1) Modern macro economics emerged

o with the GreatDepression.

2) The science of macro economic

o emerged during the decade of the Great Depression.

3) They ear sof the Great Depression was a time when the unemployment rate was
o high and the amount of output was falling.

4) In1933,the worsty ear of the Great Depression, the unemployment rate was
o 25percentofthelaborforce.

5) In 1933,the worsty ear of the Great Depression, total production in the United States was
o 70 percent of its 1929 level.

6) In 1933,the worsty ear of the Great Depression, total production in the United States was
o 70 percent of its 1929 level,and 25 percent of the labor force was unemployed.

7) During the GreatDepression

o atonetimetheUnitedStateshadanunemployment rate of 25percent.

8) The year 1933was

o the worst year for the United States during the Great Depression with an
unemployment rate of 25 percent.

9) In The General Theory of Employment , Interest, and Money, John Maynard Keynes argued
that to eliminate a depression governments should spend
o moretooffsetinsufficientprivatespending.

10) Keynes’prescription for eliminating the Great Depression required a policy action of
o additional spending by government to increase total spending in the economy.

11) John Maynard Keynes

o wroteTheGeneralTheoryofEmployment,Interest andMoney.

12) John Maynard Keynes

o Focused on the short term in attempting to solve the Great Depression..
13) In The General Theory of Employment ,Interest ,and Money, John Maynard Keynes
argued for government policies that would eliminate
o The Great Depression and Keynes focused primarily on the economy’s short-term problems

14) During the 1960s and 1970s, the main economic problems of concern to policy makers
were inflation, economic growth, and unemployment trates.
o slow;high

15) Which of the following are example soflong-term economic

policy issues?

B) Inflation and slow economicgrowth.

16) Whichofthefollowingisalong-runmacroeconomic policygoal?

C) promote steadygrowth

17) Real GDP is definedas

C) thevalueoftotalproductionofallthenation’s
farms,factories,shopsandofficesmeasuredin
the prices of a singleyear.

18) Real GDPis

A) thebestmeasurewehavefortotalproduction,
though it does have someflaws.

19) Potential GDPis*

D) achieved when all factors of production are fully employed.

20) Potential GDPis

A) themaximumGDPthataneconomyactually
achieves throughout its entirehistory.
B) thelevelofGDPachievedduringperiodswhen
100percentofthelaborforceisemployed.
C) agoalthatcanneverbeachievedbytheeconomy.
D) thevalueofproductionwhenallthenation’sresources are
fullyemployed.
21) Potential GDP isthe
A) thevalueofproductionwithfullyemployedresources.
B) currentvalueofproductionintheeconomy.
C) valueofproductionwhentheeconomyisina
recession.
D) valueofproductionwhentheeconomyisata
peak.
22) RealGDP
A) fluctuatesfromyeartoyearbutisalwaysbelow
potentialGDP.
B) fluctuates around potentialGDP.
C) growsataconstant3to4percentperyear.
D) canbecalledpotentialGDPwhenitisadjusted for
pricechanges
23) Economicgrowthisbestdefinedas
A) therateofgrowthofemployment.
B) thelong-runexpansionofthenation’sproductionpossibilities.
C) therateofincreaseineconomicproductivity.
D) thebusiness-cyclechangesintotaloutput.
24) Economic growth can be describedas
A) an increase in the inflationrate.
B) anincreaseinemploymentinthemanufacturing
sector.
C) anoutwardshiftintheeconomy’sproduction
possibilityfrontier.
D) anundesirablegoalbecauseitisaccompaniedby
severeinflation.
25) EconomicgrowthintheUnitedStatescanbe
characterizedby
A) movements along itsPPF.
B) increases in potentialGDP.
C) theproductivitygrowthslowdowninthe1990s.
D) high rates ofinflation.
26) Economic growth is measuredby
A) changes in realGDP.
B) changes in nominalGDP.
C) changes in the employmentrate.
D) Alloftheaboveareusedtomeasureeconomic
growth.
27) Long-term economic growth is most closely associatedwith
A) gettingunemploymentaslowaspossible.
B) increasing potentialGDP.
C) bringing aboutdeflation.
D) reducingthenumberofjobchangesinthe
economy
28) Lookingbackoverthepast40yearsweseethat
the United Statesexperienced
A) growthconsistentlyabove4percentduringeach
decade.
B) bettergrowthduringthe1990sthanduringthe
1960s.
C) itsbestdecadeofgrowthduringthe1960s.
D) itsbestdecadeofgrowthduringthe1970s.
29) Usingaproductionpossibilityfrontier,economic
growth is represented byan
A)
inwardshiftintheproductionpossibilityfrontiersothatlessofeachgood
canbeproduced.
B)
outwardshiftintheproductionpossibilityfrontiersothatmoreofeachg
oodcanbeproduced.
C)
inwardshiftintheproductionpossibilityfrontiersothatmoreofeachgoo
dcanbeproduced.
D)
outwardshiftintheproductionpossibilityfrontiersothatlessofeachgoo
dcanbeproduced
30) Intheabovefigure,economicgrowthcanberepresented as the
movementfrom
A) pointa to pointb.
B) pointb to pointc.
C) pointc to pointd.
D) pointd to pointa.
31) Whichofthefollowingapplytoeconomic
growth?
Economicgrowthallowspeopletobuymor
e
I. goods and services in thefuture.
Economicgrowthistheexpansionofthe
economy’s productionpossibilities.
II
.
III.
EconomicgrowthisrepresentedbythefluctuationsofrealGDParoundp
otentialGDP.
A) I.
B) I andII.
C) I andIII.
D) I, II, andIII.
Economicgrowthismeasuredus
ingtheincrease in .
A) real gross domesticproduct
B) the Lucaswedge
C) the consumer priceindex
D) the unemploymentrate
32) Allofthefollowingstatementsaretrueaboutreal
GDP EXCEPT
A) ithasatrendcomponentandafluctuatingcomponent.
B) itmeasureschangesinoutputandprices.
C) intheUnitedStates,itshowsageneralupward
drift.
D) Alloftheabovearefalsestatementsaboutreal
GDP.
33) Inthefigureabove,long-termeconomicgrowth
can be seenas
A) the growth in actual GDP from 1994 to2002.
B) the growth in potential GDP from 1994to
2002.
C) thefluctuationsofrealGDParoundpotential
GDP.
D)
themaximumpointofrealGDPastheeconomymovesthroughthebusin
esscycles.
34) The productivity slowdown refers tothe
A) increaseinthegrowthrateofoutputperperson
that started during the1970s.
B) decreaseinthegrowthrateofoutputperperson
that started during the1970s.
C) recessionthatoccurredin1981.
D) recessionthatoccurredin1991.
35) ThegrowthrateofGDPperpersonsincethe
1960shas
A) consistentlyrisenasshownwiththeLucas
wedge.
B) remainedconstantandismeasuredbytheOkun
gap.
C)
slowed,especiallyduringthe1970s,andhasresultedinlossesestimated
bytheLucaswedge.
D) risen,particularlyduringthe1970s,andhas
meant GDP has grown as measured by the
Okun gap.
36) A business cycleis
A) thepatternofshort-runupwardanddownward
movements in totaloutput.
B)
theincreaseinconsumerspendingthataccompaniesanincreaseindisp
osableincome.
C) thecyclicalchangeinthenation’sbalanceof
trade.
D) the cyclical movement in the interestrates.
37) The business cycle is defined asthe
A) regular growth rate of the realGDP.
B) regularfluctuationsofrealGDPbelowpotential
GDP.
C) irregularfluctuationsofpricesaroundrealGDP.
D) irregularfluctuationsofrealGDParoundpotentialGDP.
38) Businesscycles
A) arenotregularcycleslikethephasesofthe
moon.
B) can be caused by the phases of themoon.
C) aremoreregularthanthephasesofthemoon.
D) oftenfollowchangesinthephasesofthemoon.
39) Business cyclesare
A) irregular,withsomehavingtworecessionsand
noexpansion.
B) predictable,witharecessionfollowingatrough.
C) unpredictable,butalwayshavetwophasesand
two turningpoints.
D) unpredictable,anddon’talwayshavetwophases
and two turningpoints.
40) Arecession
A) follows atrough.
B) isdefinedasaperiodofnegativerealGDP
growth.
C) comes just before apeak.
D) isaperiodduringwhichrealGDPexpands.
41) A recessionis
A) aperiodduringwhichrealGDPincreasesforat
least two successivequarters.
B) thelowerturningpointofabusinesscycle.
C) theupperturningpointofabusinesscycle.
D) aperiodduringwhichrealGDPdecreasesforat
least two successivequarters.
42) A recession is a periodwith
A) negativegrowthrateinrealGDPthatlastsat
least onequarter.
B) positivegrowthrateinrealGDPthatlastsat
least onequarter.
C) positivegrowthrateinrealGDPthatlastsat
least twoquarters.
D) negativegrowthrateinrealGDPthatlastsat
least twoquarters.
43) Anobserveroftheeconomynoticesthatoverthe
last nine months the unemployment rate has increased from 5.6
percent to 8.7 percent. During
thesametimetherateofgrowthinrealgrossdomestic product has
become negative. From this
information we might concludethat
A) inflationisprobablyrampantinthiseconomy.
B) arecessionisoccurringinthiseconomy.
C) anexpansionaryphaseofthebusinesscycleisin
process.
D) apeakinthebusinesscyclewillsoonbereached.
44) A trough isthe
A) lowerturningpointofabusinesscyclewhenan
expansionbegins.
B) lowerturningpointofabusinesscyclewhena
recessionbegins.
C) upperturningpointofabusinesscyclewhenan
expansionbegins.
D) upperturningpointofabusinesscyclewhena
recessionbegins.
45) AnexpansionoccurswhenthelevelofrealGDP is
A) increasing.
B) decreasing.
C) at a cyclicalpeak.
D) at a cyclicaltrough.
46) Anexpansion
A) follows apeak.
B) isdefinedasaperiodofnegativerealGDP
growth.
C) comes just before atrough.
D) isdefinedasaperiodofrealGDPincreases.
47) An expansion ends when theeconomy
A) hitsatroughandthenentersarecession.
B) hitsapeakandthenentersarecession.
C) beginstogrowfollowingapeak.
D) hasgrownfortwoquartersinarow.
48) A peak isthe
A) lowerturningpointofabusinesscyclewhenan
expansionends.
B) lowerturningpointofabusinesscyclewhena
recessionends.
C) upperturningpointofabusinesscyclewhenan
expansionends.
D) upperturningpointofabusinesscyclewhena
recessionends.
49) Intheabovefigure,arecessionbeginsatpoint
andanexpansionbeginsatpoint .
A) a;b
B) b;c
C) b;a
D) d;c
50) Intheabovefigure,atroughisatpoint and
a peak isatpoint .
A) a;b
B) b;c
C) b;a
D) d;c
51) Intheabovefigure,whichpointrepresentsthe
under use ofresources?
A) pointF.
B) pointG.
C) pointH.
D) pointK.
52) Intheabovefigure,whichpointrepresentsthe
overuse ofresources?
A) pointF.
B) pointG.
C) pointI.
D) pointK.
53) In the above figure, which point represents an
economywhichisatthepeakpartofabusiness
cycle?
A) pointF.
B) pointG.
C) pointI.
D) pointK.
54) Most recently the U.S.economy
A) hasexperiencedanexpansionsincethe4th
quarter of2001.
B) hasbeenalongrecessionwhichbeganinthe3rd
quarter of2001.
C) experiencedseveralrecessionssincethe4th
quarter of2001.
D) wasatapeakduringthe4thquarterof2001.
55) During the late 1990s the U.S.economy
A) enduredarecessionthatendedinthe1stquarter
of2001.
B) had real GDP below potentialGDP.
C) experiencedrealGDPabovepotentialGDP.
D) experiencedrealGDPthatfluctuatedaround
potentialGDP.
56) IntheUnitedStates,realGDPperpersonin
2003 was equal toapproximately
A) $12,600
B) $16,900
C) $33,900
D) $58,600
57) IfwelookattheU.S.economyoverthepast130
years we seethat
A) realGDPexpandedcontinuouslythroughout
the period at a rate of 4.2percent.
B) onlypotentialGDPgrewatarateof3.7percent, without any growth
in realGDP.
C) realGDPdeclinedmoreoftenthanitexpanded.
D) realGDPaveragedanannualgrowthrateof3.7
percent.
58) IfwecompareU.S.GDPtoothernations’GDP
andtheworldGDPasawholeweseethatthe
A) UnitedStatesgrewfasterthansomecountries
but slower thanothers.
B) UnitedStateshadalowergrowthratethanall
othercountries.
C) restoftheworldalwaysgrewatafasterratebecause it isbigger.
D) restoftheworldalwaysgrewataslowerratebecause it isbigger.
59)
Ameaningfulmeasurethatcanbeusedtocompareeconomicgrowthrat
esacrosscountriesis
A) inflation perperson.
B) nominalGDP.
C) potentialGDP.
D) real GDP perperson.
60) Tostudyeconomicgrowthacrosscountries,you
should comparegrowthin acrosscountries.
A) inflationrates.
B) realGDP.
C) unemployment.
D) real GDP perperson.
61) Real GDP per person is definedas
A) nominalGDPdividedbythenumberofworkers.
B) nominal GDP divided by totalpopulation.
C) real GDP divided by totalpopulation.
D) realGDPdividedbythenumberofworkers.
62) OneofthecostsoffastergrowthinGDPisthat
A) toomanygoodsareavailableforconsumption.
B) moremoneyforresearchanddevelopmentis
available.
C) itdoesnotincreasethewealthavailableforall.
D) resourcesmaybedepletedmorerapidly.
63) OneofthecostsofmorerapidgrowthinGDPis that
A) people must give up currentconsumption.
B) moremoneyisavailableforresearchanddevelopment.
C) itdoesnotincreasethewealthavailableforall.
D) toomanygoodseventuallyareavailableforconsumption.
64) Economicgrowth
A) isalwaysdesiredandfastergrowthhasonly
benefits and nocosts.
B) ispaidforinpartbylesscurrentconsumption.
C) allows for greater currentconsumption.
D) costs us with less futureconsumption.
65) In2003intheUnitedStatesthenumberofindividuals with a job
wasapproximately
A) 17million.
B) 37million.
C) 137million.
D) 217million.
66) In2003, peopleheldjobsintheU.S.economy.
A) between75and100million.
B) between95and105million.
C) between130and140million.
D) between250and270million.
67) IncharacterizingU.S.jobcreationduringthe
1980sand1990sweseethatjobswere
A) lostduringthe1980sbutcreatedduringthe
1990s.
B) createdatafasterannualrateduringthe1980s
than during the1990s.
C) createdduringthe1980sbutlostduringthe
1990s.
D) lostduringbothdecadesbutatafasterratedur- ing
the1980s.
68) \The number of jobs in the U.S.economy
A)
staysconstantovertimebecausethesamenumberofworkersarelostdu
ringrecessionsasare
created duringexpansions.
B) grows always, even duringrecessions.
C) hasactuallyfallenasjobshavegonetoplaces
with lower wages around theglobe.
D) generallygrowsovertime,asfewerjobsarelost
duringrecessionsthanarecreatedduringexpansions