Chapter 18. Alternative Perspectives on Stabilization Policy 1.Economists who view the economy as inherently unstable generally argue that: A) stabilization policy is too dangerous to be used. B) the economy should be stimulated when it is depressed and slowed when it is overheated. C) the economy should be slowed when it is depressed and stimulated when it is overheated. D) monetary and fiscal policies should follow rigid rules of constant growth. 2.Ec...

Chapter 19. Government Debt and Budget Deficits 1.When a government spends more than it collects in taxes, it runs a: A) trade deficit. B) trade surplus. C) budget surplus. D) budget deficit. 2.Government debt equals the: A) difference between current government purchases and taxes. B) difference between saving and investment. C) sum of past budget deficits and surpluses. D) ...

Chapter 20. The Financial System, Opportunities and Dangers 1.The financial system refers to the: A) mechanism that transfers wealth from consumers to corporations. B) institutions that facilitate the flow of funds between savers and investors. C) arrangements that allow money to circulate in the economy. D) government regulations that govern the terms of borrowing and lending. 2.The set of institutions in the economy that fa...

Chapter 2. The Data of Macroeconomics 1.The economic statistic used to measure the level of prices is: A) GDP. B) CPI. C) GNP. D) real GDP. 2.The statistic used by economists to measure the value of economic output is: A) the CPI. B) GDP. C) the GDP deflator. D) the unemployment rate. 3.GDP is all of the following except the total: A) expenditu...

Chapter 4. The Monetary System, What It Is and How It Works

Chapter 6. The Open Economy 1.An “open” economy is one in which: A) the level of output is fixed. B) government spending exceeds revenues. C) the national interest rate equals the world interest rate. D) there is trade in goods and services with the rest of the world. 2.A country's exports may be written as equal to: A) GDP minus consumption minus investment minus government spending. B) GDP minus consu...

Chapter 7. Unemployment and the Labor Market 1.The macroeconomic problem that affects individuals most directly and severely is: A) inflation. B) unemployment. C) low savings. D) low investment. 2.The unemployment rate in the United States since 1952 has: A) never been close to zero. B) gravitated toward a steady-state rate of zero. C) remained constant from year to year. D...

Chapter 8. Economic Growth I, Capital Accumulation and Population Growth 1.The Solow growth model describes: A) how output is determined at a point in time. B) how output is determined with fixed amounts of capital and labor. C) how saving, population growth, and technological change affect output over time. D) the static allocation, production, and distribution of the economy's output. 2.Unlike the long-run classica...

Chapter 9. Economic Growth II, Technology, Empirics, and Policy 1.The efficiency of labor is a term that does not reflect the: A) high output that comes from labor cooperating with a large amount of capital. B) health of the labor force. C) education of the labor force. D) skills of the labor force acquired through on-the-job training. 2.The efficiency of labor: A) is the marginal product of labor. B) ...

Chapter 10. Introduction to Economic Fluctuations 1.Business cycles are: A) regular and predictable. B) irregular but predictable. C) regular but unpredictable. D) irregular and unpredictable. 2.Short-run fluctuations in output and employment are called: A) sectoral shifts. B) the classical dichotomy. C) business cycles. D) productivity slowdowns. 3.Recessions ...