1. If a reduction in the unemployment rate is always accompanied by a reduction in income inequality,
then:
A) full employment and greater income equality are conflicting goals.
B) full employment and greater income equality are compatible goals.
C) reduced income inequality is a more important goal than is achieving full employment.
D) achieving full employment is a more important goal than reducing income inequality.
2. With respect to the basic economic goals of society, for example, economic growth, full employment,
economic efficiency, price level stability, economic freedom, distributional equity, and economic security,
it can be said that:
A) all are accepted and assigned similar priorities in every industrialized society.
B) all are precisely measurable.
C) some goals are complementary and others are conflicting.
D) all are conflicting goals.
3. Macroeconomics can best be described as the:
A) analysis of how a consumer tries to spend income.
B) study of the large aggregates of the economy or the economy as a whole.
C) analysis of how firms attempt to maximize their profits.
D) study of how supply and demand determine prices in individual markets.
4. Which of the following is not correct? A typical production possibilities curve:
A) indicates how much of two products a society can produce.
B) reveals how much each additional unit of one product will cost in terms of the other product.
C) specifies how much of each product society should produce.
D) indicates that to produce more of one product society must forgo larger and larger amounts of the
other product.
5. Other things equal, which of the following would shift an economy's production possibilities curve to the
left?
A) the discovery of a low-cost means of generating and storing solar energy
B) the entrance of more women into the labor force
C) a law requiring mandatory retirement from the labor force at age 55
D) an increase in the proportion of total output that consists of capital or investment goods
6. If all discrimination in the United States were eliminated, the economy would:
A) have a less concave production possibilities curve.
B) produce at some point closer to its production possibilities curve.
C) be able to produce at some point outside of its production possibilities curve.
D) produce more consumer goods and fewer investment goods.
7. In moving along a stable supply curve which of the following is not held constant?
A) the number of firms producing this good
B) expectations about the future price of the product
C) techniques used in producing this product
D) the price of the product for which the supply curve is relevant
8. GDP excludes:
A) the market value of unpaid work in the home. C) the production of nondurable goods.
B) the production of services.
D) positive changes in inventories.
9. In a typical year which of the following measures of aggregate output and income is likely to be the
smallest?
A) gross domestic product
B) national income
C) disposable income D) personal income
10. A recession is a period in which:
A) cost-push inflation is present. C) demand-pull inflation is present.
B) nominal domestic output falls. D) real domestic output falls.
11. The unemployment rate is the:
A) ratio of unemployed to employed workers.
B) number of employed workers minus the number of workers who are not in the labor force.
C) percentage of the labor force that is out of work.
D) percentage of the total population that is out of work.
12. The determinants of aggregate demand:
A) explain why the aggregate demand curve is downsloping.
B) explain shifts in the aggregate demand curve.
C) demonstrate why real output and the price level are inversely related.
D) include input prices and resource productivity.
13. Which of the following represents the most expansionary fiscal policy?
A) a $10 billion tax cut
C) a $10 billion tax increase
B) a $10 billion increase in government spending
D) a $10 billion decrease in government
spending
14. The greatest expansionary impact of a budget deficit will occur when the:
A) government finances the deficit by obtaining newly printed money.
B) government borrows the money from the general public.
C) economy is operating in the intermediate range of its aggregate supply curve.
D) marginal propensity to save for the economy is high.
15. The money supply is backed:
A) by the government's ability to control the supply of money and therefore to keep its value relatively
stable.
B) by government bonds.
C) dollar-for-dollar with gold and silver.
D) dollar-for-dollar with gold bullion.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
B
C
B
C
C
B
D
A
C
D
C
B
B
A
A