Question 1

An increase in aggregate demand will result in inflation.

Accepted Answer

An increase in aggregate demand can lead to an increase in the price level, causing inflation. This is because an increase in aggregate demand increases the demand for goods and services, and if the supply of goods and services cannot increase in response, the prices will rise due to the excess demand.

Question 2

Economic aggregates are not observable in the "real world."

Accepted Answer

Economic aggregates, such as GDP or inflation, are not directly observable phenomena in the real world. They are constructed using data from various sources and mathematical models.

Question 3

GDP in 2015 would not include the resale of a house built in 2000.

Accepted Answer

GDP only includes the production of newly produced goods and services, not the resale of previously produced assets such as houses.

Question 4

Gross Domestic Product includes the sale of intermediate goods and services.

Accepted Answer

Gross Domestic Product (GDP) only includes the final goods and services produced within a country's borders in a given time period. Intermediate goods and services are excluded as they have already been accounted for in the final good or service they contribute to.

Question 5

Individuals live and work in both individual and aggregate economic entities.

Accepted Answer

Individuals can operate as an economic entity when making decisions about their personal finances, savings, and investments. However, they also participate in aggregate economic entities such as companies, markets, and governments when they engage in economic activities as part of a larger group.

Question 6

During economic fluctuations,individual markets usually move in different directions.

Accepted Answer

The answer of During economic fluctuations,individual markets usually move in...

Question 7

Two of the most important macroeconomic issues are unemployment and inflation.

Accepted Answer

Unemployment and inflation are two of the most closely watched and discussed macroeconomic issues as they have significant impacts on the overall health of an economy.

Question 8

Abstract terms like "cost of living" and "price level" are meaningless to ordinary individuals.

Accepted Answer

The answer of Abstract terms like "cost of living" and...

Question 9

Gross Domestic Product represents the money value of all final goods and services produced in the domestic economy within the year.

Accepted Answer

This is a correct definition of Gross Domestic Product (GDP). It measures the value of all goods and services produced within a country's borders in a given time period, usually a year.

Question 10

Macroeconomists pay little attention to the composition of aggregate output.

Accepted Answer

The answer of Macroeconomists pay little attention to the composition...

Question 11

The key characteristic of macroeconomics is the process of aggregation.

Accepted Answer

Macroeconomics deals with the aggregate behavior of the entire economy rather than individual markets or actors. Aggregation involves combining data from different individual units to form an overall summary or composite measure. This is a key feature of macroeconomic analysis.

Question 12

In macroeconomics,the vertical axis in a supply-demand model measures the price level rather than a particular product's price.

Accepted Answer

In a supply-demand model, the vertical axis represents the price level or the general price level in the economy, not the price of a specific product.

Question 13

If a woman marries her housekeeper,GDP would remain constant.

Accepted Answer

The answer of If a woman marries her housekeeper,GDP would...

Question 14

Aggregation involves adding together different products and services.

Accepted Answer

Aggregation is the process of combining and adding together different products or services to create a unified whole.

Question 15

Someone who studies the pricing policies of the Microsoft Corporation would be a microeconomist.

Accepted Answer

Microeconomics deals with the study of individual units or components of the economy, such as individual consumers, firms, and markets. The study of pricing policies of a corporation like Microsoft falls under microeconomics.

Question 16

Real GDP values current output of goods and services at their current prices.

Accepted Answer

Real GDP adjusts for inflation by using constant prices from a base year, while nominal GDP values current output of goods and services at their current prices.

Question 17

If aggregate demand keeps shifting rightward month after month and aggregate supply remains constant,the economy will experience a recession.

Accepted Answer

If aggregate demand keeps shifting rightward month after month, it would indicate an increase in consumer spending and investment, which would lead to economic growth rather than a recession.

Question 18

From 2000 to 2001,the U.S.economy's annual growth rate slowed down abruptly.

Accepted Answer

This statement is true. During this period, the economy experienced a recession, with a negative GDP growth rate in 2001.

Question 19

Supply and demand provides the basic explanatory framework for constructing both microeconomic and macroeconomic models.

Accepted Answer

This statement is true as supply and demand is the foundations for understanding how prices are determined in both microeconomics (individual markets) and macroeconomics (economy-wide).

Question 20

Nominal GDP includes the current value of services produced in the economy.

Accepted Answer

Nominal GDP measures the current value of goods and services produced in the economy without adjusting for inflation. Therefore, it includes the current value of services produced in the economy.

Quiz 5: An Introduction To Macroeconomics