Question 1

Capital is a stock variable.

Accepted Answer

Capital is a stock variable because it represents the accumulated wealth or assets of a business or individual at a specific point in time. It contrasts with flow variables, such as income or expenses, which measure changes over a period of time.

Question 2

During the Great Depression,President Hoover
A) correctly called for an increase in taxes
B) incorrectly called for an increase in taxes
C) incorrectly called for a decrease in taxes
D) correctly called for a decrease in government spending
E) incorrectly called for an increase in government spending

Accepted Answer

President Hoover incorrectly called for an increase in taxes during the Great Depression, believing that balancing the budget through increased tax revenue would help the economy recover. However, this actually worsened the situation by reducing consumer spending and business investment.

Question 3

Since the Great Depression,business fluctuations have become more severe and longer in duration.

Accepted Answer

While there have been economic downturns since the Great Depression, overall trends show that business fluctuations have become less severe and shorter in duration, due in part to the implementation of policies and measures aimed at promoting economic stability.

Question 4

Which of the following is a stock variable?
A) business spending on capital equipment
B) consumer income
C) the federal government's debt
D) the federal government's budget deficit
E) total expenditure

Accepted Answer

The answer of Which of the following is a stock...

Question 5

If business leaders become optimistic about future sales and profits,they will __________ spending on plant and equipment,which __________ employment and income and,therefore,their expectations are __________.
A) increase; increases; fulfilled
B) increase; increases; not met
C) increase; decreases; fulfilled
D) decrease; decreases; fulfilled
E) decrease; increases; not met

Accepted Answer

If business leaders become optimistic about future sales and profits, they will increase spending on plant and equipment, which increases employment and income. This will fulfill their expectations.

Question 6

If firms expect greater demand for their products,invest in more capital and hire more labor,
A) there will likely be an increase in inflation and a rise in taxation
B) the business cycle is likely to be moving from peak to trough
C) their behavior may encourage the very prosperity that they expect
D) government will probably have to spend more and tax less to offset the economic impacts of these business decisions
E) consumers will probably spend less in anticipation of a decline in economic activity

Accepted Answer

When firms invest in more capital and hire more labor in anticipation of greater demand for their products, it stimulates economic activity and can lead to overall prosperity in the economy. This is because increased production and employment often result in increased income, production, and spending by consumers, leading to a positive multiplier effect on the economy.

Question 7

An economic variable that is measured per unit of time,such as spending per year,is known as a(n)
A) stock variable
B) periodic variable
C) expectations variable
D) flow variable
E) constant variable

Accepted Answer

A flow variable is an economic variable that is measured per unit of time, such as spending per year.

Question 8

The ultimate objective of macroeconomics is to
A) reduce the unemployment rate
B) stabilize the economy's growth rate
C) develop and test theories about how the overall economy works
D) improve the international competitiveness of the U.S.financial markets
E) maximize the efficiency of government intervention in the marketplace

Accepted Answer

The ultimate objective of macroeconomics is to develop and test theories about how the overall economy works. While reducing unemployment, stabilizing the economy's growth rate, improving international competitiveness, and maximizing government intervention efficiency are important objectives, they are not the ultimate goal of macroeconomics. The broader objective is to create a better understanding of how the economy functions and how policies can be designed and implemented to promote economic growth and stability.

Question 9

Which of the following is a stock variable?
A) Gross Domestic Product
B) consumption spending
C) the federal government's spending on Social Security
D) the money supply
E) Federal income tax revenue

Accepted Answer

A stock variable is a variable that is measured at a particular point in time, such as the amount of money in circulation (money supply). The other options are flow variables, which are measured over a period of time, such as GDP, consumption spending, government spending, and tax revenue.

Question 10

Which of the following best describes a flow (rather than a stock)?
A) you own $5,000 worth of government bonds
B) you own a $100,000 house
C) you own a coin collection valued at $10,000
D) you earn $500 per week
E) you own a $45,000 automobile

Accepted Answer

A flow is a quantity that is measured over a period of time, such as income or production. Earning $500 per week is an example of a flow, as it is a measurement of income per week, rather than a fixed asset or stock. The other answer choices describe stocks, or assets with a fixed value at a specific point in time.

Question 11

If business leaders become pessimistic about future sales and profits,they will __________ spending on plant and equipment,which __________ employment and income and,therefore,their expectations are __________.
A) reduce; reduces; fulfilled
B) reduce; increases; fulfilled
C) reduce; increases; not met
D) increase; increases; not met
E) increase; reduces; fulfilled

Accepted Answer

If business leaders become pessimistic about future sales and profits, they will reduce spending on plant and equipment, which reduces employment and income. Therefore, their expectations are not met.

Question 12

Which of the following best describes a stock (rather than a flow)?
A) each week you save $100
B) each week you buy $10 worth of gasoline
C) each week you buy $50 worth of groceries
D) you earn $500 per week at your job
E) you own $5,000 worth of government bonds

Accepted Answer

Stocks refer to ownership in a corporation, and owning $5,000 worth of government bonds does not represent ownership in a corporation. The other options refer to flows of income or expenditure rather than ownership.

Question 13

Which of the following is not a flow variable?
A) the amount of spending by consumers this holiday season
B) the number of times a dollar bill is spent in a day
C) the amount of sales taxes collected in a state per year
D) the number of shares of stock traded on Wall Street per week
E) the $100 Susan keeps in her purse,in case an emergency arises

Accepted Answer

Flow variables are those that are measured over a period of time, such as per day or per year. Option E represents a stock or a stockpile, which is not a flow variable. The other options represent variables that are measured over a period of time and therefore are flow variables.

Question 14

Which of the following is a flow variable?
A) U.S.plant and equipment
B) the U.S.population
C) money supply
D) investment spending
E) household debt

Accepted Answer

Investment spending is a flow variable as it represents the amount of spending on new investments in a certain period of time (e.g. a year), rather than a stock of assets or liabilities like the others listed (plant and equipment, population, money supply, household debt).

Question 15

Which of the following statements regarding Gross Domestic Product is not true?
A) It is a stock variable.
B) It is measured for a particular time period,usually one year.
C) It is perhaps the most effective means of viewing the same economy over time.
D) It is a measure of the economy's performance.
E) It is a flow variable,not a stock variable.

Accepted Answer

Gross Domestic Product (GDP) is a flow variable not a stock variable. A stock variable measures the amount of something at a given point in time, whereas a flow variable measures the rate at which something is produced or changed over a period of time. GDP is a measure of the total value of goods and services produced in an economy over a period of time, usually a year. It is considered a measure of the economy's performance and is often used as a means of comparing the same economy over time.

Question 16

Which of the following is a stock variable?
A) U.S.exports
B) sales by corporations
C) borrowing by the federal government
D) household wealth
E) net exports

Accepted Answer

A stock variable is a measure of the value of an asset or a liability at a particular point in time. Household wealth is an example of a stock variable because it represents the value of assets owned by households at a particular point in time. The other options listed are flow variables, which represent the amount of a certain variable over a period of time.

Question 17

Gross Domestic Product measures the value of all final goods and services produced within a nation's borders.

Accepted Answer

This is the definition of Gross Domestic Product (GDP), which is a widely used economic indicator of a country's overall economic output. It is calculated by adding up the value of all final goods and services produced within a country's borders, regardless of whether the producers are foreigners or nationals.

Question 18

If all firms expect greater demand for their products or services,they will hire __________ resources (e.g.,labor and capital)and the economy will experience __________.
A) fewer; recession
B) fewer; growth
C) more; federal budget deficits
D) more; recession
E) more; growth

Accepted Answer

If firms expect greater demand for their products or services, they will hire more resources (e.g., labor and capital) to meet the demand, which will lead to economic growth.

Question 19

Which of the following is not the proper subject matter for macroeconomics?
A) unemployment levels
B) inflation rates
C) levels of national output
D) the price of corn
E) the role of government

Accepted Answer

Macroeconomics deals with large-scale economic issues like national output, inflation, and unemployment, while the price of a single commodity like corn falls under microeconomics.

Question 20

Economic fluctuations (or business cycles)
A) are changes in the number of businesses started
B) are fluctuations in the Dow Jones industrial average relative to a long-term growth trend
C) look at the role of business in the hiring resources
D) are fluctuations in the level of economic activity,relative to a long-term growth trend
E) are changes in government spending that occur over a period of years

Accepted Answer

Economic fluctuations, also known as business cycles, refer to the ups and downs of the level of economic activity, relative to a long-term growth trend. This includes changes in measures such as Gross Domestic Product (GDP), employment rates, and consumer spending.

Quiz 5: Introduction to Macroeconomics

Capital is a stock variable.

During the Great Depression,President Hoover

Since the Great Depression,business fluctuations have become more severe and longer in duration.

Which of the following is a stock variable?

If business leaders become optimistic about future sales and profits,they will spending on plant and equipment,which employment and income and,therefore,their expectations are __.

If firms expect greater demand for their products,invest in more capital and hire more labor,

An economic variable that is measured per unit of time,such as spending per year,is known as a(n)

The ultimate objective of macroeconomics is to

Which of the following is a stock variable?

Which of the following best describes a flow (rather than a stock) ?

If business leaders become pessimistic about future sales and profits,they will spending on plant and equipment,which employment and income and,therefore,their expectations are __.

Which of the following best describes a stock (rather than a flow) ?

Which of the following is not a flow variable?

Which of the following is a flow variable?

Which of the following statements regarding Gross Domestic Product is not true?

Which of the following is a stock variable?

Gross Domestic Product measures the value of all final goods and services produced within a nation's borders.

If all firms expect greater demand for their products or services,they will hire resources (e.g.,labor and capital) and the economy will experience .

Which of the following is not the proper subject matter for macroeconomics?

Economic fluctuations (or business cycles)

Quiz 5: Introduction to Macroeconomics

Capital is a stock variable.

During the Great Depression,President Hoover

Since the Great Depression,business fluctuations have become more severe and longer in duration.

Which of the following is a stock variable?

If business leaders become optimistic about future sales and profits,they will __________ spending on plant and equipment,which __________ employment and income and,therefore,their expectations are __________.

If firms expect greater demand for their products,invest in more capital and hire more labor,

An economic variable that is measured per unit of time,such as spending per year,is known as a(n)

The ultimate objective of macroeconomics is to

Which of the following is a stock variable?

Which of the following best describes a flow (rather than a stock) ?

If business leaders become pessimistic about future sales and profits,they will __________ spending on plant and equipment,which __________ employment and income and,therefore,their expectations are __________.

Which of the following best describes a stock (rather than a flow) ?

Which of the following is not a flow variable?

Which of the following is a flow variable?

Which of the following statements regarding Gross Domestic Product is not true?

Which of the following is a stock variable?

Gross Domestic Product measures the value of all final goods and services produced within a nation's borders.

If all firms expect greater demand for their products or services,they will hire __________ resources (e.g.,labor and capital) and the economy will experience __________.

Which of the following is not the proper subject matter for macroeconomics?

Economic fluctuations (or business cycles)

If business leaders become optimistic about future sales and profits,they will spending on plant and equipment,which employment and income and,therefore,their expectations are __.

If business leaders become pessimistic about future sales and profits,they will spending on plant and equipment,which employment and income and,therefore,their expectations are __.

If all firms expect greater demand for their products or services,they will hire resources (e.g.,labor and capital) and the economy will experience .