Question 1

Inflation reduces the purchasing power of a person's income and savings.

Accepted Answer

A) True 
 B)False

Question 2

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each.This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas)  but sold them for $12 each.Based on this information, we can conclude that Harry's production of large pepperoni pizzas

Accepted Answer

A)  increased both nominal and real GDP from last year.
B)  increased nominal GDP from last year, but real GDP was unaffected.
C)  increased real GDP from last year, but nominal GDP was unaffected.
D)  did not change either nominal or real GDP from last year.E) A) and B)
F) A) and C)

Question 3

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?

Accepted Answer

A)  Nominal GDP doubles.
B)  Nominal GDP is halved.
C)  Nominal GDP doesn't change.
D)  There is not enough information to determine what happens to nominal GDP.E) A) and C)
F) A) and B)

Question 4

Prices tend to be sticky partially because sellers know that consumers prefer stable prices.

Accepted Answer

A) True 
 B)False

Question 5

Prices tend to be stickier in the shorter run than in the longer run.

Accepted Answer

A) True 
 B)False

Question 6

Real gross domestic product

Accepted Answer

A)  is a measure of inflation.
B)  will increase if the price level increases.
C)  will increase if the level of output increases.
D)  can change from one year to the next even if there is no change in output.E) C) and D)
F) None of the above

Question 7

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) All of the above
F) C) and D)

Question 8

Which of the following is used to measure directly the average standard of living across countries?

Accepted Answer

A)  real GDP
B)  nominal GDP
C)  purchasing power parity
D)  GDP per personE) A) and B)
F) A) and C)

Question 9

If expectations were always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Accepted Answer

A) True 
 B)False

Question 10

Saving in the economy

Accepted Answer

A)  occurs when current spending is less than current incomes.
B)  is generally not a determinant of future output.
C)  and investment are essentially the same concept.
D)  occurs when current consumption is more than current output.E) A) and B)
F) A) and C)

Question 11

If prices of goods and services were free to quickly adjust, then

Accepted Answer

A)  a negative demand shock would lead to increased unemployment in the short run.
B)  a positive demand shock would lead to increased unemployment in the short run.
C)  a negative demand shock would have no short-run effect on unemployment.
D)  there would be no short-run demand shocks.E) None of the above
F) B) and D)

Question 12

The term "recession" describes a situation where

Accepted Answer

A)  inflation rates exceed normal levels.
B)  output and living standards decline.
C)  an economy's ability to produce is destroyed.
D)  government takes a less active role in economic matters.E) All of the above
F) B) and D)

Question 13

Which among the following countries had the highest GDP per person in 2014?

Accepted Answer

A)  Mexico
B)  India
C)  Russia
D)  ChinaE) B) and C)
F) C) and D)

Question 14

High rates of unemployment are undesirable because they

Accepted Answer

A)  always lead to a decline in nominal GDP.
B)  are associated with higher levels of crime and illness.
C)  cannot be reduced through government policy.
D)  are associated with increases in the price level.E) C) and D)
F) A) and B)

Question 15

In 2014, output (GDP)  per person in the U.S.was about

Accepted Answer

A)  $32,000.
B)  $21,000.
C)  $54,000.
D)  $76,000.E) A) and B)
F) A) and D)

Question 16

Modern economic growth

Accepted Answer

A)  started occurring during the time of the Roman Empire.
B)  has been experienced by all countries around the world.
C)  refers to the phenomenon when a country's total output rises.
D)  makes a country's output per person rise at a compounded rate.E) None of the above
F) A) and D)

Question 17

Inventories held by firms

Accepted Answer

A)  tend to increase the severity of short-run fluctuations.
B)  tend to reduce the severity of short-run fluctuations.
C)  are held by businesses because they are a costless way of responding to demand shocks.
D)  are the result of positive demand shocks.E) A) and B)
F) A) and C)

Question 18

The business cycle is primarily concerned with changes in the level of overall prices over time.

Accepted Answer

A) True 
 B)False

Question 19

Sticky prices could be the result of firms being afraid of price wars.

Accepted Answer

A) True 
 B)False

Question 20

An increase in worker productivity will lead to a

Accepted Answer

A)  negative demand shock.
B)  positive demand shock.
C)  negative supply shock.
D)  positive supply shock.E) A) and B)
F) A) and C)

Exam 26: An Introduction to Macroeconomics

If prices of goods and services were free to quickly adjust, then

Correct Answer
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Correct Answer
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Real gross domestic product

Correct Answer
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Sticky prices could be the result of firms being afraid of price wars.

Correct Answer
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Unemployment describes the condition where

Correct Answer
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Inventories held by firms

Correct Answer
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High rates of unemployment are undesirable because they

Correct Answer
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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?

Correct Answer
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In 2014, output (GDP) per person in the U.S.was about

Correct Answer
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Which among the following countries had the highest GDP per person in 2014?

Correct Answer
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Modern economic growth

Correct Answer
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Inflation reduces the purchasing power of a person's income and savings.

Correct Answer
verified

Which of the following is used to measure directly the average standard of living across countries?

Correct Answer
verified

Prices tend to be sticky partially because sellers know that consumers prefer stable prices.

Correct Answer
verified

Saving in the economy

Correct Answer
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Prices tend to be stickier in the shorter run than in the longer run.

Correct Answer
verified

The term "recession" describes a situation where

Correct Answer
verified

If expectations were always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Correct Answer
verified

The business cycle is primarily concerned with changes in the level of overall prices over time.

Correct Answer
verified

An increase in worker productivity will lead to a

Correct Answer
verified

Exam 26: An Introduction to Macroeconomics

If prices of goods and services were free to quickly adjust, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Real gross domestic product

Correct AnswerverifiedShow Answer

Sticky prices could be the result of firms being afraid of price wars.

Correct AnswerverifiedShow Answer

Unemployment describes the condition where

Correct AnswerverifiedShow Answer

Inventories held by firms

Correct AnswerverifiedShow Answer

High rates of unemployment are undesirable because they

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

In 2014, output (GDP) per person in the U.S.was about

Correct AnswerverifiedShow Answer

Which among the following countries had the highest GDP per person in 2014?

Correct AnswerverifiedShow Answer

Modern economic growth

Correct AnswerverifiedShow Answer

Inflation reduces the purchasing power of a person's income and savings.

Correct AnswerverifiedShow Answer

Which of the following is used to measure directly the average standard of living across countries?

Correct AnswerverifiedShow Answer

Prices tend to be sticky partially because sellers know that consumers prefer stable prices.

Correct AnswerverifiedShow Answer

Saving in the economy

Correct AnswerverifiedShow Answer

Prices tend to be stickier in the shorter run than in the longer run.

Correct AnswerverifiedShow Answer

The term "recession" describes a situation where

Correct AnswerverifiedShow Answer

If expectations were always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies.

Correct AnswerverifiedShow Answer

The business cycle is primarily concerned with changes in the level of overall prices over time.

Correct AnswerverifiedShow Answer

An increase in worker productivity will lead to a

Correct AnswerverifiedShow Answer

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