Professional Documents
Culture Documents
Student:
___________________________________________________________________________
1. The two general types of economic systems that exist today are:
A. market systems and capitalism.
B. socialism and central planning.
C. market systems and command systems.
D. laissez faire systems and pure command systems.
3. The coordination problem in the centrally planned economies refers to the idea that:
A. planners had to direct required inputs to each enterprise.
B. the price level and the level of employment were inversely related.
C. the immediate effect of more investment was less consumption.
D. exports had to be equal to imports for a central plan to work.
4. In terms of the circular flow diagram, households make expenditures in the _____ market and
receive income through the _____ market.
A. product; financial
B. resource; product
C. product; resource
D. capital; product
9. The market system's answer to the fundamental question "Who will get the goods and services?" is
essentially:
A. "Those willing and able to pay for them."
B. "Those who physically produced them."
C. "Those who most need them."
D. "Those who get utility from them."
13. An increase in the price of a product will reduce the amount of it purchased because:
A. supply curves are upsloping.
B. the higher price means that real incomes have risen.
C. consumers will substitute other products for the one whose price has risen.
D. consumers substitute relatively high-priced for relatively low-priced products.
14. In 2003 the price of oil increased, which in turn caused the price of natural gas to rise. This can
best be explained by saying that oil and natural gas are:
A. complementary goods and the higher price for oil increased the demand for natural gas.
B. substitute goods and the higher price for oil increased the demand for natural gas.
C. complementary goods and the higher price for oil decreased the supply of natural gas.
D. substitute goods and the higher price for oil decreased the supply of natural gas.
15. An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes
will increase the demand for bicycles. This prediction is based on the assumption that:
A. there are many goods that are substitutes for bicycles.
B. there are many goods that are complementary to bicycles.
C. there are few goods that are substitutes for bicycles.
D. bicycles are normal goods.
16. Which of the following will cause the demand curve for product A to shift to the left?
A. population growth that causes an expansion in the number of persons consuming A
B. an increase in money income if A is a normal good
C. a decrease in the price of complementary product C
D. an increase in money income if A is an inferior good
17. College students living off-campus frequently consume large amounts of ramen noodles and
boxed macaroni and cheese. When they finish school and start their careers, their consumption of
these goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese
are:
A. inferior goods.
B. normal goods.
C. complementary goods.
D. substitute goods.
19. In moving along a stable supply curve which of the following is not held constant?
A. the number of firms producing this good
B. expectations about the future price of the product
C. techniques used in producing this product
D. the price of the product for which the supply curve is relevant
20. An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:
A. demand curve for cigarettes rightward.
B. demand curve for cigarettes leftward.
C. supply curve for cigarettes rightward.
D. supply curve for cigarettes leftward.
Answer the next question(s) on the basis of the given supply and demand data for wheat:
21. Refer to the above data. Equilibrium price will be:
A. $4.
B. $3.
C. $2.
D. $1.
22. Refer to the above data. If the price in this market was $4:
A. the market would clear; quantity demanded would equal quantity supplied.
B. buyers would want to purchase more wheat than is currently being supplied.
C. farmers would not be able to sell all their wheat.
D. there would be a shortage of wheat.
31. By summing the dollar value of all market transactions in the economy we would:
A. be determining the market value of all resources used in the production process.
B. obtain a sum substantially larger than the GDP.
C. be determining value added for the economy.
D. be measuring GDP.
32. GDP can be calculated by summing:
A. consumption, investment, government purchases, exports, and imports.
B. investment, government purchases, consumption, and net exports.
C. consumption, investment, wages, and rents.
D. consumption, investment, government purchases, and imports.
35. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures
remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2
is:
A. $180 billion.
B. $190 billion.
C. $200 billion.
D. $210 billion.
Answer the next question(s) on the basis of the following data. All figures are in billions of dollars.
46. Nominal GDP is adjusted for price changes through the use of:
A. the Consumer Price Index (CPI).
B. the GDP price index.
C. the Producer Price Index (PPI).
D. exchange rates.
47. In the second quarter (3-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP
declined. We can conclude that:
A. nominal income declined by more than personal income.
B. the price level rose by more than nominal GDP.
C. real wages declined by more than real GDP.
D. the price level fell by more than real GDP.
48. If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index
for that year is:
A. 100.
B. 200.
C. 240.
D. 300.
49. Assume that the size of the underground economy increases both absolutely and relatively over
time. As a result:
A. real GDP will rise more rapidly than nominal GDP.
B. GDP will tend to increasingly understate the level of output through time.
C. GDP will tend to increasingly overstate the level of output through time.
D. the accuracy of GDP will be unaffected through time.
51. GDP data are criticized as being inaccurate measures of economic welfare because:
A. they do not take into account changes in the amount of leisure.
B. they do not take into account all changes in product quality.
C. they do not take into account the adverse effects of economic activity on the environment.
D. of all of the above considerations.
MacroReviewTest Key
1. The two general types of economic systems that exist today are:
a. market systems and capitalism.
b. socialism and central planning.
C. market systems and command systems.
d. laissez faire systems and pure command systems.
Econ: 29
Learning Objective: 2-1
Macro: 29
McConnell - Chapter 02 #1
Micro: 29
Topic: 1
Type: Fact
Econ: 32
Learning Objective: 2-2
Macro: 32
McConnell - Chapter 02 #20
Micro: 32
Status: New
Topic: 2
Type: Definition
3. The coordination problem in the centrally planned economies refers to the idea that:
A. planners had to direct required inputs to each enterprise.
b. the price level and the level of employment were inversely related.
c. the immediate effect of more investment was less consumption.
d. exports had to be equal to imports for a central plan to work.
Econ: 38
Learning Objective: 2-1
Macro: 38
McConnell - Chapter 02 #66
Micro: 38
Status: New
Topic: 5
Type: Application of a Concept
4. In terms of the circular flow diagram, households make expenditures in the _____ market and
receive income through the _____ market.
a. product; financial
b. resource; product
C. product; resource
d. capital; product
Econ: 39
Learning Objective: 2-5
Macro: 39
McConnell - Chapter 02 #86
Micro: 39
Topic: 6
Type: Definition
Econ: 39
Learning Objective: 2-5
Macro: 39
McConnell - Chapter 02 #89
Micro: 39
Topic: 6
Type: Definition
6. Households and businesses are:
a. both buyers in the resource market.
b. both sellers in the product market.
C. sellers in the resource and product markets respectively.
d. sellers in the product and resource markets respectively.
Econ: 39
Learning Objective: 2-5
Macro: 39
McConnell - Chapter 02 #88
Micro: 39
Topic: 6
Type: Definition
Econ: 34
Learning Objective: 2-3
Macro: 34
McConnell - Chapter 02 #40
Micro: 34
Status: New
Topic: 3
Type: Application of a Concept
Econ: 35
Learning Objective: 2-3
Macro: 35
McConnell - Chapter 02 #44
Micro: 35
Status: New
Topic: 3
Type: Application of a Concept
9. The market system's answer to the fundamental question "Who will get the goods and services?" is
essentially:
A. "Those willing and able to pay for them."
b. "Those who physically produced them."
c. "Those who most need them."
d. "Those who get utility from them."
Econ: 35
Learning Objective: 2-3
Macro: 35
McConnell - Chapter 02 #54
Micro: 35
Status: New
Topic: 3
Type: Application of a Concept
Econ: 37
Learning Objective: 2-3
Macro: 37
McConnell - Chapter 02 #65
Micro: 37
Status: New
Topic: 4
Type: Application of a Concept
Econ: 46
Learning Objective: 3-1
Macro: 46
McConnell - Chapter 03 #3
Micro: 46
Topic: 1
Type: Definition
12. Economists use the term demand to
a. a particular price-quantity combination on a stable demand curve.
b. the total amount spent on a particular commodity over a stipulated time period.
c. an upsloping line on a graph that relates consumer purchases and product price.
D. a schedule of various combinations of market prices and amounts demanded.
Econ: 45
Learning Objective: 3-1
Macro: 45
McConnell - Chapter 03 #6
Micro: 45
Topic: 1
Type: Definition
13. An increase in the price of a product will reduce the amount of it purchased because:
a. supply curves are upsloping.
b. the higher price means that real incomes have risen.
C. consumers will substitute other products for the one whose price has risen.
d. consumers substitute relatively high-priced for relatively low-priced products.
Econ: 46
Learning Objective: 3-1
Macro: 46
McConnell - Chapter 03 #11
Micro: 46
Topic: 1
Type: Definition
14. In 2003 the price of oil increased, which in turn caused the price of natural gas to rise. This can
best be explained by saying that oil and natural gas are:
a. complementary goods and the higher price for oil increased the demand for natural gas.
B. substitute goods and the higher price for oil increased the demand for natural gas.
c. complementary goods and the higher price for oil decreased the supply of natural gas.
d. substitute goods and the higher price for oil decreased the supply of natural gas.
Econ: 49
Learning Objective: 3-1
Macro: 49
McConnell - Chapter 03 #23
Micro: 49
Topic: 2
Type: Application of Concept
15. An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes
will increase the demand for bicycles. This prediction is based on the assumption that:
a. there are many goods that are substitutes for bicycles.
b. there are many goods that are complementary to bicycles.
c. there are few goods that are substitutes for bicycles.
D. bicycles are normal goods.
Econ: 48
Learning Objective: 3-1
Macro: 48
McConnell - Chapter 03 #24
Micro: 48
Topic: 2
Type: Application of Concept
16. Which of the following will cause the demand curve for product A to shift to the left?
a. population growth that causes an expansion in the number of persons consuming A
b. an increase in money income if A is a normal good
c. a decrease in the price of complementary product C
D. an increase in money income if A is an inferior good
Econ: 48
Learning Objective: 3-1
Macro: 48
McConnell - Chapter 03 #35
Micro: 48
Topic: 2
Type: Application of Concept
17. College students living off-campus frequently consume large amounts of ramen noodles and
boxed macaroni and cheese. When they finish school and start their careers, their consumption of
these goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese
are:
A. inferior goods.
b. normal goods.
c. complementary goods.
d. substitute goods.
Econ: 48
Learning Objective: 3-1
Macro: 48
McConnell - Chapter 03 #38
Micro: 48
Status: New
Topic: 2
Type: Application of Concept
18. Cameras and film are:
a. substitute goods.
B. complementary goods.
c. independent goods.
d. inferior goods.
Econ: 49
Learning Objective: 3-1
Macro: 49
McConnell - Chapter 03 #44
Micro: 49
Topic: 2
Type: Application of Concept
19. In moving along a stable supply curve which of the following is not held constant?
a. the number of firms producing this good
b. expectations about the future price of the product
c. techniques used in producing this product
D. the price of the product for which the supply curve is relevant
Econ: 53
Learning Objective: 3-2
Macro: 53
McConnell - Chapter 03 #83
Micro: 53
Topic: 5
Type: Application of Concept
20. An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:
a. demand curve for cigarettes rightward.
b. demand curve for cigarettes leftward.
c. supply curve for cigarettes rightward.
D. supply curve for cigarettes leftward.
Econ: 52
Learning Objective: 3-2
Macro: 52
McConnell - Chapter 03 #90
Micro: 52
Status: New
Topic: 5
Type: Application of Concept
Answer the next question(s) on the basis of the given supply and demand data for wheat:
McConnell - Chapter 03
Econ: 53
Learning Objective: 3-3
Macro: 53
McConnell - Chapter 03 #99
Micro: 53
Topic: 6
Type: Table
22. Refer to the above data. If the price in this market was $4:
a. the market would clear; quantity demanded would equal quantity supplied.
b. buyers would want to purchase more wheat than is currently being supplied.
C. farmers would not be able to sell all their wheat.
d. there would be a shortage of wheat.
Econ: 53
Learning Objective: 3-3
Macro: 53
McConnell - Chapter 03 #100
Micro: 53
Topic: 6
Type: Table
23. A market is in equilibrium:
a. provided there is no surplus of the product.
b. at all prices above that shown by the intersection of the supply and demand curves.
C. if the amount producers want to sell is equal to the amount consumers want to buy.
d. whenever the demand curve is downsloping and the supply curve is upsloping.
Econ: 53
Learning Objective: 3-3
Macro: 53
McConnell - Chapter 03 #106
Micro: 53
Topic: 6
Type: Definition
Econ: 54
Learning Objective: 3-3
Macro: 54
McConnell - Chapter 03 #126
Micro: 54
Topic: 6
Type: Definition
Econ: 53
Learning Objective: 3-2
Macro: 53
McConnell - Chapter 03 #153
Micro: 53
Topic: 7
Type: Application of Concept
McConnell - Chapter 03
Econ: 58
Learning Objective: 3-5
Macro: 58
McConnell - Chapter 03 #185
Micro: 58
Topic: 8
Type: Table
Econ: 59
Learning Objective: 3-5
Macro: 59
McConnell - Chapter 03 #192
Micro: 59
Status: New
Topic: 8
Type: Definition
28. Price ceilings and price floors:
a. cause surpluses and shortages respectively.
b. make the rationing function of free markets more efficient.
C. interfere with the rationing function of prices.
d. shift demand and supply curves and therefore have no effect on the rationing function of prices.
Econ: 60
Learning Objective: 3-5
Macro: 60
McConnell - Chapter 03 #196
Micro: 60
Topic: 8
Type: Application of Concept
Econ: 106
Learning Objective: 6-1
Macro: 106
McConnell - Chapter 06 #1
Topic: 1
Type: Definition
Econ: 106
Learning Objective: 6-1
Macro: 106
McConnell - Chapter 06 #3
Topic: 1
Type: Definition
31. By summing the dollar value of all market transactions in the economy we would:
a. be determining the market value of all resources used in the production process.
B. obtain a sum substantially larger than the GDP.
c. be determining value added for the economy.
d. be measuring GDP.
Econ: 106
Learning Objective: 6-1
Macro: 106
McConnell - Chapter 06 #9
Topic: 1
Type: Application of Concept
Econ: 108
Learning Objective: 6-1
Macro: 108
McConnell - Chapter 06 #16
Topic: 2
Type: Application of Concept
Econ: 110
Learning Objective: 6-1
Macro: 110
McConnell - Chapter 06 #21
Topic: 2
Type: Application of Concept
34. Gross investment refers to:
a. private investment minus public investment.
B. net investment plus replacement investment.
c. net investment after it has been "inflated" for changes in the price level.
d. net investment plus net exports.
Econ: 108
Learning Objective: 6-1
Macro: 108
McConnell - Chapter 06 #20
Topic: 2
Type: Definition
35. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures
remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2
is:
a. $180 billion.
b. $190 billion.
c. $200 billion.
D. $210 billion.
Econ: 109
Learning Objective: 6-1
Macro: 109
McConnell - Chapter 06 #29
Topic: 2
Type: Complex Analysis
Econ: 109
Learning Objective: 6-1
Macro: 109
McConnell - Chapter 06 #35
Topic: 2
Type: Definition
37. Transfer payments are:
a. excluded when calculating GDP because they only reflect inflation.
B. excluded when calculating GDP because they do not reflect current production.
c. included when calculating GDP because they are a category of investment spending.
d. included when calculating GDP because they increase the spending of recipients.
Econ: 110
Learning Objective: 6-1
Macro: 110
McConnell - Chapter 06 #37
Topic: 2
Type: Application of Concept
38. If depreciation (consumption of fixed capital) exceeds domestic investment, we can conclude
that:
a. nominal GDP is rising but real GDP is declining.
B. net investment is negative.
c. the economy is importing more than it exports.
d. the economy's production capacity is expanding.
Econ: 109
Learning Objective: 6-2
Macro: 109
McConnell - Chapter 06 #47
Topic: 3
Type: Application of Concept
Econ: 118
Learning Objective: 6-1
Macro: 118
McConnell - Chapter 06 #57
Topic: 3
Type: Application of Concept
Answer the next question(s) on the basis of the following data. All figures are in billions of dollars.
McConnell - Chapter 06
Econ: 110
Learning Objective: 6-1
Macro: 110
McConnell - Chapter 06 #60
Topic: 4
Type: Table
Econ: 113
Learning Objective: 6-2
Macro: 113
McConnell - Chapter 06 #61
Topic: 4
Type: Table
42. Refer to the above data. NI is:
a. $362.
b. $372.
c. $447.
D. $402.
Econ: 113
Learning Objective: 6-2
Macro: 113
McConnell - Chapter 06 #62
Status: New
Topic: 4
Type: Table
Econ: 113
Learning Objective: 6-2
Macro: 113
McConnell - Chapter 06 #63
Status: New
Topic: 4
Type: Table
Econ: 114
Learning Objective: 6-2
Macro: 114
McConnell - Chapter 06 #64
Status: New
Topic: 4
Type: Table
45. Real GDP measures:
a. current output at current prices.
B. base year output at current prices.
c. current output at base year prices.
d. base year output at current exchange rates.
Econ: 116
Learning Objective: 6-4
Macro: 116
McConnell - Chapter 06 #108
Topic: 7
Type: Definition
46. Nominal GDP is adjusted for price changes through the use of:
a. the Consumer Price Index (CPI).
b. the GDP price index.
C. the Producer Price Index (PPI).
d. exchange rates.
Econ: 116
Learning Objective: 6-3
Learning Objective: 6-4
Macro: 116
McConnell - Chapter 06 #109
Topic: 7
Type: Definition
47. In the second quarter (3-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP
declined. We can conclude that:
a. nominal income declined by more than personal income.
B. the price level rose by more than nominal GDP.
c. real wages declined by more than real GDP.
d. the price level fell by more than real GDP.
Econ: 116
Learning Objective: 6-4
Macro: 116
McConnell - Chapter 06 #110
Topic: 7
Type: Application of Concept
48. If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index
for that year is:
a. 100.
b. 200.
c. 240.
D. 300.
Econ: 117
Learning Objective: 6-3
Learning Objective: 6-4
Macro: 127
McConnell - Chapter 06 #118
Topic: 7
Type: Application of Concept
49. Assume that the size of the underground economy increases both absolutely and relatively over
time. As a result:
a. real GDP will rise more rapidly than nominal GDP.
B. GDP will tend to increasingly understate the level of output through time.
c. GDP will tend to increasingly overstate the level of output through time.
d. the accuracy of GDP will be unaffected through time.
Econ: 119
Learning Objective: 6-5
Macro: 119
McConnell - Chapter 06 #161
Topic: 8
Type: Application of Concept
Econ: 119
Learning Objective: 6-5
Macro: 119
McConnell - Chapter 06 #160
Topic: 8
Type: Application of Concept
51. GDP data are criticized as being inaccurate measures of economic welfare because:
a. they do not take into account changes in the amount of leisure.
b. they do not take into account all changes in product quality.
c. they do not take into account the adverse effects of economic activity on the environment.
D. of all of the above considerations.