Deck 5: Macroeconomics: the Big Picture

Question 1

Because of the increase in population over the past 50 years,

A) the rate of increase in real GDP per capita has been greater than the rate of increase in real GDP.
B) real GDP has grown at a slower rate than GDP.
C) the rate of increase in real GDP per capita has been less than the rate of increase in real GDP.
D) there has been no growth in real GDP.
E) the rate of increase in real GDP has been greater than the rate of increase in GDP.

Answer 1

C

Question 2

The increase in real GDP per capita over the past 50 years is closest to

A) $1,000.
B) $3 trillion.
C) $30,000.
D) $100,000.
E) $3,000.

Answer 2

C

Question 3

GDP is

A) a term used for economic growth.
B) a measure of the economy's potential.
C) another term for inflation.
D) a measure of the total value of all goods and services produced in a country during a specific period of time.
E) the total value of all goods and services produced during a specific period of time adjusted for the general increase in prices.

Answer 3

D

Question 4

Over the past 50 years, the average rate of increase in U.S. real GDP per capita has been about

A) 5 percent.
B) 0 percent.
C) 13 percent.
D) -3 percent.
E) 2 percent.

Question 5

The field of economics that studies the whole market economy is known as

A) microeconomics.
B) market economics.
C) macroeconomics.
D) global economics.

Question 6

The term per capita refers to

A) the rate of change.
B) the rate of inflation.
C) the population.
D) the price level.
E) the name of the country.

Question 7

According to the textbook, which of the following is one of the most important developments of the 1980-2006 period?

A) A period called the Great Moderation
B) The end of the World Trade Organization
C) The dissolution of the European Union
D) The beginning of the Great Depression

Question 8

The increase in U.S. production over the past 50 years

A) equals Japan's increase in production over the same period of time.
B) equals Germany's increase in production over the same period of time.
C) is less than the increase in production in either Germany or Japan.
D) is larger than the sum of Germany's and Japan's current real GDP.
E) equals the sum of both Japan's and Germany's increase in production over the same period of time.

Question 9

Over the past 50 years, the U.S. population

A) declined by about 90 million people.
B) increased by slightly over 120 million people.
C) declined by about 10 million people.
D) increased by about 10 million people.
E) increased by over 500 million people.

Question 10

The Great Recession and other economic developments in the United States between 2007 and 2016 were isolated, so they were not shared by other industrial nations in Europe.

Question 11

The average annual growth rate of the U.S. economy over the past 50 years has been about

A) 0 percent.
B) 10 percent
C) 15 percent.
D) 3 percent
E) -3 percent.

Question 12

The long-run upward trend in real GDP is called

A) the business cycle.
B) inflation.
C) recession.
D) economic growth.
E) economic fluctuations.

Question 13

The economy of the United States was increasingly less stable in the period of 1980-2006, with economic fluctuations at the end of the 1990s that were much larger than those experienced during the rest of the twentieth century.

Question 14

The adjective real, in the term real GDP, is used to indicate that

A) it is the perfect measure of what is produced.
B) this measure of output is official as opposed to an unofficial measure.
C) this measure of output is adjusted for the general increase in prices over time.
D) this measure of output is adjusted for the government's economic involvement.
E) it measures only real goods and services, not the value of those that can't be measured, such as a home-cooked meal.

Question 15

Between the early 1980s and 2006, the U.S. economy was in a period of

A) steady economic growth, and low inflation and unemployment.
B) high inflation, unemployment and economic volatility.
C) an economic depression of high unemployment and deflation.
D) stagnation with no economic growth but stable prices.

Question 16

GDP is the total value of all goods and services newly produced in the economy during a specified period of time, adjusted for inflation.

Question 17

Suppose a country's real GDP increased 3 percent between 2016 and 2017, while its population increased 2 percent. Between 2016 and 2017, real GDP per capita of this country

A) increased by 5 percent.
B) increased by 1percent.
C) decreased by 5 percent.
D) decreased by 1 percent.
E) remained the same.

Question 18

According to the textbook, which of the following is one of the most important developments of the period between 2007 and 2009?

A) The rapid economic growth of countries in the European Monetary Union
B) The Great Recession occurred in the United States
C) The dissolution of the Federal Reserve as the central bank of the United States
D) The Great Depression as a global phenomenon

Question 19

Which of the following trends were not observed in the 1980-2006 period?

A) China saw production per capita of its citizens increase significantly.
B) India saw production per capita of its citizens increase significantly.
C) Sub-Saharan African countries experienced a dramatic expansion of their economies.
D) After the recession in 1981-1982, the United States experienced two decades of almost continuous economic growth, with only minor recessions.

Question 20

Economic growth and economic fluctuations can occur simultaneously.

Question 21

The Great Recession officially ended in

A) December 2017.
B) April 2008.
C) June 2009.
D) August 2011.
E) None of these

Question 22

If real GDP and population are both growing at a positive rate,

A) real GDP must be growing slower than real GDP per capita.
B) real GDP must be growing faster than real GDP per capita.
C) real GDP per capita must be increasing.
D) real GDP per capita must be decreasing.
E) None of these

Question 23

If real GDP and population grow at the same rate, the real GDP per capita will decrease.

Question 24

When real GDP per capita is increasing, the standard of living is improving on average.

Question 25

According to the text, the difference in real income per capita between the North and the South has widened in the 100 years after the Civil War.

Question 26

As a rule of thumb, a recession is

A) a fall in real GDP lasting at least one month.
B) a fall in real GDP lasting at least six months.
C) said to occur whenever real GDP falls below the long-term trend.
D) said to occur whenever real GDP falls below the long-term trend for at least one month.
E) a fall in real GDP lasting at least one year.

Question 27

A recession that is very severe is called a

A) monumental shift.
B) microeconomic collapse.
C) depression.
D) deflation.

Question 28

How long did the recent economic expansion last before the beginning of the Great Recession?

A) About a year.
B) About two years.
C) About three years.
D) About 6 years.
E) About 20 years.

Question 29

Which of the following statements is true?

A) If real GDP grows faster than population, the real GDP per capita will decrease.
B) If real GDP grows slower than population, the real GDP per capita will increase.
C) If real GDP and population grow at the same rate, the real GDP per capita will remain constant.
D) None of these
E) All of these

Question 30

In terms of the decline in real GDP, the 2008-2009 recession was

A) eight times less severe than the Great Depression.
B) eight times more severe than the Great Depression.
C) the same as the Great Depression.
D) 20 times more severe than the Great Depression.
E) None of these

Question 31

Everybody has benefited from the economic growth of the past 50 years.

Question 32

The recession phase

A) is no longer a phase of the business cycle.
B) has the same duration and depth in all business cycles.
C) varies in duration and depth with each business cycle.
D) has the same depth in all business cycles.
E) has the same duration in all business cycles.

Question 33

Recessions in the United States have become less severe between 1980 and 2006.

Question 34

Exhibit 17-2

Based on the data in Exhibit 17-2, a recession occurred beginning in which year?

A) 2006
B) 2007
C) 2008
D) 2009
E) 2010

Question 35

Exhibit 17-2

Based on the data in Exhibit 17-2, the recession ended in which year?

A) 2017
B) 2016
C) 2015
D) 2014
E) 2013

Question 36

The most recent recession officially started in

A) December 2007.
B) March 2001.
C) March 2012.
D) November 2006.
E) March 2016.

Question 37

Which of the following statements is true?

A) The economy returns to normal when a recession ends.
B) When a recession ends, most people feel the effects of an improving economy.
C) The most recent economic expansion lasted about 26 years.
D) A recession is not over until the unemployment rate begins to fall.
E) The most recent recession officially started in December 2007.

Question 38

The economic downturn of 2008-2009 is commonly called

A) the Great Depression.
B) the Great Moderation.
C) the Great Recession.
D) the Great Inflation.
E) None of these

Question 39

Over the past 50 years, real GDP per capita has roughly

A) stayed the same.
B) tripled.
C) increased by 50 percent.
D) doubled.
E) declined by 50 percent.

Question 40

If real GDP is growing at a slower rate than the growth rate of population,

A) real GDP must be growing more slowly than real GDP per capita.
B) real GDP must be growing faster than real GDP per capita.
C) real GDP per capita must be negative.
D) real GDP per capita must be increasing.
E) None of these

Question 41

The labor force is

A) those in the population who have a job.
B) the percentage of people in the population who have a job.
C) those in the population who have a full-time job.
D) that part of the population that is working or looking for a job.
E) the same as the population.

Question 42

When examining a graph that plots real GDP over time, what two types of patterns occur?

Question 43

The unemployment rate

A) has increased steadily over the last 40 years.
B) is never equal to zero.
C) is zero if the economy is in an expansion.
D) increases as real GDP increases.
E) is zero unless the economy is in a recession.

Question 44

Does it make a difference if the rate of growth in real GDP per capita changes by less than a percentage point? Justify your answer using evidence from U.S. experience.

Question 45

A decline in real GDP that lasts for at least a year is known as a recession.

Question 46

After a recession, the economy usually takes several years to return to its pre-recession state.

Question 47

Exhibit 17-3

The data in Exhibit 17-3 shows the values of real GDP and population for two countries, X and Y, for the years 2016 and 2017. Which of these two countries experienced a faster increase in the standard of living between 2016 and 2017?

Question 48

The unemployment rate is defined as

A) the percentage of the population not working.
B) the percentage of the labor force not working full-time.
C) the number of people in the population who do not work.
D) the percentage of the labor force not working.
E) the number of people in the labor force who do not work.

Question 49

The most recent recession officially started in December 2009.

Question 50

Exhibit 17-4

The data in Exhibit 17-4 shows, for a certain country, real GDP and its growth trend from March of 2015 through December of 2017. Identify when the peak occurred, when the recession occurred, and when the economy reached its trough.

Question 51

Economists generally agree on the cause of the recession that began in 1990.

Question 52

Which of the following best describes the behavior of real GDP in the United States?

A) A long-term downward trend and more pronounced economic fluctuations in recent times
B) A long-term downward trend and less pronounced economic fluctuations in recent times
C) A long-term upward trend and more pronounced economic fluctuations in recent times
D) A long-term upward trend and less pronounced economic fluctuations in recent times

Question 53

Explain what real GDP measures.

Question 54

What is the difference between a recession and a depression? Have there been any depressions over the last 50 years? Justify your answer.

Question 55

Over the last 50 years in the United States, the unemployment rate has

A) remained a constant 5 percent.
B) averaged zero.
C) fluctuated but shown no clear upward or downward trend.
D) shown a steady upward trend.
E) shown a steady downward trend.

Question 56

To say that a recession is over is the same as saying the economy has returned to normal.

Question 57

The unemployment rate

A) is not related to the level of real GDP.
B) increases as real GDP decreases.
C) decreases as real GDP decreases.
D) increases as real GDP increases.
E) increases only if real GDP is below potential.

Question 58

When a recession is over, do people begin to immediately feel the effects of an improving economy? Use the experience of the most recent recession to justify your answer.

Question 59

The term depression best describes

A) all of the recessions occurring after World War II except for the 1990-1991 recession.
B) all of the recessions occurring after World War II including the 1990-1991 recession.
C) all of the recessions that have ever occurred.
D) the 1990-1991 recession.
E) the recessions that occurred in 1920-1921, 1929-1933, and 1937-1938.

Question 60

What is meant by a recession? As a rule of thumb, when is the economy considered to be in a recession?

Question 61

If you borrow $100 from a friend and you pay her back $105 at the end of the year, the interest rate is

A) 5 percent.
B) $105.
C) 5 percent.
D) $5.
E) $95.

Question 62

During the Great Depression, the unemployment rate

A) fell to 1 percent.
B) rose to 10.4 percent.
C) rose to over 25 percent.
D) fell to 0 percent.
E) rose to over 50 percent.

Question 63

Which of the following statements is true about the U.S. rate of inflation between 1973 and 2004?

A) The rate of inflation trended upward during this period.
B) The rate of inflation trended downward during this period.
C) The rate of inflation fluctuated between 2 and 3 percent during this period.
D) Until 1980 the rate of inflation trended upward, and after 1980 the rate of inflation trended downward.
E) Until 1980 the rate of inflation trended downward, and after 1980 the rate of inflation trended upward.

Question 64

Which of the following statements is true?

A) There is no relationship between real GDP and the unemployment rate over a business cycle.
B) During a business cycle, the unemployment rate declines at the same time real GDP declines.
C) During a business cycle, the unemployment rate increases at the same time real GDP declines.
D) During a business cycle, the unemployment rate increases at the same time real GDP increases.
E) During a business cycle, the unemployment rate increases only if real GDP is below potential GDP.

Question 65

As the economy went into recession in 2008, the unemployment rate

A) increased by about 3 percentage points.
B) increased by 15 percentage points.
C) fell by 5 percentage points.
D) fell by 1.5 percentage points.
E) did not change.

Question 66

A low and stable inflation rate has been a key feature of the U.S. economy for the past 40 years.

Question 67

Which of the following statements is the most accurate?

A) Deflation is when the rate of inflation declines.
B) Disinflation only occurs when the price level declines.
C) The end of the Great Inflation in 1980 was followed by deflation.
D) Disinflation is when the rate of inflation declines.
E) Deflation and disinflation always happen at the same time.

Question 68

Which of the following statements about the recessions that have occurred over the past 50 years is true?

A) During a recession, the price level increases, and the rate of inflation declines.
B) The price level usually declines during a recession.
C) The rate of inflation usually increases during a recession.
D) The rate of inflation usually stays constant during a recession.
E) During a recession, both the price level and the rate of inflation decline.

Question 69

The highest unemployment rate recorded in the United States since World War II is

A) 42 percent.
B) 3 percent.
C) 10.4 percent.
D) 5 percent.
E) 19.1 percent.

Question 70

An increase in the overall price level is called

A) an expansion.
B) economic growth.
C) deflation.
D) a recession.
E) inflation.

Question 71

The average inflation rate in the United States in the 1990s was in the range of

A) 2 to 3 percent.
B) -3 to -2 percent.
C) 4 to 5 percent.
D) 0 to 1 percent.
E) 9 to 10 percent.

Question 72

The rate of inflation has no effect on the economy.

Question 73

A decline in the rate of inflation is referred to as deflation.

Question 74

Suppose you owe $1,000 on your credit card and you are charged a 2 percent monthly interest rate on the balance. How much in interest will be generated on that balance after the first month?

A) $20
B) $40
C) $200
D) $400
E) $2

Question 75

Which of the following statements is true?

A) In the 1980s, the rate of inflation became negative.
B) The average rate of inflation has been close to zero over the past 50 years.
C) Over the past 50 years, the United States has not experienced a low and stable rate of inflation.
D) The inflation rate usually increases during a recession.
E) The rate of inflation usually falls to zero during a recession.

Question 76

The unemployment rate in the United States is zero unless the economy is in a recession.

Question 77

The U.S. economy moved closer to deflation at the end of 2008; this was the first time in 40 years that deflation seemed a possibility.

Question 78

The period referred to in the text as the Great Inflation occurred

A) during the 1980s.
B) from the mid-1960s through 1980.
C) during the Revolutionary War.
D) during the Korean War.
E) during the Civil War.

Question 79

Which of the following statements is true about the most recent recessions in the U.S.?

A) The unemployment rate began to fall as the economy went into recession.
B) The unemployment rate did not change during most recent recessions.
C) The most recent recessions reported unemployment rates that were significantly higher than those observed during the great depression.
D) The unemployment rate increased to over 20 percent during the most recent recessions.
E) None of these.

Question 80

Based on the experience of the previous 50 years, there is good reason to expect the rate of inflation to equal zero, on average.