Question 1

The modern macroeconomic tools used by the government are _____ policy and _____ policy.

Accepted Answer

A)  tax; antitrust
B)  fiscal; monetary
C)  monetary; exchange rate
D)  capital; laborE) B) and C)
F) A) and B)

Question 2

If macroeconomic policy has been successful over time, it is likely that the economy has not seen:

Accepted Answer

A)  any inflation.
B)  any severe recessions.
C)  any unemployment.
D)  a business cycle.E) B) and C)
F) None of the above

Question 3

Which of the following are considered to be the two types of macroeconomic policies?

Accepted Answer

A)  monetary and fiscal policy
B)  monetary and regulation policy
C)  fiscal and regulation policy
D)  fiscal policy and price controlsE) A) and C)
F) C) and D)

Question 4

A trade surplus occurs:

Accepted Answer

A)  during economic contractions only.
B)  when the value of imports exceeds the value of exports.
C)  when the value of imports is less than the value exports.
D)  when unemployment is rising.E) All of the above
F) B) and D)

Question 5

If a country has a trade deficit, does it indicate that the country has a serious problem?

Accepted Answer

A)  No. Trade deficits occur when a country's investment spending is higher than its level of saving.
B)  Yes. Trade deficits occur when a country has low productivity.
C)  Yes. Trade deficits occur when a country does not have a comparative advantage in production.
D)  Yes. Trade deficits occur when a country has a high budget surplus.E) None of the above
F) A) and B)

Question 6

When the Great Depression reached its trough in 1933, the unemployment rate was approximately:

Accepted Answer

A)  5%.
B)  10%.
C)  25%.
D)  50%.E) B) and C)
F) A) and D)

Question 7

John Maynard Keynes believed that the government should:

Accepted Answer

A)  actively try to mitigate the effects of recessions by using fiscal and monetary policies.
B)  not interfere with the economy but let the economy self-correct.
C)  intervene only when there is a boom but let the recession run its course.
D)  not use fiscal and monetary policies, as these policies have long-term adverse effects.E) B) and D)
F) B) and C)

Question 8

An economic expansion in the United States is typically associated with a(n) :

Accepted Answer

A)  falling inflation rate.
B)  increase in the poverty rate.
C)  falling unemployment rate.
D)  decrease in corporate profits.E) C) and D)
F) A) and D)

Question 9

The sequence of business cycle phases is:

Accepted Answer

A)  peak, trough, expansion, recession.
B)  peak, expansion, trough, recession.
C)  peak, recession, trough, expansion.
D)  peak, expansion, recession, trough.E) B) and C)
F) None of the above

Question 10

Fiscal policy attempts to affect the level of overall spending by making changes in:

Accepted Answer

A)  the interest rate.
B)  the money supply.
C)  banking regulations.
D)  taxes and spending.E) None of the above
F) A) and D)

Question 11

The economy is in a recession and Congress passes legislation to reduce income taxes. Tom, seeing an increase in his take-home pay, goes to Best Buy and purchases a new television. Why is the tax cut a macroeconomic issue, while Tom's new TV is a microeconomic issue?

Accepted Answer

The tax cut is an example of fiscal poli...

Question 12

Use of fiscal policy involves changes in:

Accepted Answer

A)  interest rates.
B)  government spending.
C)  the quantity of money.
D)  the quantity of money and interest rates.E) B) and D)
F) C) and D)

Question 13

Fiscal policy can be used to reduce the severity of recessions.

Accepted Answer

A) True 
 B)False

Question 14

During a recession, one will often observe:

Accepted Answer

A)  rising aggregate output.
B)  rising unemployment rates and falling aggregate output.
C)  rising employment rates.
D)  zero unemployment rates.E) B) and C)
F) C) and D)

Question 15

The most widely used indicator of the conditions in the labor market is the:

Accepted Answer

A)  unemployment rate.
B)  population growth rate.
C)  inflation rate.
D)  trade deficit.E) None of the above
F) B) and C)

Question 16

What is long-run economic growth, and why is it so important for a nation's economy?

Accepted Answer

Long-run economic growth is the sustaine...

Question 17

Which of the following statements is TRUE?

Accepted Answer

A)  Long-run growth started during the Renaissance.
B)  Long-run growth started in the early 1700s.
C)  Peasants in eighteenth-century Europe had a standard of living more than 50 times that of the Egyptian peasants in the age of the pharaohs.
D)  Long-run growth is a relatively modern phenomenon.E) All of the above
F) A) and B)

Question 18

Between 1980 and 2014, inflation wiped out most of the wage gains of the typical worker.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is TRUE about inflation and deflation?

Accepted Answer

A)  Both are good for the economy.
B)  Inflation is always good for the economy and deflation is always bad for the economy.
C)  Inflation is always bad for the economy and deflation is always good for the economy.
D)  Both inflation and deflation can pose problems for the economy.E) All of the above
F) A) and D)

Question 20

The paradox of thrift highlights:

Accepted Answer

A)  the role of investment in the macroeconomy.
B)  how individual decisions to save more may worsen a recession.
C)  how an increase in spending occurs during recessions.
D)  irrational behavior on the part of households.E) A) and B)
F) A) and C)

Exam 6: Macroeconomics: the Big Picture

John Maynard Keynes believed that the government should:

Correct AnswerverifiedShow Answer

When the Great Depression reached its trough in 1933, the unemployment rate was approximately:

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The paradox of thrift highlights:

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Between 1980 and 2014, inflation wiped out most of the wage gains of the typical worker.

Correct AnswerverifiedShow Answer

The sequence of business cycle phases is:

Correct AnswerverifiedShow Answer

The most widely used indicator of the conditions in the labor market is the:

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Use of fiscal policy involves changes in:

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If macroeconomic policy has been successful over time, it is likely that the economy has not seen:

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A trade surplus occurs:

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Fiscal policy can be used to reduce the severity of recessions.

Correct AnswerverifiedShow Answer

Which of the following are considered to be the two types of macroeconomic policies?

Correct AnswerverifiedShow Answer

During a recession, one will often observe:

Correct AnswerverifiedShow Answer

What is long-run economic growth, and why is it so important for a nation's economy?

Correct AnswerverifiedLong-run economic growth is the sustaine...View AnswerShow Answer

The modern macroeconomic tools used by the government are _____ policy and _____ policy.

Correct AnswerverifiedShow Answer

The economy is in a recession and Congress passes legislation to reduce income taxes. Tom, seeing an increase in his take-home pay, goes to Best Buy and purchases a new television. Why is the tax cut a macroeconomic issue, while Tom's new TV is a microeconomic issue?

Correct AnswerverifiedThe tax cut is an example of fiscal poli...View AnswerShow Answer

An economic expansion in the United States is typically associated with a(n) :

Correct AnswerverifiedShow Answer

If a country has a trade deficit, does it indicate that the country has a serious problem?

Correct AnswerverifiedShow Answer

Fiscal policy attempts to affect the level of overall spending by making changes in:

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

Which of the following is TRUE about inflation and deflation?

Correct AnswerverifiedShow Answer

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Long-run economic growth is the sustaine...
View Answer

The modern macroeconomic tools used by the government are _ policy and _ policy.

Correct Answer
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The tax cut is an example of fiscal poli...
View Answer

Correct Answer
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