Question 1

Modern economic growth refers to any situation where a nation's output increases.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a
Recession reduce demand for laptop computers, we would expect Techno to

Accepted Answer

A)   reduce output in the long run.
B)   reduce output in the short run.
C)   raise prices in the short run to compensate for lost revenue.
D)   lower prices in the short run to offset the reduced demand.E) All of the above
F) A) and C)

Question 3

Which of the following best represents the effect of an increase in investment?

Accepted Answer

A)   moving from point a to point b
B)   moving from point d to point c
C)   moving from point a to point c
D)   moving from point b to point dE) A) and B)
F) B) and C)

Question 4

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

Accepted Answer

One way to deal with unexpected shifts i...

Question 5

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Accepted Answer

A)   is highly susceptible to inﬂation.
B)   faces ﬂuctuating output levels whenever there is a demand shock.
C)   is capable of always producing at its optimal capacity.
D)   is largely immune to business cycles.E) B) and D)
F) A) and B)

Question 6

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Accepted Answer

A)   will increase by 5 percent.
B)   will not change.
C)   will increase by 1 percent.
D)   will decrease.E) A) and D)
F) C) and D)

Question 7

For an economy to increase investment, it must

Accepted Answer

A)   increase saving.
B)   increase present consumption.
C)   buy more stocks and bonds.
D)   increase nominal GDP.E) A) and D)
F) C) and D)

Question 8

During recessions, business must

Accepted Answer

A)   cut per-unit production costs so they can cut the selling price and increase sales.
B)   reduce output levels to bring quantities supplied in line with the reduced quantity demanded.
C)   cut per-unit production costs and increase the selling price, and also increase output levels to bring quantities supplied in line with the expected quantity demanded.
D)   increase per-unit production costs so they can reduce sales even further, and also reduce demand to match the quantities supplied.
E)   cut per-unit production costs to reduce the selling price, and also reduce output levels to bring quantities supplied in line with the reduced quantity demanded.F) A) and E)
G) A) and B)

Question 9

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

Accepted Answer

A) True 
 B)False

Question 10

The period known as the Industrial Revolution began in the United States in the late 1800s.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that inventories are falling. We can expect that, in the future,

Accepted Answer

A)   unemployment will likely increase.
B)   unemployment will likely decrease.
C)   unemployment could increase or decrease, as its direction cannot be predicted based on inventories.
D)   real GDP will likely decrease.E) B) and C)
F) All of the above

Question 12

Decisions about saving and investment are

Accepted Answer

A)   generally made under conditions of complete certainty about the future.
B)   complicated by the fact that the future is uncertain.
C)   unaffected by expectations of the future.
D)   independent of expectations about the future.E) B) and D)
F) B) and C)

Question 13

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand
Shock and prices are ﬂexible?

Accepted Answer

A)   The ﬁrm's inventories will not change.
B)   The ﬁrm's inventories will increase by 200 computers per week.
C)   The ﬁrm's inventories will decrease by 150 computers per week.
D)   The ﬁrm's inventories will increase by 350 computers per week.E) A) and C)
F) B) and D)

Question 14

Which of the following statements is true?

Accepted Answer

A)   Short-run economic ﬂuctuations are made worse because prices are ﬂexible.
B)   Short-run economic ﬂuctuations would be less severe if prices were inﬂexible.
C)   If prices were fully inﬂexible, there would be no short-run economic ﬂuctuations.
D)   If prices were fully ﬂexible, there would be no short-run economic ﬂuctuations.E) B) and C)
F) A) and B)

Question 15

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Accepted Answer

A) True 
 B)False

Question 16

(Consider This) Describe the economic conditions of the Great Recession.

Accepted Answer

The Great Recession was triggered by a s...

Question 17

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their
purchases of goods and services.

Accepted Answer

A) True 
 B)False

Question 18

What social problems have been linked to higher rates of unemployment?

Accepted Answer

Higher unemployment rates are ...

Question 19

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Accepted Answer

A)   is highly susceptible to recessions and high unemployment.
B)   faces regularly ﬂuctuating output levels in response to demand shocks.
C)   is capable of always producing at its optimal capacity.
D)   can only lessen the impacts of business cycles through active government policy.E) B) and D)
F) None of the above

Question 20

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) C) and D)
F) A) and B)

Exam 6: An Introduction to Macroeconomics

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

Correct Answer
verified

Suppose that inventories are falling. We can expect that, in the future,

Correct Answer
verified

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Correct Answer
verified

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

Correct Answer
verified
One way to deal with unexpected shifts i...
View Answer

Decisions about saving and investment are

Correct Answer
verified

For an economy to increase investment, it must

Correct Answer
verified

(Consider This) Describe the economic conditions of the Great Recession.

Correct Answer
verified
The Great Recession was triggered by a s...
View Answer

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Correct Answer
verified

Correct Answer
verified

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a Recession reduce demand for laptop computers, we would expect Techno to

Correct Answer
verified

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Correct Answer
verified

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand Shock and prices are ﬂexible?

Correct Answer
verified

Modern economic growth refers to any situation where a nation's output increases.

Correct Answer
verified

The period known as the Industrial Revolution began in the United States in the late 1800s.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

During recessions, business must

Correct Answer
verified

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Correct Answer
verified

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

Correct Answer
verified

What social problems have been linked to higher rates of unemployment?

Correct Answer
verified
Higher unemployment rates are ...
View Answer

Which of the following best represents the effect of an increase in investment?

Correct Answer
verified

Exam 6: An Introduction to Macroeconomics

In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

Correct AnswerverifiedShow Answer

Suppose that inventories are falling. We can expect that, in the future,

Correct AnswerverifiedShow Answer

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Correct AnswerverifiedShow Answer

How do companies deal with unexpected shifts in quantity demanded when prices are sticky?

Correct AnswerverifiedOne way to deal with unexpected shifts i...View AnswerShow Answer

Decisions about saving and investment are

Correct AnswerverifiedShow Answer

For an economy to increase investment, it must

Correct AnswerverifiedShow Answer

(Consider This) Describe the economic conditions of the Great Recession.

Correct AnswerverifiedThe Great Recession was triggered by a s...View AnswerShow Answer

Suppose a family's income increases by 5 percent at the same time that inﬂation is 6 percent. Then the family's living standard

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a Recession reduce demand for laptop computers, we would expect Techno to

Correct AnswerverifiedShow Answer

Refer to the ﬁgure. Assuming this market is representative of the economy as a whole, this economy

Correct AnswerverifiedShow Answer

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. What happens to the ﬁrm's inventory of computers if there is a negative demand Shock and prices are ﬂexible?

Correct AnswerverifiedShow Answer

Modern economic growth refers to any situation where a nation's output increases.

Correct AnswerverifiedShow Answer

The period known as the Industrial Revolution began in the United States in the late 1800s.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

During recessions, business must

Correct AnswerverifiedShow Answer

Economists and policymakers are generally more concerned about nominal GDP than real GDP.

Correct AnswerverifiedShow Answer

A negative demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

Correct AnswerverifiedShow Answer

What social problems have been linked to higher rates of unemployment?

Correct AnswerverifiedHigher unemployment rates are ...View AnswerShow Answer

Which of the following best represents the effect of an increase in investment?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
One way to deal with unexpected shifts i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Great Recession was triggered by a s...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Higher unemployment rates are ...
View Answer

Correct Answer
verified