Which of the following is NOT a major concern of macroeconomics? Stock prices           B) Output growth                   C) Inflation                D) Unemployment Which of the following is an assumption used by Classical economists? could not persist because wages would rise to eliminate the excess supply of labor could not persist because wages would fall to eliminate the excess supply of labor could be eliminated through fiscal and monetary policies could be eliminated only through government intervention

1. Which of the following is NOT a major concern of macroeconomics?
   1. Stock prices           B) Output growth                   C) Inflation                D) Unemployment

2. Which of the following is an assumption used by Classical economists?
   1. could not persist because wages would rise to eliminate the excess supply of labor
   2. could not persist because wages would fall to eliminate the excess supply of labor
   3. could be eliminated through fiscal and monetary policies
   4. could be eliminated only through government intervention.

3. Macroeconomic policies became more influenced by Keynes’s theories starting with

1. 1. --------the period of high unemployment and and high inflation in the 1970s.
   2. The Great Depression
   3. 2008 Global Crisis
   4. the OPEC recession

4. Economists distinguish real from nominal GDP to

1. 1. determine whether the government sector is growing.
   2. -----------determine whether real production has changed.
   3. determine whether economic welfare has changed.
   4. measure the change in nominal interest rates.

5. If a U.S. firm produces computers in the United States and sells them in Germany, the computers are part of production and should be counted as part of                                                                           GDP.

1. German; U.S.
2. German; German
3. North American; European
4. U.S.; U.S.

6. A recession is conventionally defined as a period in which                       declines for

                     consecutive quarters.

1. 1. -----------aggregate output; two
   2. stock prices; four
   3. aggregate output; four
   4. employment; four

7. Which of the following would not occur in an ideal economy?

1. 1. Rapid growth of output per worker
   2. Low unemployment
   3. Deflation
   4. None of the above

8. In the national income accounts, all of the following are classified as government purchases except:

1. services provided by police officers.
2. purchases of military hardware.
3. services provided by U.S. senators.
4. ----------------payments made to Social Security recipients.

9. Personal consumption expenditure is computed as follows:

1. 1. nonresidential sales + inventories
   2. durable goods + nondurable goods and services
   3. durable goods + exports
   4. durable goods = nondurable goods - federal taxes

10. If C = 100 + .8Y, then S =

A) 0.25Y                    B) -100 + .2Y             C) -80 + .2Y               D) 100 + .2Y

11. Suppose consumption is $7,500 when income is $4,000 and the MPS equals 0.4. When income increases to $6,000, consumption is

A) $8,050.                  B) $8,300.                   C) $8,700.                  D) $9,500.

12. If the tax multiplier is -4, the MPS is

A) 0.2.                        B) 0.3.                         C) 0.4.                        D) 0.5.

13. In a closed economy, equilibrium in the goods market occurs at that point where total investment equals:

1. national saving.
2. household saving.
3. public saving.
4. private saving.

14. Rapid increases in prices during periods of recession is known as

1. 1. price gouging.      B) stagnation.             C) depression.                        D) stagflation.

15. If real GDP decreases from Year 1 to Year 2, we can conclude that

1. 1. production levels are lower in Year 2 than in Year 1.
   2. price levels are lower in Year 2 than in Year 1.
   3. there is less unemployment in Year 2 than in Year 1.
   4. we need more information before commenting.

16. The equilibrium interest rate is determined in the               market and the equilibrium output level is determined in the                                      market.

1. goods; goods
2. goods; money
3. money; goods
4. money; money

17. Which of the following statements best describes the operation of the crowding-out effect?

1. G (up) → Y (up) → Md (down) → r (down) → I (down)
2. G (up) → Y (up) → Md (up) → r (up) → I (down)
3. G (up) → Y (up) → Md (down) → r (up) → I (down)
4. G (up) → r (up) → I (up)

18. The main goal of an expansionary fiscal policy is to               ; the main goal of an expansionary monetary policy is to                                     .

1. increase output level; increase output level.
2. increase output level; decrease the interest rate
3. decrease the interest rate; increase output level
4. decrease the interest rate; decrease the interest rate

19. The sum of frictional and structural unemployment is thought of as the

1. 1. cyclical rate of unemployment.
   2. normal rate of unemployment.
   3. seasonal rate of unemployment.
   4. natural rate of unemployment.