VEE MACROECONOMICS.FINAL TEST 2026\2027.
During a recession fueled by a leftward shift in the AD curve, employment tends to:
A. Increase
B. Decrease
C. Remain constant
Answer: B (Decrease)
Stagflation is a combination of:
A. High inflation rate and high unemployment
B. Low inflation rate and low unemployment
C. High inflation rate and low unemployment
D. Low inflation rate and high unemployment
Answer: A (High inflation rate and high unemployment)
If the AD curve increases and the AS curve decreases, the most likely effect on prices is:
A. An increase
B. A decrease
C. No impact
D. Not enough information
Answer: A (An increase)
If both the AD and AS curves shift to the right, the most likely impact on prices is:
A. An increase
B. A decrease
C. No impact
D. Unknown
Answer: D (Unknown)
Which of the following are taken out of national income to arrive at personal income?
A. Rent
B. Changes in inventories
C. Corporate income taxes
Answer: C (Corporate income taxes)
,VEE MACROECONOMICS.FINAL TEST 2026\2027.
Fill in the blanks as most appropriate.
When inflation has consistently been negative, real GDP is ____ nominal GDP.
A. equal to
B. greater than
C. less than
Answer: B (greater than)
The IS and LM curves operate most typically on which dimensions?
A. Income and real interest rates
B. Prices and income
C. Real interest rates and prices
Answer: A (Income and real interest rates)
The Austrian school of thought on the solution to an economic recession is to:
A. Increase wages
B. Reduce interest rates
C. Minimize government intervention
Answer: C (Minimize government intervention)
The long run aggregate supply curve is most accurately described as:
A. Upward sloping
B. Downward sloping
C. Vertical
D. Horizontal
Answer: C (Vertical)
The production process of a calculator involves several steps. Suppose the pieces of the chain
add the following value to the process:
Raw materials supplier: $4
Factory: $3
Retailer: $2
The price that the retailer buys the calculator from the factory will be closest to:
A. $7
B. $9
, VEE MACROECONOMICS.FINAL TEST 2026\2027.
C. $2
D. $3
Answer: A ($7)
The factory buys raw materials for $4.
The retailer buys the product from the factor for $4 + $3 = $7.
The consumer buys the product from the retailer for $4 + $3 + $2 = $9.
Orange is a small, new country that produces only one item, personal computers. Output for the
past few years has been:
Year Quantity Price
2011 1,000 500
2012 2,000 550
2013 1,500 600
Assume that there are no technological improvements (a computer produced in 2011 is the same
as a computer produced in 2013). The GDP deflator for 2013, with 2011 as a base year, is closest
to:
A. 120
B. 100
C. 80
Answer: A (120)
GDP deflator = ((1500600)/(1500500))*100 = 120
If both the AD and AS curves shift to the left, the most likely impact on real GDP is:
A. An increase
B. A decrease
C. No impact
D. Unknown
Answer: B (A decrease)
Compared to balanced trade (imports = exports), how does a trade deficit (imports > exports)
affect total expenditures?
A. Decreases expenditures
During a recession fueled by a leftward shift in the AD curve, employment tends to:
A. Increase
B. Decrease
C. Remain constant
Answer: B (Decrease)
Stagflation is a combination of:
A. High inflation rate and high unemployment
B. Low inflation rate and low unemployment
C. High inflation rate and low unemployment
D. Low inflation rate and high unemployment
Answer: A (High inflation rate and high unemployment)
If the AD curve increases and the AS curve decreases, the most likely effect on prices is:
A. An increase
B. A decrease
C. No impact
D. Not enough information
Answer: A (An increase)
If both the AD and AS curves shift to the right, the most likely impact on prices is:
A. An increase
B. A decrease
C. No impact
D. Unknown
Answer: D (Unknown)
Which of the following are taken out of national income to arrive at personal income?
A. Rent
B. Changes in inventories
C. Corporate income taxes
Answer: C (Corporate income taxes)
,VEE MACROECONOMICS.FINAL TEST 2026\2027.
Fill in the blanks as most appropriate.
When inflation has consistently been negative, real GDP is ____ nominal GDP.
A. equal to
B. greater than
C. less than
Answer: B (greater than)
The IS and LM curves operate most typically on which dimensions?
A. Income and real interest rates
B. Prices and income
C. Real interest rates and prices
Answer: A (Income and real interest rates)
The Austrian school of thought on the solution to an economic recession is to:
A. Increase wages
B. Reduce interest rates
C. Minimize government intervention
Answer: C (Minimize government intervention)
The long run aggregate supply curve is most accurately described as:
A. Upward sloping
B. Downward sloping
C. Vertical
D. Horizontal
Answer: C (Vertical)
The production process of a calculator involves several steps. Suppose the pieces of the chain
add the following value to the process:
Raw materials supplier: $4
Factory: $3
Retailer: $2
The price that the retailer buys the calculator from the factory will be closest to:
A. $7
B. $9
, VEE MACROECONOMICS.FINAL TEST 2026\2027.
C. $2
D. $3
Answer: A ($7)
The factory buys raw materials for $4.
The retailer buys the product from the factor for $4 + $3 = $7.
The consumer buys the product from the retailer for $4 + $3 + $2 = $9.
Orange is a small, new country that produces only one item, personal computers. Output for the
past few years has been:
Year Quantity Price
2011 1,000 500
2012 2,000 550
2013 1,500 600
Assume that there are no technological improvements (a computer produced in 2011 is the same
as a computer produced in 2013). The GDP deflator for 2013, with 2011 as a base year, is closest
to:
A. 120
B. 100
C. 80
Answer: A (120)
GDP deflator = ((1500600)/(1500500))*100 = 120
If both the AD and AS curves shift to the left, the most likely impact on real GDP is:
A. An increase
B. A decrease
C. No impact
D. Unknown
Answer: B (A decrease)
Compared to balanced trade (imports = exports), how does a trade deficit (imports > exports)
affect total expenditures?
A. Decreases expenditures
