ECON 301 CHAPTER 1-3 EXAM
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
In microeconomics, when economists state that households and firms "optimize," they mean
that: - ANS firms make production decisions to maximize their profits and households
maximize their utility.
Since the early 1980s, inflation in the United States has been relatively _____ and relatively
_____. - ANS low; stable
The price of a good is observed to rise at the same time that the quantity purchased rises. This
can be explained by a _____ the good. - ANS rise in demand for
Economic growth since 2009 has been lower than normal because: - ANS the recovery from
the Great Recession have been very slow.
Real GDP is often plotted using a logarithmic scale. On such a scale, equal distances represent
equal _____ changes. - ANS percentage
When _____, the _____ rate tends to decrease. - ANS inflation increases; unemployment
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Macroeconomics can be considered a science because it - ANS uses real world data to test
and confirm predictions, constitutes a systematized body of knowledge based on observed facts
The market clearing model is useful in describing the market for haircuts because - ANS even
though haircut prices are slow to change they consistently adjust toward the market clearing
equilibrium price over time
Since 1995, the Bureau of Economic Analysis has produced chain-weighted measures of real
GDP. With chain-weighted measures, the base year changes: - ANS continuously over time.
A person with two paying jobs is _____ in the household survey. - ANS counted once
GDP equals _____ minus factor payments from abroad plus factor payments to abroad. -
ANS gross national product (GNP)
The PCE deflator is the ratio of nominal _____ spending to real _____ spending. -
ANS consumer, consumer
The Federal Reserve uses the percentage change in the _____ as its preferred gauge of how
quickly prices are rising. - ANS PCE deflator
When a foreign corporation produces automobiles in Alabama and employs foreign engineers,
the compensation paid to these engineers is part of _____ GDP and _____ GNP. - ANS U.S.;
the foreign
The CPI has a fixed basket of goods and is an example of a _____ index. - ANS Laspeyres
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
In microeconomics, when economists state that households and firms "optimize," they mean
that: - ANS firms make production decisions to maximize their profits and households
maximize their utility.
Since the early 1980s, inflation in the United States has been relatively _____ and relatively
_____. - ANS low; stable
The price of a good is observed to rise at the same time that the quantity purchased rises. This
can be explained by a _____ the good. - ANS rise in demand for
Economic growth since 2009 has been lower than normal because: - ANS the recovery from
the Great Recession have been very slow.
Real GDP is often plotted using a logarithmic scale. On such a scale, equal distances represent
equal _____ changes. - ANS percentage
When _____, the _____ rate tends to decrease. - ANS inflation increases; unemployment
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Macroeconomics can be considered a science because it - ANS uses real world data to test
and confirm predictions, constitutes a systematized body of knowledge based on observed facts
The market clearing model is useful in describing the market for haircuts because - ANS even
though haircut prices are slow to change they consistently adjust toward the market clearing
equilibrium price over time
Since 1995, the Bureau of Economic Analysis has produced chain-weighted measures of real
GDP. With chain-weighted measures, the base year changes: - ANS continuously over time.
A person with two paying jobs is _____ in the household survey. - ANS counted once
GDP equals _____ minus factor payments from abroad plus factor payments to abroad. -
ANS gross national product (GNP)
The PCE deflator is the ratio of nominal _____ spending to real _____ spending. -
ANS consumer, consumer
The Federal Reserve uses the percentage change in the _____ as its preferred gauge of how
quickly prices are rising. - ANS PCE deflator
When a foreign corporation produces automobiles in Alabama and employs foreign engineers,
the compensation paid to these engineers is part of _____ GDP and _____ GNP. - ANS U.S.;
the foreign
The CPI has a fixed basket of goods and is an example of a _____ index. - ANS Laspeyres
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
