Question 1

-Refer to Figure 5-1 above.If the economy reaches point B on the graph,it is going through a(n)
A) peak
B) trough
C) expansion
D) boom
E) recession

Accepted Answer

The answer of 
-Refer to Figure 5-1 above.If the economy...

Question 2

During the 1990s and the first decade of the 2000s
A) polls have shown that U.S.citizens are more concerned about inflation than any other national problem
B) the U.S.inflation rate reached double digits (10 percent or higher)
C) the U.S.economy consistently experienced deflation (a falling price level)
D) the U.S.inflation rate averaged about 8 percent per year
E) the U.S.inflation rate averaged less than 3 percent per year

Accepted Answer

The statement mentions polls showing that citizens are more concerned about inflation, which suggests that inflation is a concern, but not necessarily that it is currently high. The other options suggest double-digit inflation or consistent deflation, which are not supported by the statement. Option D suggests an average inflation rate of 8 percent, which is high but still lower than double digits. Option E suggests an average inflation rate of less than 3 percent, which is consistent with the statement implying inflation is a concern but not currently very high.

Question 3

-Refer to Figure 5-1 above.If the economy moves from point B to C on the graph,it is going through a(n)
A) peak
B) trough
C) expansion
D) slump
E) recession

Accepted Answer

Moving from point B to C on a typical economic cycle graph represents a period of growth or expansion, where economic output is increasing.

Question 4

-Refer to Figure 5-1 above.If the economy goes from point A to point C on the graph,it is going through a(n)
A) peak
B) trough
C) expansion
D) business cycle
E) recession

Accepted Answer

The answer of 
-Refer to Figure 5-1 above.If the economy...

Question 5

Over the past 90 years or so,the inflation rate has
A) generally increased
B) been positive in most years
C) stayed low
D) been negative in most years
E) dramatically increased

Accepted Answer

The inflation rate has been positive in most years, meaning that prices have generally increased over time. While there have been periods of high and low inflation, the overall trend has been upward.

Question 6

We could try to use a powerful computer to construct a macroeconomic model including tens of thousands of demand and supply curves,for every market in the economy.This would not be a useful undertaking because
A) it would not be worth the increased level of complication and effort needed to collect all information
B) the model would be simplistic
C) the model would inevitably leave out important information
D) the suggested prices would inevitably be wrong in each market
E) the model would not be realistic

Accepted Answer

The answer of We could try to use a powerful...

Question 7

Inflation has never been a major problem in the U.S.

Accepted Answer

While inflation has not been a constant problem in the U.S., there have been periods of high inflation such as in the 1970s and early 1980s.

Question 8

Why is inflation considered a problem?
A) Firms gain too much economic power.
B) It is always very high when it exists.
C) People prefer falling prices.
D) It is costly for society.
E) Government gains too much economic power..

Accepted Answer

Inflation is considered a problem because it is costly for society. As prices rise, the purchasing power of money decreases, which can lead to reduced economic growth, reduced incomes, and reduced standards of living. Inflation can also lead to distortions in the economy, with some individuals and sectors benefiting at the expense of others.

Question 9

Aggregation is important in macroeconomics because
A) it is a basic tool of reasoning
B) we need a model with as much information as possible
C) it allows us to comprehend the entire economy in all its detail
D) it allows us to keep different markets separate in our minds
E) we need to consider the entire economy at once with a model as simple as possible

Accepted Answer

The answer of Aggregation is important in macroeconomics because
A) it...

Question 10

Since 1959,the U.S.has experienced severe recessions in which three periods?
A) 1964-65,1981-82,and 1990-91
B) 1974-75,1981-82,and 2008-09
C) 1960-61,1974-75,and 2008-09
D) 1960-61,1981-82,and 2008-09
E) 1969-70,1981-82,and 2008-09

Accepted Answer

The U.S. has experienced severe recessions in 1974-75, 1981-82, and 2008-09.

Question 11

In macroeconomics,
A) we study one market at a time
B) we try to understand how the entire economy behaves
C) we focus on large,important products and ignore the rest
D) we study one nation's economy only
E) we aggregate all national economies into a world economy

Accepted Answer

The definition of macroeconomics is the study of the economy as a whole, including topics such as inflation, unemployment, economic growth, and monetary and fiscal policy. Therefore, the focus is on understanding how the entire economy behaves rather than just one specific market or product.

Question 12

Microeconomics involves the analysis of smaller,less developed economies while macroeconomics is concerned with the analysis of larger developed economies.

Accepted Answer

This statement is not accurate. Microeconomics and macroeconomics refer to the level of analysis, not the size or development of an economy. Microeconomics examines the behavior and decisions of individual consumers and firms, while macroeconomics focuses on the performance of national economies as a whole. Both micro and macro analysis can be applied to economies of any size or level of development.

Question 13

Aggregation is important because it allows macroeconomists to divide a whole into its individual components.

Accepted Answer

Aggregation is important because it allows macroeconomists to combine individual components into a whole, simplifying the analysis of complex economic systems by looking at them in more manageable, aggregated terms.

Question 14

During the expansion phase of a business cycle
A) employment and output are both at a peak
B) employment and output are both rising
C) employment is falling and output is rising
D) unemployment is rising and output is falling
E) employment is rising and output is falling

Accepted Answer

During the expansion phase of a business cycle, both employment and output are rising. This typically occurs after a trough in the business cycle, when the economy is starting to recover and businesses are growing. As businesses expand and produce more goods and services, they usually need to hire more workers to keep up with demand. This leads to an increase in both employment and output.

Question 15

-Refer to Figure 5-1 above.If the economy moves from point A to B on the graph,it is going through a(n)
A) peak
B) trough
C) expansion
D) boom
E) recession

Accepted Answer

The answer of 
-Refer to Figure 5-1 above.If the economy...

Question 16

A measure that economists use in order to keep track of employment is
A) the price level
B) real GDP per person
C) real GDP
D) the growth rate of output
E) the unemployment rate

Accepted Answer

The unemployment rate is the most appropriate measure to keep track of employment, as it indicates the percentage of the labor force that is currently unemployed. This measure provides valuable information on the state of the labor market, including its health and potential changes in job opportunities.

Question 17

The inflation rate
A) explains how prices are reacting to economic policies
B) indicates the level of prices charged by all firms in the economy
C) measures the annual percent increase in the average level of prices
D) measures how fast wages and incomes are rising
E) determines the prices that firms will offer to customers

Accepted Answer

The inflation rate measures the annual percent increase in the average level of prices.

Question 18

Which of the following is a period of decreasing output that is severe and long lasting?
A) business cycle
B) expansion
C) peak
D) recession
E) depression

Accepted Answer

A depression is a severe and long-lasting period of decreasing output, characterized by high unemployment, a decline in production and sales, and a general decline in economic activity. This is the most severe type of economic downturn and can last for several years.

Question 19

When we study macroeconomics,
A) we model tens of thousands of individual supply and demand curves
B) we determine thousands of prices and quantities
C) we employ aggregation to reduce the number of markets we need to understand
D) we add up all the demand and supply curves that are obtained in microeconomics
E) we add up the prices of all goods and services produced in the economy

Accepted Answer

Macroeconomics employs aggregation to reduce the number of markets needed to be understood. This involves analyzing the behavior of entire industries or even entire economies, rather than individual consumers or firms. Options A, B, D, and E all involve analyzing individual components, which is not the primary focus of macroeconomics.

Question 20

Aggregation is the process of combining different things into a single category.

Accepted Answer

Aggregation involves grouping or combining different items into one entity, such as combining multiple datasets into a single dataset or combining different products or services into one bundle.

Quiz 17: What Macroeconomics Tries to Explain

-Refer to Figure 5-1 above.If the economy reaches point B on the graph,it is going through a(n)

During the 1990s and the first decade of the 2000s

-Refer to Figure 5-1 above.If the economy moves from point B to C on the graph,it is going through a(n)

-Refer to Figure 5-1 above.If the economy goes from point A to point C on the graph,it is going through a(n)

Over the past 90 years or so,the inflation rate has

We could try to use a powerful computer to construct a macroeconomic model including tens of thousands of demand and supply curves,for every market in the economy.This would not be a useful undertaking because

Inflation has never been a major problem in the U.S.

Why is inflation considered a problem?

Aggregation is important in macroeconomics because

Since 1959,the U.S.has experienced severe recessions in which three periods?

In macroeconomics,

Microeconomics involves the analysis of smaller,less developed economies while macroeconomics is concerned with the analysis of larger developed economies.

Aggregation is important because it allows macroeconomists to divide a whole into its individual components.

During the expansion phase of a business cycle

-Refer to Figure 5-1 above.If the economy moves from point A to B on the graph,it is going through a(n)

A measure that economists use in order to keep track of employment is

The inflation rate

Which of the following is a period of decreasing output that is severe and long lasting?

When we study macroeconomics,

Aggregation is the process of combining different things into a single category.