Economics Review Chapters 1-6

19 Questions | Total Attempts: 322

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Macroeconomics Quizzes & Trivia

A review of Chapters 1-6 of "Principles of Macroeconomics. "


Questions and Answers
  • 1. 
    • A. 

      A new car bought by the Jones family

    • B. 

      A truck used in transporting school children to a soccer practice

    • C. 

      A truck used in transporting steel to an automobile factory

    • D. 

      Hamburger meat used to produce a juicy hamburger on a home grill

    • E. 

      A sapling used to create a forest in a new national park

  • 2. 
    The French production possibilities curve shifts to the right when there is
    • A. 

      A decrease in the French capital stock

    • B. 

      A decrease in the French labor supply

    • C. 

      High unemployment in France during the previous period

    • D. 

      Only consumer goods production in France during the previous period

    • E. 

      Technological innovation in the production of French goods

  • 3. 
    A point inside a production possibilities curve reflects
    • A. 

      The law of increasing costs

    • B. 

      Technological information

    • C. 

      Less than full use of resoures and technology

    • D. 

      Economic efficiency

    • E. 

      A way to increase future economic growth

  • 4. 
    A demand curve shows the relationship between
    • A. 

      Price and quantity demanded

    • B. 

      The demand and supply schedules

    • C. 

      Demand and supply equilibrium

    • D. 

      Leakages and injections

    • E. 

      Price and technology

  • 5. 
    An increase in the demand for a good refers to a shift in the
    • A. 

      Demand curve to the left

    • B. 

      Demand curve to the right

    • C. 

      Quantity demanded to the right

    • D. 

      Quantity demanded to the left

    • E. 

      Price of the good

  • 6. 
    Sugar and honey are substitue goods for many cooking applications. If the price of sugar rises, we would expect the
    • A. 

      Demand for honey to increase

    • B. 

      Demand for honey to decrease

    • C. 

      Quantity demanded of honey to decrease

    • D. 

      Price of honey to decrease

    • E. 

      Quantity demanded of honey to increase

  • 7. 
    A market-day supply curve is
    • A. 

      Horizontal, summing individual supply curves

    • B. 

      Vertical

    • C. 

      Downward sloping

    • D. 

      Upward sloping

    • E. 

      Dependent on the market-day demand

  • 8. 
    If the price of a good is below its equilibrium level, then
    • A. 

      An excess supply will result

    • B. 

      Quantity supplied exceeds quantity demanded

    • C. 

      The supply curve will shift to the right

    • D. 

      Quantity demanded exceeds quantity supplied

    • E. 

      The demand curve will shift to the left

  • 9. 
    If more people enter medical school, we can expect
    • A. 

      The demand for doctors to increase

    • B. 

      The supply of doctors to increase

    • C. 

      The demand for doctors to decrease

    • D. 

      The supply of doctors to decrease

    • E. 

      No effect on the supply or demand of doctors--just a movement along the curves

  • 10. 
    The simultaneous occurrence of inflation and unemployment is called
    • A. 

      Depression

    • B. 

      Downturn

    • C. 

      Deflation

    • D. 

      Demand-pull inflation

    • E. 

      Stagflation

  • 11. 
    • A. 

      An upward movement along the AD curve

    • B. 

      A downward movement along the AD curve

    • C. 

      The AD curve shift to the left

    • D. 

      The AD curve shift to the right

    • E. 

      The AS curve shift to the right

  • 12. 
    Real GDP is nominal GDP adjusted for
    • A. 

      Price changes

    • B. 

      Intermediate goods

    • C. 

      Business cycle fluctuations

    • D. 

      International trade

    • E. 

      Depreciation

  • 13. 
    The expenditure approach to GDP accounting includes
    • A. 

      Wages and salaries

    • B. 

      Net exports

    • C. 

      Net interest

    • D. 

      Corporate profit

    • E. 

      Proprietors' income

  • 14. 
    When net exports are positive,
    • A. 

      Exports are greater than imports

    • B. 

      Imports are greater than exports

    • C. 

      Imports are greater than investments

    • D. 

      Exports are greater than depreciation spending

    • E. 

      Exports are greater than net investment

  • 15. 
    The "life cycle" hypothesis states that
    • A. 

      MPC remains constant as national income rises

    • B. 

      MPC varies with age

    • C. 

      Transitory income determines consumption

    • D. 

      MPC varies with permanent income

    • E. 

      Consumption spending is independent of income

  • 16. 
    Economists refer to the simple relationship between consumption and income as
    • A. 

      Autonomous consumption

    • B. 

      The marginal propensity to consume

    • C. 

      The absolute income hypothesis

    • D. 

      Disposable income

    • E. 

      The consumption function

  • 17. 
    The short run consumption curve may shift upward over the long run largely because
    • A. 

      People become wealthier

    • B. 

      The marginal propensity to save increases

    • C. 

      The 45-degree line becomes a 90-degree line

    • D. 

      The demand curve for investment is upward sloping

    • E. 

      Economic growth, although still positive, slows down

  • 18. 
    The relationship between MPC and MPS is
    • A. 

      1+MPC=MPS

    • B. 

      1-MPC=MPS

    • C. 

      1+MPS=MPC

    • D. 

      MPC-MPS=1

    • E. 

      MPS-MPC=1

  • 19. 
    When the interest rate falls, the level of investment in the economy
    • A. 

      Falls

    • B. 

      Is unaffected

    • C. 

      Shifts to the left

    • D. 

      Rises

    • E. 

      Shifts to the right