouses.

Accepted Answer

A) True 
 B)False

Question 8

"Supply shocks" occur any time there is a change in the supply of goods and services.

Accepted Answer

A) True 
 B)False

Question 9

(Consider This)If Ford Motor Company purchases factory equipment previously used by General Motors,this would be considered an economic investment.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would an economist consider to be investment?

Accepted Answer

A)   Boeing building a new factory.
B)   Oprah buying a $10 million home from a fellow celebrity.
C)   A stockbroker buying 10,000 shares of Starbucks stock.
D)   All of these.E) A) and D)
F) C) and D)

Question 11

Which of the following is most closely related to recessions?

Accepted Answer

A)   Positive long-run economic growth.
B)   Rapid growth in the price level.
C)   Falling rates of unemployment.
D)   Negative real growth in output.E) A) and B)
F) B) and C)

Question 12

When demand shocks lead to recessions,it is mainly due to:

Accepted Answer

A)   price inflexibility.
B)   the inability of government policy to affect demand.
C)   unexpected changes in the supply of goods and services.
D)   government regulations that prevent firms from adjusting output in response to the shocks.E) A) and C)
F) B) and D)

Question 13

Which of the following is an example of a supply shock?

Accepted Answer

A)   A surge in consumer optimism prompts increased buying of goods and services.
B)   A surprise tax rebate from the government gives people more money to spend.
C)   A dramatic increase in energy prices increases production costs for firms in the economy.
D)   Government increases spending on education.E) A) and B)
F) B) and C)

Question 14

In 2008-2009,the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Accepted Answer

A) True 
 B)False

Question 15

Why are economists concerned about inflation?

Accepted Answer

A)   Inflation generally causes unemployment rates to rise.
B)   Real GDP is necessarily falling when there is inflation.
C)   Inflation lowers the standard of living for people whose income does not increase as fast as the price level.
D)   Inflation increases the value of peoples' saving and encourages overspending on goods and services.E) B) and D)
F) None of the above

Question 16

In the very short run,demand shocks will tend to change the level of output but have little effect on prices.

Accepted Answer

A) True 
 B)False

Question 17

Before the period of modern economic growth:

Accepted Answer

A)   only civilizations such as the Roman Empire experienced economic growth.
B)   rates of population growth virtually matched rates of output growth.
C)   most economies realized high rates of growth in output per person.
D)   output and population growth were stagnant.E) B) and C)
F) None of the above

Question 18

(Consider This) Which of the following is an example of economic investment?

Accepted Answer

A)   Volvo buys an old factory building from General Motors.
B)   Nike buys a new machine that increases shoe production.
C)   Bill Gates buys shares of stock in IBM.
D)   Warren Buffet buys U.S.savings bonds.E) None of the above
F) B) and D)

Question 19

Unemployment describes the condition where:

Accepted Answer

A)   equipment and machinery are going unused.
B)   a person cannot get a job but is willing to work and is actively seeking work.
C)   a person does not have a job,regardless of whether or not he or she wants one.
D)   any resource sits idle.E) None of the above
F) B) and D)

Question 20

A nation that wants to invest in more newly created capital in the present must be willing to forgo present consumption.

Accepted Answer

A) True 
 B)False

Exam 25: An Introduction to Macroeconomics

Which of the following is most closely related to recessions?

Correct AnswerverifiedShow Answer

(Consider This)If Ford Motor Company purchases factory equipment previously used by General Motors,this would be considered an economic investment.

Correct AnswerverifiedShow Answer

Why are economists concerned about inflation?

Correct AnswerverifiedShow Answer

If the prices of all goods and services rose,but the quantity produced remained unchanged,what would happen to nominal and real GDP?

Correct AnswerverifiedShow Answer

(Consider This) Which of the following is an example of economic investment?

Correct AnswerverifiedShow Answer

In 2008-2009,the U.S.economy lost 8 million jobs and saw the unemployment rate rise from 4.6 percent to as high as 10.1 percent.

Correct AnswerverifiedShow Answer

(Consider This)The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories,tools,and warehouses.

Correct AnswerverifiedShow Answer

Which of the following is an example of a supply shock?

Correct AnswerverifiedShow Answer

A nation that wants to invest in more newly created capital in the present must be willing to forgo present consumption.

Correct AnswerverifiedShow Answer

In situations of sticky prices and negative demand shocks,we would expect firms to:

Correct AnswerverifiedShow Answer

Which of the following results from firms holding inventories?

Correct AnswerverifiedShow Answer

Modern economic growth refers to any situation where a nation's output increases.

Correct AnswerverifiedShow Answer

The "sticky price" model is the only one used by macroeconomists.

Correct AnswerverifiedShow Answer

Before the period of modern economic growth:

Correct AnswerverifiedShow Answer

"Supply shocks" occur any time there is a change in the supply of goods and services.

Correct AnswerverifiedShow Answer

Which of the following would an economist consider to be investment?

Correct AnswerverifiedShow Answer

When demand shocks lead to recessions,it is mainly due to:

Correct AnswerverifiedShow Answer

Any person without a job is considered to be unemployed.

Correct AnswerverifiedShow Answer

Unemployment describes the condition where:

Correct AnswerverifiedShow Answer

In the very short run,demand shocks will tend to change the level of output but have little effect on prices.

Correct AnswerverifiedShow Answer

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