Macroeconomics - Chapter 1

Front 1

1. Which of the following is not a macroeconomic question?
a) How do lower interest rates lead to economic recovery?
b) Why did Japan perform so poorly in the 1990s?
c) Why have stock prices fallen?
d) What is the predicted market value for an initial public offering of stock?
e) What is the outlook for economic growth in the US?

Back 1

d) What is the predicted market value for an initial public offering of stock?

Front 2

2. From 1965 to 1990, US economic output, adjusted for inflation, quadrupled while the
population doubled. This means that output per person
a) rose by a factor of 8
b) fell by 50%
c) doubled
d) remained constant
e) increased 200%

Back 2

c) doubled

Front 3

3. Suppose that everyone in the population of Country A is employed and equally
productive. If the population grows by 5%, hours of work fall by 3%, and output per hour
grows by 4%, then output per person, or output per capita rises by approximately
a) 1%
b) 6%
c) 12%
d) 3%
e) 7%

Back 3

a) 1%

Front 4

4. Which of the following is an historically accurate description of real per capita growth
rates?
a) For the 1820-1913 period, the UK economy experienced negative growth
b) Between 1820 and 1913, Bangladesh grew as rapidly as Japan
c) In 1820 the US had a higher income per head than China, Japan and the UK
d) By 2010 China had overtaken Japan in terms of Income per head
e) Between 1913 and 2002, Japan grew faster than either the US or the UK

Back 4

e) Between 1913 and 2002, Japan grew faster than either the US or the UK

Front 5

5. Which of the following is probably the least relevant to a country’s growth rate?
a) infrastructure such as roads or computer networks
b) the education of the workforce
c) new technological inventions
d) legal restrictions on capital mobility and investment
e) short-term interest rates

Back 5

e) short-term interest rates

Front 6

6. A general definition of economics is the study of
a) money
b) the allocation of resources
c) the distribution of income
d) the production of goods
e) the role of government in society

Back 6

b) the allocation of resources

Front 7

7. The fundamental problem of economics is
a) that resources are too scarce to satisfy all wants simultaneously
b) how to balance the federal budget
c) deciding how large government should be
d) how to keep the unemployment rate below 4%
e) that firms have no way to know what consumers want to buy

Back 7

a) that resources are too scarce to satisfy all wants simultaneously

Front 8

8. Modern market economies allocate resources primarily through
a) carefully planned staffing policies
b) coordination among government agencies
c) price signals
d) long-term contracts
e) internet-based bartering

Back 8

c) price signals

Front 9

9. Which of the following is not a direct concern of macroeconomists?
a) interest rates
b) the growth rate of output
c) aggregate investment in machines and infrastructure
d) pricing decisions by an individual firm
e) monetary policy

Back 9

d) pricing decisions by an individual firm

Front 10

10. Which of the following is not a macroeconomic event?
a) a fluctuation in interest rates
b) a change in the exchange rate
c) the bankruptcy of a competitive firm
d) a drop in stock market prices
e) a shift in monetary policy

Back 10

c) the bankruptcy of a competitive firm

Front 11

11. Macroeconomics differs from microeconomics in that
a) microeconomics examines strictly short run questions; macroeconomics examines
only long run questions
b) microeconomics examines the domestic economy only; macroeconomics examines
the world
c) microeconomics examines production; macroeconomics examines distribution
d) microeconomics examines individual behavior; macroeconomics examines
aggregate outcomes
e) microeconomics examines positive issues; macroeconomics examines normative
questions

Back 11

d) microeconomics examines individual behavior; macroeconomics examines
aggregate outcomes

Front 12

12. Macroeconomics and microeconomics are complementary in that
a) macroeconomics explores the context within which microeconomic decisions are
made
b) microeconomics takes a broader look at the issues upon which macroeconomics is
more narrowly focused
c) microeconomics seeks to understand the economy as it is, while macroeconomics
seeks to determine how the economy ought to be designed
d) microeconomics examines market-based economies, whereas macroeconomics
examines command economies
e) macroeconomics studies private behavior, while microeconomics studies public
behavior

Back 12

a) macroeconomics explores the context within which microeconomic decisions are
made