1)Since the Great Depression, business fluctuations have become more severe and
ID: 1207504 • Letter: 1
Question
1)Since the Great Depression, business fluctuations have become more severe and longer in duration: True or False
2)The ultimate objective of macroeconomics is to: A. improve the international competitiveness of U.S. financial markets. B. stabilize the growth rate in an economy. C. reduce the unemployment rate in an economy. D. develop and test theories about how the overall economy works.
3)The market value of all final goods and services produced in a nation during a particular period is called the: A. gross national product. B. net national product. C. gross world product. D. gross domestic product.
4)Economic fluctuations or business cycles: A. look at the role played by business on the level of unemployment. B. are fluctuations in the Dow Jones industrial average relative to a long-term growth trend. C. measure changes in the total number of new businesses started during a year. D. are fluctuations in the level of economic activity relative to a long-term growth trend.
5)Identify a valid trend observed in U.S. business cycles since 1933. A. Expansions generally lasted longer than contractions. B. There was no recession since 1979. C. Contractions lasted for more than two years on an average. D. There were only two or three complete cycles.
6)The value of a country's final goods and services after adjusting for changes due to inflation is called its _____. A. disposable income B. real GDP C. nominal GDP D. net national product
7)By a leading economic indicator, economists mean: A. a highly accurate indicator that is easily measured. B. an indicator of future economic activity. C. an indicator that predicts the level of inflation in an economy. D. an indicator that reflects economic fluctuations as they occur.
8)The aggregate demand curve for an economy depicts the: A. quantity of goods and services demanded at different price levels during a given time period, other things held constant. B. quantity of goods and services demanded during a given time period at different interest rates, other things held constant. C. quantity of goods and services that the economy is capable of producing during a given time period, other things held constant. D. quantity of goods and services demanded at different price levels during different time periods, other things held constant.
9)According to John Maynard Keynes’ General Theory of Employment, Interest and Money, the government should _____ in order to get an economy out of a depression. A. allow the economy to correct itself B. increase taxes C. increase spending D. reduce subsidies
10)The term inflation is used to describe a(n): A. sustained increase in the price level. B. rise in the value of money. C. general reduction in prices. D. decline in nominal income.
11)The gross domestic product (GDP) of a country measures the _____. A. market value of all intermediate goods and services produced by resources located within the country B. market value of all final goods and services produced by resources located within the country C. value added to the economy by intermediate goods and services minus original cost D. market value of all goods and services produced by resources located outside the country
12)Which of the following is an example of an intermediate good? A. Furniture bought by a family B. Sugar bought by a family C. Sugar bought by a bakery D. Burgers bought at a restaurant
13)The gross domestic product (GDP) excludes: A. the cost of a new vending machine. B. the value of new stocks and shares. C. the value of a new building. D. government expenditure on a new bridge.
14)The largest component of aggregate expenditure is _____. A. government purchases B. transfers C. consumption D. investment
15)Which of the following is true of leakages and injections in the circular flow model? A. Injections minus leakages equal gross domestic product (GDP). B. Leakages minus injections equal gross domestic product (GDP). C. Leakages minus injections equal zero in equilibrium. D. Leakages must be less than injections for an economy to be in equilibrium.
16)Gross domestic product (GDP) is a poor measure of social well-being because: A. the revenue earned through exports is ignored. B. the underground economy is not included in GDP accounting. C. consumer spending is more important than business spending and should be considered more valuable. D. each dollar of government spending is valued at less than one-half of private spending.
17)To determine the consumer price index (CPI), _____. A. the values of the current market basket at current prices and the base-year market basket at base-year prices need to be known B. the values of the current market basket at current and base-year prices need to be known C. the values of the base-year market basket at current and base-year prices need to be known D. only the current market basket at base-year prices needs to be known
18)Which of the following is true about the consumer price index (CPI) and the GDP price index? A. Both yield identical numbers for price level changes for any two years. B. CPI includes products that are widely used, while GDP price index includes all goods and services. C. Both measures weigh prices by quantities consumed in some base year. D. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
19)_____ is measured in terms of current-year prices. A. Nominal gross domestic product (GDP) B. Real gross domestic product (GDP) C. GDP price index D. Arbitrage
20)Real gross domestic product (GDP) shows: A. net domestic product. B. nominal GDP adjusted for taxes. C. constant dollar GDP. D. total spending on intermediate goods and services.
Explanation / Answer
1. True
2. D. develop and test theories about how the overall economy works.
3. D. gross domestic product.
4. D. are fluctuations in the level of economic activity relative to a long-term growth trend.
5. A. Expansions generally lasted longer than contractions.
6. B. real GDP
7. D. an indicator that reflects economic fluctuations as they occur
8. A. quantity of goods and services demanded at different price levels during a given time period, other things held constant.
9. C. increase spending
10. D. decline in nominal income
11. B. market value of all final goods and services produced by resources located within the country
12. C. Sugar bought by a bakery
13. D. government expenditure on a new bridge.
14. A. government purchases
15. A. Injections minus leakages equal gross domestic product (GDP).
16. B. the underground economy is not included in GDP accounting.
17. B. the values of the current market basket at current and base-year prices need to be known
18. D. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
19. B. Real gross domestic product (GDP)
20. B. nominal GDP adjusted for taxes.
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