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1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high rates of inflation. D) what causes recessions and depressions. 2. A typical trend during a recession is that: A) the unemployment rate falls. B) the popularity of the incumbent president rises. C) incomes fall. D) the inflation rate rises. 3. Macroeconomics is the study of the: A) activities of individual units of the economy. B) decision making by households and firms. C) economy as a whole. D) interaction of firms and households in the marketplace. 4. The study of the economy as a whole is called: A) household economics. B) business economics. C) microeconomics. D) macroeconomics. 5. Macroeconomists cannot conduct controlled experiments, such as testing various tax and expenditure policies, because: A) it is against the law. B) they tried it once and it did not work. C) they must make use of the data history gives them. D) economists already know the answers that would come out of the experiments. 6. The ability of macroeconomists to predict the future course of economic events: A) is no better than the meteorologist's ability to predict the next month's weather. B) is much better than the meteorologist's ability to predict the next month's weather. C) has gotten worse over time. D) is less precise than it was in the 1920s.
Page 1 7. Which of the combinations listed is not a U.S. president and an important economic issue of his administration? A) President Carter, inflation B) President Reagan, budget deficits C) President G.H.W. Bush, budget deficits D) President Clinton, inflation 8. All of the following are types of macroeconomics data except the: A) price of an IBM computer. B) growth rate of real GDP. C) inflation rate. D) unemployment rate. 9. All of the following are important macroeconomic variables except: A) real GDP. B) the unemployment rate. C) the marginal rate of substitution. D) the inflation rate. 10. The total income of everyone in the economy adjusted for the level of base year prices is called: A) a recession. B) an inflation. C) real GDP. D) a business fluctuation. 11. A measure of how fast the general level of prices is rising is called the: A) growth rate of real GDP. B) inflation rate. C) unemployment rate. D) market-clearing rate. 12. The inflation rate is a measure of how fast: A) the total income of the economy is growing. B) unemployment in the economy is increasing. C) the general level of prices in the economy is rising. D) the number of jobs in the economy is expanding.
Page 2 13. Real GDP ______ over time and the growth rate of real GDP ______. A) grows; fluctuates B) is steady; is steady C) grows; is steady D) is steady; fluctuates 14. Two striking features of a graph of U.S. real GDP per capita over the twentieth century are the: A) overall upward trend interrupted by a large downturn due to the economic depression in the 1930s. B) nearly constant level with a large downturn in the 1930s. C) downward trend in the first half of the century followed by the upward trend in the second half. D) constant level in the first half of the century followed by the upward trend in the second half. 15. In the U.S. economy today, real GDP per person, compared with its level in 1900, is about: A) 50 percent higher. B) twice as high. C) three times as high. D) eight times as high. 16. Recessions are periods when real GDP: A) increases slowly. B) increases rapidly. C) decreases mildly. D) decreases severely. 17. Compared with a recession, real GDP during a depression: A) increases more rapidly. B) increases at approximately the same rate. C) decreases at approximately the same rate. D) decreases more severely. 18. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.Page 3 19. The inflation rate in the United States averaged about: A) nearly zero between 1900 and 1950. B) nearly zero between 1950 and 2000. C) 10 percent between 1900 and 1950. D) 10 percent between 1950 and 2000. 20. Deflation occurs when: A) real GDP decreases. B) the unemployment rate decreases. C) prices fall. D) prices increase, but at a slower rate. 21. A period of falling prices is called: A) deflation. B) inflation. C) a depression. D) a recession. 22. A graph of the rate of inflation in the United States over the twentieth century shows: A) an overall upward trend interrupted by a large downturn in the 1930s. B) some periods of deflation in the first half of the century, but only positive rates of inflation in the second half of the century. C) a relatively steady, positive level throughout the century except for deflation in the 1930s. D) a constant rate of inflation in the first half of the century followed by an upward trend in the second half. 23. A graph of the U.S. unemployment rate over the twentieth century shows: A) an overall upward trend in the unemployment rate interrupted by a large upturn in the 1930s. B) an overall downward trend in the unemployment rate interrupted by a large upturn in the 1930s. C) rates of unemployment always greater than zero with substantial variations from year to year. D) alternating periods of positive and negative rates of unemployment.
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