True / False
1. The key characteristic of macroeconomics is the process of aggregation.
a.
True
b.
False
True
Easy
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Drawing a Line Between Macroeconomics and Microeconomics
2. Someone who studies the pricing policies of the Microsoft Corporation would be a microeconomist.
a.
True
b.
False
True
Easy
economics
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
3. Economic aggregates are not observable in the “real world.”
a.
True
b.
False
True
Moderate
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Drawing a Line Between Macroeconomics and Microeconomics
4. Aggregation involves adding together different products and services.
a.
True
b.
False
True
Moderate
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
5. Abstract terms like “cost of living” and “price level” are meaningless to ordinary individuals.
a.
True
b.
False
False
Easy
6. Macroeconomists pay little attention to the composition of aggregate output.
a.
True
b.
False
True
Moderate
7. During economic fluctuations, individual markets usually move in different directions.
a.
True
b.
False
False
Moderate
8. From 2000 to 2001, the U.S. economy’s annual growth rate slowed down abruptly.
a.
True
b.
False
True
Easy
9. Individuals live and work in both individual and aggregate economic entities.
a.
True
b.
False
True
Difficult
10. Two of the most important macroeconomic issues are unemployment and inflation.
a.
True
b.
False
True
Easy
11. An increase in aggregate demand will result in inflation.
a.
True
b.
False
True
Moderate
12. Supply and demand provides the basic explanatory framework for constructing both microeconomic and
macroeconomic models.
a.
True
b.
False
13. In macroeconomics, the vertical axis in a supply-demand model measures the price level rather than a particular
product’s price.
a.
True
b.
False
14. If aggregate demand keeps shifting rightward month after month and aggregate supply remains constant, the economy
will experience a recession.
a.
True
b.
False
False
Moderate
15. Gross Domestic Product represents the money value of all final goods and services produced in the domestic economy
within the year.
a.
True
b.
False
True
Easy
economics
16. Nominal GDP includes the current value of services produced in the economy.
a.
True
b.
False
True
Easy
17. Real GDP values current output of goods and services at their current prices.
a.
True
b.
False
False
Moderate
economics
18. GDP in 2015 would not include the resale of a house built in 2000.
a.
True
b.
False
True
Moderate
19. Gross Domestic Product includes the sale of intermediate goods and services.
a.
True
b.
False
False
Easy
20. If a woman marries her housekeeper, GDP would remain constant.
a.
True
b.
False
False
Moderate
21. Cars produced by General Motors in Mexico would be included in U.S. Gross Domestic Product.
a.
True
b.
False
False
Moderate
22. When the Art Institute of Chicago purchases a painting by Mary Cassatt that she produced in Paris in 1885, this would
not be included in the U.S. GDP for 2015.
a.
True
b.
False
True
Moderate
economics
23. Illegal gambling on the NCAA Final Four would be included in GDP.
a.
True
b.
False
False
Moderate
24. GDP consistently measures the output of goods and services in all countries.
a.
True
b.
False
False
Moderate
economics
25. The existence of the “underground economy” causes measured GDP to overestimate actual output.
a.
True
b.
False
False
Difficult
26. Gross Domestic Product accurately measures the environmental costs of producing all goods and services.
a.
True
b.
False
False
Moderate
27. Changes in nominal GDP always reflect changes in real output.
a.
True
b.
False
False
Moderate
28. Production for war and environmental clean-up services are not included in GDP.
a.
True
b.
False
False
Moderate
29. In the United States, GDP has grown slower than the population since 1870.
a.
True
b.
False
False
Easy
30. Business cycles are a persistent feature of the U.S. economy.
a.
True
b.
False
True
Easy
31. Economic fluctuations in the United States have been less extreme since the 1950s.
a.
True
b.
False
True
Easy
32. In terms of macroeconomic conditions, the 1930s were the “good old days.”
a.
True
b.
False
False
Moderate
33. John Maynard Keynes wrote that economies can suffer recession or depression for many years if the government does
not intervene.
a.
True
b.
False
True
Moderate
economics
34. If aggregate demand shifts outward, the result will be inflation.
a.
True
b.
False
True
Moderate
35. Stagflation is the simultaneous occurrence of inflation and high unemployment.
a.
True
b.
False
True
Moderate
36. In the early 1980s, the economy experienced high unemployment with falling inflation.
a.
True
b.
False
True
Moderate
37. One of the initial problems facing the newly elected President Clinton was a large budget deficit.
a.
True
b.
False
True
Moderate
38. Part of the good economic performance of the United States in the 1990s can be explained by a rightward-shifting
aggregate supply curve.
a.
True
b.
False
True
Difficult
39. Stabilization policy often faces a trade-off between inflation and unemployment.
a.
True
b.
False
True
Moderate
40. In 2001, the first year of the Bush administration, Americans learned that recessions were a thing of the past.
a.
True
b.
False
False
Difficult
41. In response to the “Great Depression 2.0” the Obama administration responded with more tax cuts, increased federal
spending, and aid to state and local governments.
a.
True
b.
False
True
Difficult
42. Economist John Maynard Keynes wrote that the economy naturally gravitates toward smooth growth and high levels
of employment.
a.
True
b.
False
False
Easy
43. The composition of demand and supply in various markets is not important to the question of inflation. .
a.
True
b.
False
True
Difficult
44. The Great Depression changed the prevailing thinking about economics.
a.
True
b.
False
True
Moderate
The study of economics, and defi – The study of economics, and definitions of economics
The Economy on a Rollercoaster
Multiple Choice
45. A macroeconomist would concentrate on which of the following issues?
a.
the price of pizzas
b.
the profits of the IBM Corporation
c.
the unemployment rate in Germany
d.
the market for hot dogs
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
46. In economics, aggregation refers to
a.
collecting sample specimens for reclassification.
b.
using small stones to pave an artistic walkway.
c.
combining many markets into one overall economy.
d.
using large computers to solve economic problems.
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Drawing a Line Between Macroeconomics and Microeconomics
47. Macroeconomists are distinguished from microeconomists because macroeconomists are more interested in
a.
inflation and unemployment than in individual markets.
b.
large corporations rather than small businesses.
c.
inflation in the United States rather than inflation in Costa Rica.
d.
the demand for oil rather than the demand for corn.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
48. 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.
c
Difficult
DISC: The study of economics, an – DISC: The study of economics, and definitions in
economics
United States – BPROG: Reflective Thinking – BPROG: Analysis
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
49. 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.
microeconomist.
e.
social economist.
Easy
DISC: The study of economics, an – DISC: The study of economics, and definitions in
economics
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
50. Combining various goods and services into a convenient grouping is called
a.
conglomeration.
b.
blending.
c.
congregation.
d.
agglomeration.
e.
aggregation.
e
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
51. Macroeconomics stresses
a.
resource allocation and income distribution.
b.
inflation and unemployment.
c.
resource allocation and inflation.
d.
unemployment and income distribution.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
52. How do macroeconomists differ from microeconomists?
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.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
53. 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
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
54. 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.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
55. 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.
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Drawing a Line Between Macroeconomics and Microeconomics
56. 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.
Moderate
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Drawing a Line Between Macroeconomics and Microeconomics
57. During economic fluctuations, markets tend to move
a.
together.
b.
in random directions.
c.
in opposite directions.
d.
in many different directions.
a
Moderate
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
58. For a macroeconomist, the case for aggregation is based on two principles⎯1) the composition of demand and supply
may not matter for some purposes, and 2)
a.
during fluctuations markets normally move together.
b.
individual markets allocate resources efficiently.
c.
inflation, unemployment, and growth never go together.
d.
individual markets distribute income efficiently.
a
Moderate
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
59. During the first year of the Bush administration in 2001, the American economy
a.
increased its already rapid growth rate.
b.
experienced high levels of inflation.
c.
slowed in its rate of economic growth.
d.
experienced a decrease in the rate of unemployment.
Easy
DISC: Measuring the Economy
United States – BPROG: Analytic
Measuring the Economy
Drawing a Line Between Macroeconomics and Microeconomics
60. It might be useful to think of macroeconomics as a study of ____ and microeconomics as a study of ____.
a.
big corporations, small businesses
b.
oceans, fish
c.
the long run, the short run
d.
abstract, concrete
e.
theory, reality
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
61. An example of an abstraction used in macroeconomics is
a.
the price level.
b.
total costs.
c.
the tax rate.
d.
the treasury bill rate.
e.
proprietor’s income.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Drawing a Line Between Macroeconomics and Microeconomics
62. While their respective subject matters differ greatly, both microeconomists and macroeconomists rely on the same
basic tools; that is, both rely on
a.
government contracts to promote research and publications.
b.
demand-and-supply analysis.
c.
the economic theory of John Maynard Keynes.
d.
consumer protection laws and antitrust legislation.
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Supply and Demand in Macroeconomics
63. The horizontal axis on the aggregate demand-aggregate supply model measures
a.
the price of the specific product produced.
b.
the level of total output.
c.
the price level.
d.
the level of employment.
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
64. The aggregate demand curve shows the quantity of domestic product
a.
produced at each possible price level.
b.
demanded and produced at each possible price level.
c.
that is exported at each possible price level.
d.
demanded at each possible price level.
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Analytic
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
65. The basic organizing framework for both microeconomic and macroeconomic models is
a.
purely competitive markets.
b.
government planning of the economy.
c.
demand and supply.
d.
democratic socialism.
e.
all of the above.
DISC: The study of economics, an – DISC: The study of economics, and definitions in
economics
United States – BPROG: Analytic
The study of economics, and defi – The study of economics, and definitions of economics
Supply and Demand in Macroeconomics
66. If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy
should experience
a.
unemployment.
b.
recession.
c.
budget surpluses.
d.
inflation.
Difficult
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Reflective Thinking – BPROG: Analysis
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
BLOOMS: Application
67. If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy
should experience
a.
unemployment.
b.
recession.
c.
stagflation.
d.
inflation.
e.
budget surpluses.
Difficult
DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
United States – BPROG: Reflective Thinking – BPROG: Analysis
Aggregate demand and aggregate s – Aggregate demand and aggregate supply
Supply and Demand in Macroeconomics
BLOOMS: Application
68. A recession is a period during which
a.
aggregate demand, production, and unemployment rises.
b.
aggregate demand, production, and unemployment falls.
c.
aggregate demand, production, and unemployment remain the same.
d.
aggregate demand and production rises while unemployment remains the same.
e.
aggregate demand and production falls while unemployment rises.
e
Difficult