Question 1

Suppose you read in the newspaper that a large decline in business spending has occurred.Explain how this could cause real GDP to fall.Could the decline in business spending also cause potential GDP to decline? Explain.

Accepted Answer

Spending by businesses (i.e.,investment)...

Question 2

Describe the behavior of real GDP,the unemployment rate,and the inflation rate over the long term and the short term for the U.S.economy during the past 40 years.In what ways are movements in the three variables related?

Accepted Answer

Real GDP has steadily increased over the...

Question 3

According to the theory of economic fluctuations,which of the following explains the relationship between aggregate demand and employment during an economic expansion?

Accepted Answer

A)  Workers decide they have more leisure time than they prefer.As a result they decide to work more,causing more labor to be employed.This causes an increase in production.
B)  An increase in aggregate demand causes real GDP to increase as firms adjust their production.More workers are hired as a result.
C)  An increase in output causes potential GDP to decrease.This causes employment to increase.
D)  A decrease in real GDP causes aggregate demand to increase.As a result,firms hire more workers.
E)  An increase in aggregate demand causes potential GDP to increase.The resulting increase in output causes employment to increase.

Question 4

Everybody has benefited from the economic growth of the past 40 years.

Accepted Answer

A) True 
 B)False

Question 5

Suppose a country's real GDP increased 5 percent between 2010 and 2011,while its population increased 2 percent.Between 2010 and 2011,real GDP per capita of this country

Accepted Answer

A)  increased by 7 percent.
B)  increased by 3 percent.
C)  decreased by 7 percent.
D)  decreased by 2 percent.
E)  remained the same.

Question 6

Potential real GDP is the GDP that economists would expect to observe when the unemployment rate is zero.

Accepted Answer

A) True 
 B)False

Question 7

The unemployment rate

Accepted Answer

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 8

Which of the following is the best measure of how individuals benefit from economic growth?

Accepted Answer

A)  The rate of increase in GDP per capita
B)  The rate of increase in GDP
C)  The rate of increase in real GDP per capita
D)  The rate of inflation
E)  The rate of increase in real GDP

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The two branches of macroeconomic theory are

Accepted Answer

A)  inflation and growth theory.
B)  inflation and economic fluctuations theory.
C)  economic fluctuations and unemployment theory.
D)  inflation and unemployment theory.
E)  economic fluctuations and economic growth theory.

Question 11

The long-run upward trend in real GDP is called

Accepted Answer

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

Question 12

Suppose there is a permanent decrease in capital in a particular country.How does this change affect that economy's potential GDP? What economic policies can the government use to offset this decline?

Accepted Answer

Potential GDP will fall.The government c...

Question 13

Exhibit 17-4 
-The data in Exhibit 17-4 shows,for a certain country,real GDP and its growth trend from March of 2010 through December of 2013.Identify when the peak occurred,when the recession occurred,and when the economy reached its trough.

Accepted Answer

Recall the rule of thumb that a fall in ...

Question 14

State and define as best you can the three determinants of the aggregate supply of real GDP.

Accepted Answer

The three determinants of the aggregate ...

Question 15

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

Accepted Answer

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

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

Accepted Answer

A)  The rapid economic growth of China
B)  The end of the World Trade Organization
C)  The dissolution of the European Union
D)  The beginning of the Great Depression

Question 17

There is evidence from recent U.S.economic trends that inflation and interest rates rise before a recession and fall in the aftermath.

Accepted Answer

A) True 
 B)False

Question 18

Trends and fluctuations in nominal interest rates

Accepted Answer

A)  are closely connected with real GDP and the rate of inflation.
B)  are not closely connected with any economic variable.
C)  are closely connected with real GDP and not with the rate of inflation.
D)  are closely connected only with trends and fluctuations in the rate of inflation.
E)  depend on the exchange rate.

Question 19

Being a communist country,Vietnam has not been able to reap the benefits of globalization and has seen its economy collapse in the last couple of decades.

Accepted Answer

A) True 
 B)False

Question 20

The following table shows real GDP from 1991 through 1999 for a hypothetical economy.On a graph that measures real GDP on the vertical axis and time on the horizontal axis,plot real GDP using the data in the table.Draw in potential GDP and show the peak,recession,trough,and recovery phases of this business cycle.

Accepted Answer

See follow...

Exam 17: Macroeconomics: the Big Picture

Suppose a country's real GDP increased 5 percent between 2010 and 2011,while its population increased 2 percent.Between 2010 and 2011,real GDP per capita of this country

Correct Answer
verified

The two branches of macroeconomic theory are

Correct Answer
verified

Which of the following is the best measure of how individuals benefit from economic growth?

Correct Answer
verified

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

Correct Answer
verified

Exhibit 17-4 -The data in Exhibit 17-4 shows,for a certain country,real GDP and its growth trend from March of 2010 through December of 2013.Identify when the peak occurred,when the recession occurred,and when the economy reached its trough.

Correct Answer
verified
Recall the rule of thumb that a fall in ...
View Answer

Being a communist country,Vietnam has not been able to reap the benefits of globalization and has seen its economy collapse in the last couple of decades.

Correct Answer
verified

The unemployment rate

Correct Answer
verified

Describe the behavior of real GDP,the unemployment rate,and the inflation rate over the long term and the short term for the U.S.economy during the past 40 years.In what ways are movements in the three variables related?

Correct Answer
verified
Real GDP has steadily increased over the...
View Answer

Correct Answer
verified
See follow...
View Answer

There is evidence from recent U.S.economic trends that inflation and interest rates rise before a recession and fall in the aftermath.

Correct Answer
verified

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

Correct Answer
verified

Everybody has benefited from the economic growth of the past 40 years.

Correct Answer
verified

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

Correct Answer
verified

The long-run upward trend in real GDP is called

Correct Answer
verified

According to the theory of economic fluctuations,which of the following explains the relationship between aggregate demand and employment during an economic expansion?

Correct Answer
verified

Potential real GDP is the GDP that economists would expect to observe when the unemployment rate is zero.

Correct Answer
verified

Suppose you read in the newspaper that a large decline in business spending has occurred.Explain how this could cause real GDP to fall.Could the decline in business spending also cause potential GDP to decline? Explain.

Correct Answer
verified
Spending by businesses (i.e.,investment)...
View Answer

Trends and fluctuations in nominal interest rates

Correct Answer
verified

Suppose there is a permanent decrease in capital in a particular country.How does this change affect that economy's potential GDP? What economic policies can the government use to offset this decline?

Correct Answer
verified
Potential GDP will fall.The government c...
View Answer

State and define as best you can the three determinants of the aggregate supply of real GDP.

Correct Answer
verified
The three determinants of the aggregate ...
View Answer

Exam 17: Macroeconomics: the Big Picture

Suppose a country's real GDP increased 5 percent between 2010 and 2011,while its population increased 2 percent.Between 2010 and 2011,real GDP per capita of this country

Correct AnswerverifiedShow Answer

The two branches of macroeconomic theory are

Correct AnswerverifiedShow Answer

Which of the following is the best measure of how individuals benefit from economic growth?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Exhibit 17-4 -The data in Exhibit 17-4 shows,for a certain country,real GDP and its growth trend from March of 2010 through December of 2013.Identify when the peak occurred,when the recession occurred,and when the economy reached its trough.

Correct AnswerverifiedRecall the rule of thumb that a fall in ...View AnswerShow Answer

Being a communist country,Vietnam has not been able to reap the benefits of globalization and has seen its economy collapse in the last couple of decades.

Correct AnswerverifiedShow Answer

The unemployment rate

Correct AnswerverifiedShow Answer

Describe the behavior of real GDP,the unemployment rate,and the inflation rate over the long term and the short term for the U.S.economy during the past 40 years.In what ways are movements in the three variables related?

Correct AnswerverifiedReal GDP has steadily increased over the...View AnswerShow Answer

Correct AnswerverifiedSee follow...View AnswerShow Answer

There is evidence from recent U.S.economic trends that inflation and interest rates rise before a recession and fall in the aftermath.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Everybody has benefited from the economic growth of the past 40 years.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run upward trend in real GDP is called

Correct AnswerverifiedShow Answer

According to the theory of economic fluctuations,which of the following explains the relationship between aggregate demand and employment during an economic expansion?

Correct AnswerverifiedShow Answer

Potential real GDP is the GDP that economists would expect to observe when the unemployment rate is zero.

Correct AnswerverifiedShow Answer

Suppose you read in the newspaper that a large decline in business spending has occurred.Explain how this could cause real GDP to fall.Could the decline in business spending also cause potential GDP to decline? Explain.

Correct AnswerverifiedSpending by businesses (i.e.,investment)...View AnswerShow Answer

Trends and fluctuations in nominal interest rates

Correct AnswerverifiedShow Answer

Suppose there is a permanent decrease in capital in a particular country.How does this change affect that economy's potential GDP? What economic policies can the government use to offset this decline?

Correct AnswerverifiedPotential GDP will fall.The government c...View AnswerShow Answer

State and define as best you can the three determinants of the aggregate supply of real GDP.

Correct AnswerverifiedThe three determinants of the aggregate ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Recall the rule of thumb that a fall in ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Real GDP has steadily increased over the...
View Answer

Correct Answer
verified
See follow...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Spending by businesses (i.e.,investment)...
View Answer

Correct Answer
verified

Correct Answer
verified
Potential GDP will fall.The government c...
View Answer

Correct Answer
verified
The three determinants of the aggregate ...
View Answer