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Macroeconomics — Test Answers

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Which describes an investor’s primary goal of buying a loan?

A
to bolster the economy
B
to earn a profit off the interest
C
to provide capital to a business
D
to grow a business
3

As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Choose two correct answers.

A
unemployed
B
domestically unemployed
C
structurally unemployed
D
still employed
E
cyclically unemployed
F
frictionally unemployed
6

Which example best describes how a bank injects money into the economy?

A
A bank opens a savings account for a customer.
B
A bank buys a company’s rapidly growing stock.
C
A bank buys property in a bustling business district.
D
A bank approves a loan for a customer.
7

Which best describes what is represented in the business cycle model?

A
the change in production cost
B
supply and demand trends
C
the interactions between producers and consumers
D
macroeconomic trends
8

Economic growth takes place when a country

A
has a high unemployment rate.
B
produces a steady number of automobiles.
C
measures its gross domestic product (GDP).
D
produces more goods and services.
9

Which is the best definition of inflation?

A
a gradual decrease in the price of goods and services
B
an exponential decrease in the price of goods and services
C
an exponential increase in the price of goods and services
D
a gradual increase in the price of goods and services
10

Are the buying and selling of stocks centralized activities? Why or why not?

A
Yes, the world’s stock markets are coordinated exchanges, and they are dependent on one another.
B
No, people can buy stocks anywhere, and they do not need to go through a market.
C
No, there are many stock markets around the world, and they are independent of one another.
D
Yes, the New York Stock Exchange is the primary exchange for all the world’s most important trades.
11

Which best describes the role that government and business play in investments?

A
They both use taxes to support a country’s growth.
B
They both receive capital to use for growth.
C
They both invest money to earn a profit.
D
They both act as angel investors for start-ups.
13

Which of the is a characteristic of prosperity in the peak phase of the business cycle?

A
high levels of production
B
reduced incomes
C
ambivalence about the economy
D
stagnant prices
15

What role does the Federal Reserve play? Choose three correct answers.

A
Regulate the banking industry
B
Give corporate loans
C
Transfers any profits to the Treasury
D
Give individual loans
E
Loan money to banks
16

Bank deposits help the nation’s economy by

A
providing protection for consumers from theft.
B
giving consumers the ability to save money.
C
giving banks the money to loan and invest.
D
providing protection for banks on investments.
18

The spiral usually begins with an increase in demand. What is the direct effect of this increase? The inflationary spiral explains the causes and effects of high inflation.

A
Workers negotiate with employers to receive more money.
B
Producers raise prices to continue to make a profit.
C
The government prints more money, lowering the value of money.
D
Consumers need higher wages to keep up with rising prices.
19

Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?

A
Gasoline costs more to produce and purchase than tomatoes.
B
Americans spend more money on gasoline than tomatoes, on average.
C
Americans purchase many more boxes of tomatoes than barrels of gasoline.
D
Gasoline is imported from other nations at a higher rate than tomatoes.
20

Which federal agency calculates the Consumer Price Index (CPI)?

A
US Department of Commerce
B
US Department of the Treasury
C
US Census Bureau
D
US Bureau of Labor Statistics
21

When economists determine that a nation’s GDP has declined, they can point to this as a sign of

A
economic growth.
B
economic shrinkage.
C
poor leadership.
D
low unemployment.

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