Download Extra Review MC Questions for

Extra Review MC Questions for MACROECONOMIC TEST
Q1.
A
B
C
D
E
If national income goes up but the price level goes down then
the AD-curve must have shifted to the right
the AD-curve must have shifted to the left
the AS-curve must have shifted to the right
the AS-curve must have shifted to the left
the AD-curve and the AS-curve must have shifted to the right
Q2. An increase in which of the following would cause the long-run aggregate supply curve to shift to the right?
A income tax rates
B aggregate demand
C potential output
D the price level
Q3 Assume that the economy has low unemployment and a high rate of inflation. Which set of monetary
and fiscal policies would be consistent and designed to lower the rate of inflation?
Government
Taxes
spending
Change in
Interest rates
a.
Increase
Increase
Raise
b.
Increase
Decrease
Lower
c.
Increase
Increase
Leave unchanged
d.
Decrease
Decrease
Lower
e.
Increase
Decrease
Raise
Q4 An aggregate supply curve may be horizontal over some range because within that range:
A changes in the price level do not induce substitution
B output cannot be increased unless prices and interest rates rise
C rigid prices prevent employment from fluctuating
D resources are underemployed or unemployed
Q5. Which of the following is an example of “investment” as the term is used by economists?
A an entrepreneur puts part of his profits into an investment bank
B a household deposits part of its income into an account for their children’s university fees
C a bank purchases government bonds
D a farmer purchases a new tractor
Q6. Which of the following is a basic theory of NEW-CLASSICAL economic analysis?
A the economy may be in equilibrium at less than potential GDP
B the economy is self-correcting to potential GDP
C inflation is not a serious economic problem
D prices and wages tend to be inflexible
E it is possible to keep unemployment at less that its natural rate
Q7. Using an aggregate supply/aggregate demand graph, which of the following will definitely result
in a decrease in output:
I. A rightward shift of the aggregate demand curve. II. A leftward shift of the aggregate demand curve.
III. A rightward shift of the aggregate supply curve. IV. A leftward shift of the aggregate supply curve.
A I only B III only C I and III only D II and IV only
Q8. Which of the following will most likely occur as a result of an increase in labor costs (i.e wages)
A A decrease in output and an increase in inflation
B An increase in interest rates and a decrease in investment
C A decrease in both interest rates and prices
D An increase in exports and a decrease in unemployment
Q9 .An improvement in technology or an increase in the amount of capital goods will:
a. result in movement along a fixed production possibilities curve (ppf).
b. shift the LRAS outward.
c. cause the production possibilities curve to become vertical.
d. shift out the demand curve.
10) The market value of all final goods and services produced within the economy in a given year is the:
a. gross domestic product
b. net national income
c. personal income
d. gross national product
e. producer price index
11). The difference between Gross domestic product and Gross National Income is:
a. taxes and subsidies
b. depreciation (capital consumption)
c. profits
d. net incomes from abroad
12). Real GDP for a given year is
a. a physical count of the output produced that year
b. higher than nominal GDP if the inflation rate was positive
c. a measure of the market value of that year's output using prices which prevailed in a given base year
d. higher than nominal GDP if the inflation rate was zero
e. none of the above
13). GDP measured by the expenditure approach equals
a. C + I – S – T
b. C + S + (X – M)
c. C + I + G
d. C + I + G+ (X – M)
14) Which of the following is included in the calculation of GDP?
I The total sale price of a used car
II Social security payments to a retired steel worker.
III The purchase of a new home from a builder.
a. I only b. II only c. III only d. I and II only e. II and III only
15) Which of the following would be counted as investment when calculating GDP?
I The purchase of a computer by an auto manufacturer
II The purchase of a share of IBM stock by a secretary.
III The construction of a new house.
a. I only b. II only c. III only d. I and III only e. II and III only
16) Suppose that the consumer price index (deflator) rises from 80 in 2000 to 160 in 2005.
From this information we may conclude that:
a. each person’s real income is cut in half
b. consumer incomes are doubled
c. the cost of an average consumer’s market basket is doubled
d. all consumer goods’ prices are doubled
e. all prices in the economy are doubled.
17) . If real GDP has increased, which of the following can NOT be true?
a. output has increased and prices have decreased
b. nominal GDP has increased and prices have decreased
c. nominal GDP has remained the same and prices have decreased
d. output has remained the same and prices have increased
e. output has increased less than prices
ANSWERS
1. C
10. A
2. C
11. D
3. E
12. C
4. D
13. D
5. D
14. C
6. B
15. D
7. D
16. C
8. A
17. D
9. B