ECON 201 ECON201 Macro Workings Quiz Module 4 Answers
Macro Workings Quiz Module 4:
Pretest questions:
1.Choose ALL that apply.
An economy is considered to be in a recession if:
It is moving from the peak toward the trough of the business cycle.
it is moving from the trough to the peak of the business cycle.
real GDP has declined for two consecutive quarters.
2.Choose the BEST answer.
Country A’s real GDP is growing at a rate of 2 percent per year. Using the rule of 72, it will take country A ________ to double its GDP.
36 years
2 years
72 years
18 years
3.Choose ALL that apply.
Which of the following describe technical change?
Improved organization of an assembly line.
Upgraded office equipment.
New office equipment.
4.Choose ALL that apply.
The New Economy controversy maintains that recent productivity growth resulting from rapid gains in communications and information technology:
are a short-run phenomenon of about one decade.
will generate productivity gains for decades.
will generate productivity gains during recessionary periods of the business cycle.
5.Choose the BEST answer.
On the far left side of the AS curve, the economy is producing ________ potential, and on the far right of the curve, it is producing ________ potential.
always: at
below: above
above: below
always: below
6.Choose the BEST answer.
In macroeconomics, ________ denotes the total quantity of spending on domestic goods and services.
Net trade
aggregate demand (AD)
potential GDP
aggregate supply (AS)
7.Choose ALL that apply.
In the chart below concerning the shifts in Aggregate Supply, Arrow A represents an economy that is moving toward ________.
higher input price
loss in productivity
lower consumer confidence
8.Choose ALL that apply.
Inflationary pressure in the AS-AD model can be shown as a:
rightward shift of the AD curve when the economy is already producing at its potential GDP.
leftward shift of the AD curve when the economy is already producing at its potential GDP.
supply shock that shifts the AS to the left.
9.Choose the BEST answer.
Economic growth is shown in the AS-AD model as a:
rightward shift in the AD curve.
leftward shift in the short run AS curve
rightward shift in the long run AS curve.
Self-Checks:
Choose the BEST answer.Concerning the four phases in the economic cycle, the area above A in this graph represents an economic______.
Recession
Expansion
Trough
Choose the BEST answer.
Over the course of human history:
all countries have achieved substantial gains in per capita GDP since the 19th century
economic growth has brought about substantial gains in incomes and standards of living in most countries
economic growth follows a steady, long-term upward path
Choose ALL that apply.
The most important determinant of the average wage is ________.
the value of output per hour worked
productivity
total quantity of output
the number of hours worked
A nation might achieve higher economic growth if it:
devotes more resources to technology research and development
limits immigration
taxes investment in capital
has a clear regulatory process
Choose ALL that apply.
If the economy is in a recession, appropriate policies to pursue may include:
an increase in government spending that shifts the AD curve to the right
an income tax cut that shifts the AD curve to the right
investment in technology that shifts the AS curve to the right
Actual Quiz:
1.Choose the BEST answer.
Fluctuations in real GDP are called ________?
Recessions
depressions
business cycles
2.Choose the BEST answer.
The point of a fluctuation at which an economy turns from a recession to an expansion is called a ________.
trough
disinflation
depression
3.Choose ALL that apply.
These are the factors that drive economic growth:
technology
physical capital
human capital
a market orientation
4.Choose ALL that apply.
Which of the following contribute to economic growth:
lenient judicial system
protection of property rights
clear and enforced regulations
rule of law
5.Choose ALL that apply.
Investment in human capital:
is characterized by both b) and c)
is of minor importance to economic growth
is an important source of economic growth
can be acquired through on-the-job training
6.Choose the BEST answer.
Which of the following is most likely to contribute to economic growth as measured by GDP per capita?
Business cycle peaks
increased stock of physical capital
rapid population growth
7.Choose the BEST answer.
________ is the value of output per hour of labor input.
Human capital
Labor productivity
Investment
GDP per capita
8.Choose the BEST answer.
To achieve a higher stock of human capital in its economy, a nation should:
promote tax-deductible college savings plans
use less capital and more labor in the production process
encourage population growth
9.Choose ALL that apply.
In an AD/AS model:
real GDP is shown on the horizontal axis
the price level is shown on the vertical axis
the potential GDP always slopes downwards
10.Choose the BEST answer.
Neoclassical economists:
subscribe to Say’s Law that the macroeconomy is largely determined by supply side factors
include some of the greatest economists of the 19th century
take a classical view of the economy
11.Choose the BEST answer.
Aggregate Demand (AD) = C + I + G + (X-M). M = ________.
imports
income
investments
12.Choose the BEST answer.
As interest rates rise, the effect on aggregate demand is to:
increase firm borrowing and investment spending
increase consumer borrowing and saving
reduce consumer borrowing and consumption spending
13.Choose the BEST answer.
Shifts in the aggregate supply curve can be caused by:
the foreign price effect
technological innovation
the wealth effect
14.Choose the BEST answer.
The term “full employment GDP” is synonymous with which of the following?
aggregate GDP
macroeconomic equilibrium
Keynesian zone
potential GDP
15.Choose ALL that apply.
In an AD/AS diagram, ________ could explain a rise in cyclical unemployment.
a shift in AD to the left
a shift in AS to the left
a shift in AS to the right
16.Choose the BEST answer.
If the economy is in an expansionary period, appropriate policies to pursue may include:
business investment incentives that shift the AD curve to the left
a reduction in government spending that shifts the AD curve to the left
an income tax cut that shifts the AD curve to the right
17.Choose the BEST answer.
________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment.
The foreign price effect
The interest rate effect
Stagflation
Full employment GDP
18.Choose ALL that apply.
The AS-AD model can be used to analyze:
price levels and inflation
economic growth
short run cyclical unemployment
speed of adjustment from recessions to expansions
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