Question 1

Macroeconomics is the study of
A)the economic issues which affect individual well-being and individual firms' profit levels.
B)the economic issues which affect foreign and domestic prices of related goods and services.
C)inflation and poverty at the level of the household.
D)the economic issues which affect the nation's total income,employment,and output.

Accepted Answer

Macroeconomics focuses on analyzing and understanding the economy at the national or global level, including factors such as total income, employment, and output. It looks at the broader economic issues affecting the economy as a whole, rather than individual firms or households.

Question 2

A rising inflation rate tends to injure the following types of people:
A)retirees and students with savings accounts.
B)borrowers and homeowners.
C)homeowners with mortgages and students with student loans.
D)landowners and borrowers.

Accepted Answer

A rising inflation rate tends to decrease the purchasing power of money, thus reducing the value of savings accounts. Retirees dependent on fixed incomes and students saving money for college would suffer from inflation as their savings would buy less.

Question 3

Economy with no productivity growth is called the
A)zero-sum society.
B)zero-growth society.
C)export-led society.
D)doomed-to-fail society.

Accepted Answer

A zero-sum society is one where any economic gains by one group are offset by losses by another, often due to lack of productivity growth.

Question 4

The unemployment rate is the number of
A)people looking for work divided by the population.
B)jobless individuals divided by the total labor force.
C)jobless people looking for work divided by the population.
D)jobless individuals looking for work divided by those employed and unemployed but actively looking.

Accepted Answer

The answer of The unemployment rate is the number of
A)people...

Question 5

Which of the following does Gordon believe people consider the single most important macroeconomic issue today?
A)inflation
B)poverty
C)unemployment
D)low productivity

Accepted Answer

According to the passage, Gordon believes that people consider unemployment as the single most important macroeconomic issue today.

Question 6

The average output produced per worker is one way of measuring
A)inflation.
B)the interest rate.
C)employment.
D)productivity.

Accepted Answer

The average output produced per worker is a measure of productivity, which is the efficiency of production. It is calculated by dividing the total output of a company by the number of workers. This measure is important for evaluating the performance of a company and for comparing the productivity of different industries or countries. Inflation, interest rates, and employment are other economic indicators that are measured separately.

Question 7

Which of the three central concepts in macroeconomics is cited in the textbook as being linked to crime,mental illness,and suicide?
A)the inflation rate
B)the unemployment rate
C)productivity growth
D)None of the above is cited as being linked to these events.

Accepted Answer

The unemployment rate is cited in the textbook as being linked to crime, mental illness, and suicide. High levels of unemployment can lead to a higher incidence of crime as people become desperate for income. In addition, unemployment can increase feelings of stress and depression, potentially leading to mental illness and suicide.

Question 8

The central macroeconomic concept that is most clearly related to changes in the well-being of the average member of the economy is the
A)unemployment rate.
B)inflation rate.
C)productivity growth rate.
D)None of the above is closely related.

Accepted Answer

Productivity growth rate is most directly related to changes in the well-being of the average member of the economy because it measures how efficiently goods and services are produced, which directly impacts living standards and economic growth.

Question 9

Generally,the higher the level of output in an economy is the ________ will be.
A)lower the unemployment rate and inflation rate
B)higher the unemployment rate and inflation rate
C)higher the unemployment rate and the lower inflation rate
D)lower the unemployment rate and the higher inflation rate

Accepted Answer

When the level of output in an economy is high, it typically means that more goods and services are being produced and consumed. This increased economic activity usually leads to lower unemployment, as more workers are needed to produce the higher level of goods and services. However, a high level of output can also lead to higher inflation rates, as increased demand for goods and services can drive up prices.

Question 10

The branch of macroeconomics concerned with changes in the natural real GDP is the theory of
A)business cycles.
B)economic growth.
C)GDP gaps.
D)unemployment.

Accepted Answer

The branch of macroeconomics concerned with changes in the natural real GDP is called economic growth. Economic growth refers to an increase in the production of goods and services in an economy over a certain period of time. It is measured by changes in real GDP, which adjusts for inflation. A) Business cycles refer to the fluctuations in economic activity around the long-term trend of economic growth. C) GDP gaps refer to the difference between actual GDP and potential GDP. D) Unemployment refers to the number of people who are actively looking for a job but cannot find one.

Question 11

Inflation tends to redistribute income from
A)savers to borrowers.
B)borrowers to savers.
C)homeowners to landowners.
D)parents to students.

Accepted Answer

Inflation tends to decrease the purchasing power of money, which means that the value of savings decreases over time. Borrowers, on the other hand, benefit from inflation because they are repaying loans with money that is worth less than when they borrowed it. Therefore, inflation tends to redistribute income from savers to borrowers.

Question 12

Among the subjects covered in macroeconomics are the
A)unemployment rate for the entire labor force,and the causes of the increase in the overall price level.
B)causes of the increase in the price of oil relative to other commodities.
C)effects of low wages on the laborers' moral.
D)causes of the change in the individual firms' profits.

Accepted Answer

Macroeconomics deals with the performance of the economy as a whole rather than individual firms or workers. Unemployment rate for the entire labor force and the causes of the increase in the overall price level are significant aspects of macroeconomics. The other options mentioned are microeconomic factors and do not fall under the scope of macroeconomics.

Question 13

A rising inflation rate tends to help the following types of people:
A)retirees and students with savings accounts.
B)borrowers and homeowners without mortgages.
C)homeowners with mortgages and students with loans.
D)landowners and borrowers.

Accepted Answer

Homeowners with mortgages and students with loans benefit from rising inflation rates because the value of their debt decreases as the value of money decreases. This means they will have to pay back less money in real terms, which is essentially a form of debt relief.

Question 14

A high inflation rate will
A)harm those who have saved while helping those who have borrowed.
B)harm those who have borrowed while helping those who have saved.
C)harm those who have saved and those who have borrowed.
D)benefit those who have saved and those who have borrowed.

Accepted Answer

A high inflation rate reduces the value of money, which means that debts become easier to pay off with less valuable currency. This helps those who have borrowed money but harms those who have saved their money, as the value of their savings decreases.

Question 15

The "Big Three" concepts of Macroeconomics are
A)profits,liquidity,and sustainability.
B)unemployment rate,inflation,and economic growth.
C)asset rebalancing,markups,and profitability.
D)federal budget,foreign trade,and quantitative easing.

Accepted Answer

The "Big Three" concepts of Macroeconomics are the three most important economic indicators: unemployment rate, inflation, and economic growth. These indicators provide a snapshot of the overall health of the economy, and are closely monitored by economists and policymakers.

Question 16

A high current rate of inflation ________ those who have saved and ________ those who have borrowed.
A)harms,helps
B)harms,has no effect on
C)helps,helps
D)helps,has no effect on
E)helps,harms

Accepted Answer

High inflation harms those who have saved because the value of their savings decreases in real terms. On the other hand, inflation helps those who have borrowed because they are repaying their loans with currency that is worth less than the currency they borrowed.

Question 17

The inflation rate is the
A)measure used to calculate the price level.
B)measure used to calculate the cost of borrowing money.
C)percentage increase in the average level of prices.
D)percentage increase in the average level of wages.

Accepted Answer

The inflation rate is the percentage increase in the average level of prices. It measures the rate at which the general price level of goods and services in an economy is rising. Option A is incorrect because although the inflation rate is used to calculate the price level, it is not the measure used to calculate it. Option B is incorrect because the cost of borrowing money is calculated using interest rates, not inflation rates. Option D is incorrect because the inflation rate is not the percentage increase in the average level of wages, but rather the prices of goods and services.

Question 18

Political incumbents often gain or lose re-election because of a strong or weak economy.Which of the following is an exception to that rule?
A)Al Gore
B)George H.W.Bush
C)Jimmy Carter
D)Herbert Hoover

Accepted Answer

Al Gore lost the presidential election in 2000 despite a strong economy, due to factors such as controversies surrounding the Florida recount and perceived weaknesses in his campaign strategy.

Question 19

To avoid the conflicts and suffering of a "zero-sum society," an economy must maintain a
A)positive rate of productivity growth.
B)positive rate of inflation.
C)foreign trade surplus
D)government budget deficit.

Accepted Answer

A positive rate of productivity growth means that the economy is producing more goods and services efficiently. This allows for economic growth without taking away resources from others, which is the foundation of a zero-sum society. A and C are not mutually exclusive, but a foreign trade surplus alone is not a guarantee of avoiding a zero-sum society. B and D can actually contribute to a zero-sum society by reducing the value of money and limiting economic growth.

Question 20

A low unemployment rate implies that
A)job offers are scarce and inflation is high.
B)job offers are plentiful and wages are high.
C)jobs are permanent and job offers are plentiful.
D)jobs are difficult to find,and wages are low.

Accepted Answer

A low unemployment rate indicates that job offers are plentiful and there is strong competition among employers for workers. This can lead to higher wages and better job security for workers. Option A is incorrect because high inflation typically accompanies high unemployment rather than low unemployment. Option C is not necessarily true as job security depends on factors beyond just the unemployment rate. Option D is the opposite of what a low unemployment rate implies.

Quiz 1: What Is Macroeconomics

Macroeconomics is the study of

A rising inflation rate tends to injure the following types of people:

Economy with no productivity growth is called the

The unemployment rate is the number of

Which of the following does Gordon believe people consider the single most important macroeconomic issue today?

The average output produced per worker is one way of measuring

Which of the three central concepts in macroeconomics is cited in the textbook as being linked to crime,mental illness,and suicide?

The central macroeconomic concept that is most clearly related to changes in the well-being of the average member of the economy is the

Generally,the higher the level of output in an economy is the ________ will be.

The branch of macroeconomics concerned with changes in the natural real GDP is the theory of

Inflation tends to redistribute income from

Among the subjects covered in macroeconomics are the

A rising inflation rate tends to help the following types of people:

A high inflation rate will

The "Big Three" concepts of Macroeconomics are

A high current rate of inflation those who have saved and those who have borrowed.

The inflation rate is the

Political incumbents often gain or lose re-election because of a strong or weak economy.Which of the following is an exception to that rule?

To avoid the conflicts and suffering of a "zero-sum society," an economy must maintain a

A low unemployment rate implies that