Flashcards on MACRO CHAPTER 6
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-a deep recession like the Great Depression.
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The central mission of modern macroeconomics is to prevent: -shortages. -surpluses. -high gas prices. -a deep recession like the Great Depression.
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the importance of total spending.
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Keynesian economics stressed: that the Depression should run its course to bring down the high cost of living. the importance of total spending. the self-correcting power of free markets. the long run.
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expansion
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If during several months the economy is simultaneously increasing its levels of output and employment, then the economy is in a(n): -expansion. -turning point between a recovery and a downturn. -recession. -depression.
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falling unemployment rate
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An economic expansion in the United States is typically associated with a(n): increase in the poverty rate. falling unemployment rate. falling inflation rate. decrease in corporate profits.
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Expansion
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Figure: The Business Cycle Reference: Ref 6-1 ******(GOES UP THE CURVE) (Figure: The Business Cycle) Look at the figure The Business Cycle. The movement from point B to C is called a(n): -trough. -expansion. -peak. -depression.
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aggregate output per person over several decades.
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Long-run growth is the sustained upward trend in: aggregate output per person over several decades. aggregate output per person over the business cycle. interest rates over time. the unemployment rate over time.
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-a sustained rise in the production of goods and services.
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Long-run economic growth is best measured by: -the rate of private saving. -a sustained rise in the production of goods and services. -the growth of the money supply. -trade surpluses in the long run.
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-The level of saving is important for long-run growth.
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Which of the following statements is TRUE? -Long-run growth models and business cycle models are the same. -The level of saving is important for long-run growth. -In the past century, the population of the United States has grown faster than output. -Since World War II, the economy of Argentina has grown faster than the economy of Canada.
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increased
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If workers' nominal wages have risen by 50% over a 10 years and prices have increased by 40% in that same period, then we can safely conclude that the amount of goods and services workers can buy has: decreased in quality. fallen. increased. not changed.
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the overall cost of living is changing very slowly.
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Price stability occurs when: the overall cost of living is changing very slowly. food prices have remained the same. the overall price level is zero. the economy is at full employment.
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a trade deficit.
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A nation whose value of imports exceeds its value of exports is said to have: a trade deficit. hyperinflation. price stability. a trade surplus.
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-understanding how living standards change over time.
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One of the issues of importance to macroeconomists is: -the behavior of individuals and their allocation of income. -the behavior of individual markets. -how firms determine the profit-maximizing level of output. -understanding how living standards change over time.
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fiscal policy.
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Setting government spending and taxes in an effort to change overall spending in an economy is use of: fiscal policy. monetary policy. the stock market. investment.
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a recession.
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One normally expects that unemployment increases while aggregate output and aggregate incomes decrease during: a recession. government intervention. the peak of the business cycle. an expansion.
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trading with other countries makes up a portion of its economy.
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If an economy is open: it does not trade with other countries. trading with other countries makes up a portion of its economy. anyone can immigrate to the country. Its real GDP will drop.
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affects its trade balances.
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The relation between a country's level of saving and investment: pertains to trade surpluses only. does not affect an open economy. affects its trade balances. has often been used to correct a trade deficit but not a tra
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