question
Macroeconomics does not try to answer the question of:
why do some countries experience rapid growth.
what is the rate of return on education.
why do some countries have high rates of inflation.
what causes recessions and depressions.
why do some countries experience rapid growth.
what is the rate of return on education.
why do some countries have high rates of inflation.
what causes recessions and depressions.
answer
what is the rate of return on education.
question
The study of the economy as a whole is called:
household economics.
business economics.
microeconomics.
macroeconomics.
household economics.
business economics.
microeconomics.
macroeconomics.
answer
macroeconomics.
question
Macroeconomists cannot conduct controlled experiments, such as testing various tax and expenditure policies, because:
it is against the law.
they tried it once and it did not work.
they must make use of the data history gives them.
economists already know the answers that would come out of the experiments.
it is against the law.
they tried it once and it did not work.
they must make use of the data history gives them.
economists already know the answers that would come out of the experiments.
answer
they must make use of the data history gives them.
question
All of the following are important macroeconomic variables except:
real GDP.
the unemployment rate.
the marginal rate of substitution.
the inflation rate.
real GDP.
the unemployment rate.
the marginal rate of substitution.
the inflation rate.
answer
the marginal rate of substitution.
question
The unemployment rate:
was zero during the 1990s in the United States.
was zero on average between 1900 and 1950 in the United States.
has never been zero in the United States.
is usually zero when the economy is not in a recession or depression.
was zero during the 1990s in the United States.
was zero on average between 1900 and 1950 in the United States.
has never been zero in the United States.
is usually zero when the economy is not in a recession or depression.
answer
has never been zero in the United States.
question
Which of the following statements about economic models is true?
There is only one correct economic model.
All economic models are based on the same assumptions.
The purpose of economic models is to show how endogenous variables affect exogenous variables.
Economists use different models to address different questions.
There is only one correct economic model.
All economic models are based on the same assumptions.
The purpose of economic models is to show how endogenous variables affect exogenous variables.
Economists use different models to address different questions.
answer
Economists use different models to address different questions.
question
The assumption of continuous market clearing means that:
sellers can sell all that they want at the going price.
buyers can buy all that they want at the going price.
in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price.
at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.
sellers can sell all that they want at the going price.
buyers can buy all that they want at the going price.
in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price.
at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.
answer
at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.
question
Which of the following is the best example of a sticky price?
the price of a barrel of oil
the price of the U.S. dollar in terms of euros
the price of a share of stock
the price of a soda in a vending machine
the price of a barrel of oil
the price of the U.S. dollar in terms of euros
the price of a share of stock
the price of a soda in a vending machine
answer
the price of a soda in a vending machine
question
The statistic used by economists to measure the value of economic output is:
the CPI.
GDP.
the GDP deflator.
the unemployment rate.
the CPI.
GDP.
the GDP deflator.
the unemployment rate.
answer
GDP.
question
Which of the following is a stock variable?
wealth
consumption
investment
income
wealth
consumption
investment
income
answer
wealth
question
The market value of all final goods and services produced within an economy in a given period of time is called:
industrial production.
gross domestic product.
the GDP deflator.
general durable purchases.
industrial production.
gross domestic product.
the GDP deflator.
general durable purchases.
answer
gross domestic product.
question
When a firm sells a product out of inventory, investment expenditures __ and consumption expenditures ____.
increase; decrease
decrease; increase
decrease; remain unchanged
remain unchanged; increase
increase; decrease
decrease; increase
decrease; remain unchanged
remain unchanged; increase
answer
decrease; increase
question
Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that McDonald's sells you a hamburger made from that meat for $2. In this case, the value included in GDP should be:
$0.50.
$1.
$2.
$3.
$0.50.
$1.
$2.
$3.
answer
$2.
question
The value added of an item produced refers to:
a firm's profits on the item sold.
the value of the labor inputs in the production of an item.
the value of a firm's output less the value of its costs.
the value of a firm's output less the value of the intermediate goods that the firm purchases.
a firm's profits on the item sold.
the value of the labor inputs in the production of an item.
the value of a firm's output less the value of its costs.
the value of a firm's output less the value of the intermediate goods that the firm purchases.
answer
the value of a firm's output less the value of the intermediate goods that the firm purchases.
question
In computing GDP,
expenditures on used goods are included.
production added to inventories is excluded.
the amount of production in the underground economy is imputed.
the value of intermediate goods is included in the market price of the final goods.
expenditures on used goods are included.
production added to inventories is excluded.
the amount of production in the underground economy is imputed.
the value of intermediate goods is included in the market price of the final goods.
answer
the value of intermediate goods is included in the market price of the final goods.
question
To avoid double counting in the computation of GDP, only the value of ______ goods are included.
final
used
intermediate
investment
final
used
intermediate
investment
answer
final
question
If nominal GDP in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator?
0.79
1.03
1.27
1.30
0.79
1.03
1.27
1.30
answer
1.27
question
The GDP deflator is equal to:
the ratio of nominal GDP to real GDP.
the ratio of real GDP to nominal GDP.
real GDP minus national GDP.
nominal GDP minus real GDP.
the ratio of nominal GDP to real GDP.
the ratio of real GDP to nominal GDP.
real GDP minus national GDP.
nominal GDP minus real GDP.
answer
the ratio of nominal GDP to real GDP.
question
Nominal GDP measures the value of goods and services in __ prices, while real GDP measures the value of goods and services in ____ prices.
foreign; domestic
domestic; foreign
current; constant
constant; current
foreign; domestic
domestic; foreign
current; constant
constant; current
answer
current; constant
question
In the national income accounts, consumption expenditures include all of the following except household purchases of:
durable goods.
nondurable goods.
new residential housing.
services.
durable goods.
nondurable goods.
new residential housing.
services.
answer
new residential housing.
question
The new chain-weighted measures of real GDP are an improvement over traditional measures because the prices used to compute real GDP are:
never far out of date.
always from the same base year.
imputed.
chained to the CPI.
never far out of date.
always from the same base year.
imputed.
chained to the CPI.
answer
never far out of date.
question
The national income accounts identity, for an open economy, is:
Y = C + I + G - NX.
Y = C + I + G + NX.
Y = C + I + G.
Y = C + I - G.
Y = C + I + G - NX.
Y = C + I + G + NX.
Y = C + I + G.
Y = C + I - G.
answer
Y = C + I + G + NX.
question
If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is 741,andnetexportsare−1,910, then government purchases are:
$2,977.
$1,910.
-$843.
$1,067.
$2,977.
$1,910.
-$843.
$1,067.
answer
$2,977.
question
If total investment (measured in billions of current dollars) equals $741, business fixed investment is $524, and residential fixed investment is $222, then inventory investment is:
$5.
-$5.
$15.
-$15.
$5.
-$5.
$15.
-$15.
answer
-$5.
question
In 2010, the GDP of the United States totaled about:
$14.5 billion.
$145 billion.
$14.5 trillion.
$145 trillion.
$14.5 billion.
$145 billion.
$14.5 trillion.
$145 trillion.
answer
$14.5 trillion.
question
In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was:
67 percent.
50 percent.
31 percent.
16 percent.
67 percent.
50 percent.
31 percent.
16 percent.
answer
67 percent.
question
GNP equals GDP __ income earned domestically by foreigners ____ income that nationals earn abroad.
plus; plus
minus; minus
minus; plus
plus; minus
plus; plus
minus; minus
minus; plus
plus; minus
answer
minus; plus
question
According to the usual seasonal pattern of the U.S. economy, GDP is highest in the quarter of the year that includes:
January, February, and March.
April, May, and June.
July, August, and September.
October, November, and December.
January, February, and March.
April, May, and June.
July, August, and September.
October, November, and December.
answer
October, November, and December.
question
According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:
are out of a job, but not looking for work.
retired from the labor force before age 65.
do not have a job, but have looked for work in the past 4 weeks.
are absent from work because of bad weather or illness.
are out of a job, but not looking for work.
retired from the labor force before age 65.
do not have a job, but have looked for work in the past 4 weeks.
are absent from work because of bad weather or illness.
answer
do not have a job, but have looked for work in the past 4 weeks.
question
If an increasing proportion of the adult population is retired, then the labor force participation rate:
will increase.
will decrease.
will remain constant.
may increase, decrease, or remain constant.
will increase.
will decrease.
will remain constant.
may increase, decrease, or remain constant.
answer
will decrease.
question
The employment statistics computed from the establishment survey do not include:
workers with two jobs.
the self-employed.
workers on firms' payrolls.
part-time workers on firms' payrolls.
workers with two jobs.
the self-employed.
workers on firms' payrolls.
part-time workers on firms' payrolls.
answer
the self-employed.
question
In the circular flow diagram, firms receive revenue from the _ market, which is used to purchase inputs in the ___ market.
goods; financial
factor; financial
goods; factor
factor; goods
goods; financial
factor; financial
goods; factor
factor; goods
answer
goods; factor
question
If an increase of an equal percentage in all factors of production results in an increase in output of the same percentage, then a production function has the property called:
constant marginal product of labor.
increasing marginal product of labor.
constant marginal product of labor.
increasing marginal product of labor.
constant marginal product of labor.
increasing marginal product of labor.
constant marginal product of labor.
increasing marginal product of labor.
answer
constant marginal product of labor.
question
The price received by each factor of production for its services is determined by:
demand for output and supply of factors.
demand for factors and supply of output.
demand and supply of output.
demand and supply of factors.
demand for output and supply of factors.
demand for factors and supply of output.
demand and supply of output.
demand and supply of factors.
answer
demand and supply of factors.
question
A competitive, profit-maximizing firm hires labor until the:
marginal product of labor equals the wage.
price of output multiplied by the marginal product of labor equals the wage.
real wage equals the real rental price of capital.
wage equals the rental price of capital.
marginal product of labor equals the wage.
price of output multiplied by the marginal product of labor equals the wage.
real wage equals the real rental price of capital.
wage equals the rental price of capital.
answer
price of output multiplied by the marginal product of labor equals the wage.
question
The real rental price of capital is the price per unit of capital measured in:
dollars.
units of output.
units of labor.
units of capital.
dollars.
units of output.
units of labor.
units of capital.
answer
units of output.
question
An increase in the supply of capital will:
increase the real rental price of
capital.
decrease the real rental price of capital.
increase the productivity of capital.
decrease the real interest rate.
increase the real rental price of
capital.
decrease the real rental price of capital.
increase the productivity of capital.
decrease the real interest rate.
answer
decrease the real rental price of capital.
question
The neoclassical theory of distribution explains the allocation of:
output between goods and services.
output among consumption, investment, and government spending.
income among factors of production.
income between saving and investment.
output between goods and services.
output among consumption, investment, and government spending.
income among factors of production.
income between saving and investment.
answer
income among factors of production.
question
Economic profit is zero if:
all factors are paid their marginal products and the law of diminishing returns is valid.
all factors are paid their marginal products and there are constant returns to scale.
all firms maximize profits and none are competitive.
all firms maximize profits and all factors are paid their marginal products.
all factors are paid their marginal products and the law of diminishing returns is valid.
all factors are paid their marginal products and there are constant returns to scale.
all firms maximize profits and none are competitive.
all firms maximize profits and all factors are paid their marginal products.
answer
all factors are paid their marginal products and there are constant returns to scale.
question
In a Cobb-Douglas production function the marginal product of capital will increase if:
the quantity of labor increases.
the quantity of capital increases.
labor's share of output increases.
average capital productivity decreases.
the quantity of labor increases.
the quantity of capital increases.
labor's share of output increases.
average capital productivity decreases.
answer
the quantity of labor increases.
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