Chapter 06 – An Introduction to Macroeconomics
1. Short-run fluctuations in output and employment are referred to as
2. The situation where output and living standards decline is referred to as
Chapter 06 – An Introduction to Macroeconomics
3. The major statistics that provide macroeconomists a picture of the health of an economy
include the following, except:
4. Real gross domestic product
5. Real gross domestic product
Chapter 06 – An Introduction to Macroeconomics
6. Nominal gross domestic product
7. Nominal gross domestic product
8. Suppose that an economy’s output does not change from one year to the next, but the price
level doubles. What happens to real GDP?
Chapter 06 – An Introduction to Macroeconomics
9. Suppose that an economy’s output does not change from one year to the next, but the price
level doubles. What happens to nominal GDP?
10. Suppose a small economy produces only HD TV sets. In year 1, 100,000 sets are
produced and sold at a price of $1,200 each. In year 2, 100,000 sets are produced and sold at a
price of $1,000 each. As a result
11. Suppose a small economy produces only MP3 players. In year 1, 10,000 MP3 players are
produced and sold at a price of $100 each. In year 2, 12,000 MP3 players are produced and
sold at a price of $80 each. Which of the following statements is true?
Chapter 06 – An Introduction to Macroeconomics
12. Economists and policy makers are committed to encouraging a large and growing real
GDP because
13. High rates of unemployment:
14. High rates of unemployment are undesirable because they:
Chapter 06 – An Introduction to Macroeconomics
15. An increase in the overall level of prices is called:
16. Inflation is troublesome to consumers because of the following effects, except:
17. Which of the following is most likely to be an indication of higher unemployment?
Chapter 06 – An Introduction to Macroeconomics
18. Suppose a family’s income increases by 5% at the same time that inflation is 6%. Then
19. If a family’s income increases by 5% at the same time that inflation is 3.5%, then the:
20. Macroeconomic models help clarify important questions such as the following, except:
Chapter 06 – An Introduction to Macroeconomics
21. Rapid and sustained economic growth of nations:
22. The Industrial Revolution began in:
23. For many decades prior to the Industrial Revolution, the standards of living in England
and China:
Chapter 06 – An Introduction to Macroeconomics
24. In earlier centuries, the Roman and Chinese economies:
25. Suppose that real GDP increases by 5% while the population of a country increases by
7%. Then
26. Modern economic growth:
Chapter 06 – An Introduction to Macroeconomics
27. Under modern economic growth, the annual average increase in output per person is
28. Before the late 1700’s, living standards in the richest part of the world were
29. Which of the following is not an adjustment made when comparing standards of living
across countries?
Chapter 06 – An Introduction to Macroeconomics
30. Purchasing power parity refers to
31. In 2009, output per person in the U.S was about
32. Which among the following countries had the highest GDP per person in 2009?
Chapter 06 – An Introduction to Macroeconomics
33. Investment happens when:
34. Savings:
35. There is a trade-off between:
Chapter 06 – An Introduction to Macroeconomics
36. The amount of investment is ultimately limited by the amount of:
37. Which of the following statements is true?
38. Which of the following is the best example of financial investment?
Chapter 06 – An Introduction to Macroeconomics
39. Which of the following is the best example of economic investment?
40. Which of the following is the best example of investment as defined by economists?
Chapter 06 – An Introduction to Macroeconomics
41. Which of the following best represents the effect of an increase in investment?
42. One principle of economic growth is the notion that, to raise living standards over time, an
economy must:
43. Which of the following is the principal source of savings in an economy?
Chapter 06 – An Introduction to Macroeconomics
44. Savings are transferred from savers to borrowers through the following intermediaries,
except:
45. Decisions about savings and investment are:
46. Increased optimism about the future will lead to:
Chapter 06 – An Introduction to Macroeconomics
47. Situations in which firms expect one thing to happen but then something else happens are
called:
48. In economics, the word “shocks” refers to:
49. Sharply rising oil prices are most likely to lead to a:
Chapter 06 – An Introduction to Macroeconomics
50. If consumers become pessimistic, the economy is likely to experience a:
51. An increase in worker productivity will lead to a:
52. The term “shock”:
Chapter 06 – An Introduction to Macroeconomics
53. What impact will a negative demand shock have on the main measures of economic
performance?
54. What impact will a negative supply shock have on the main measures of economic
performance?
55. Economists believe that most short-run fluctuations: