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Macroeconomic Multiple Choice Questions

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1) Which of the following is a long -run macroeconomic policy goal?
A) reduce unemployment (B) increase inflation (C) promote steady growth (D) eliminate recession

2)If our exports are $1.2 billion and our imports are $1.7 billion
A)the United States is lending to the rest of the world(B) U.S national saving is too high (C) the United States is borrowing from the rest of the world(D) U.S investment must decrease

3) In the expenditure approach to GDP, the largest component is
A) government purchase (B) personal consumption expenditures (C)gross private domestic investment (D) net exports

4) If a larger fraction of adult population is working, the household production
A) counted in real GDP increase(B) not counted in the real GDP increase (C) counted in real GDP decreases (D) not counted in real GDP decrease.

5) Suppose the working age population in Tiny Town is 100 people. If 25 of these people are not in the labor force , the _____ equals _____
A) unemployment rate ; 25/100X 100 (B) unemployment rate ; 25/125X100 (C) labor force; 75(D) labor force 25/100X100

6) The technique currently used to calculate the CPI implicitly assumes that over time consumer buy
A) relatively more goods whose relative price are rising (B) relatively less goods whose relative price are rising

7)The supply of real GDP is a function of
A) the total expenditures of consumers, investors and the government(B) the sum of wages, salaries, corporate profits, rents and interest(C) only the state of technology (D) the quantities of labor, capitals and the state of technology.

8)In the short run macroeconomic equilibrium
A) real GDP equals potential GDP and aggregate demand determines the price level.(B) the price level is fixed and the short -run aggregate supply determine real GDP(C) real GDP and the price level are determine by short-run aggregate supply and aggregate demand(D) real GDP is less than potential GDP

9) Because the leisure-real GDP production possibilities frontier is bowed outward then,
A) each additional unit of real GDP cost a decreasing amount of forgone labor(B) as more real GDP is produced, increasingly more productive labor is being used(C) the marginal product of labor is increasing as real GDP increases(D) the slope of the economy's production function decrease as real GDP increase.

10)Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded
A) increases (B) decrease (C) does not change because there is no change in the money wage rate.
(D) increase only if the price level also decrease

11) Convergence of the income gap has been most dramatic between
A) Hong Kong and the United States (B) The central European countries and the United States © Africa and the United States(D) South America and the United States

12) Which of the following Statement regarding human capital is incorrect?
A) Human capital is the accumulated skill and Knowledge of human being (B) Education is the only vehicle for the creation of human capital because training simply reinforce what has already been learned (C)The accumulation of human capital is the source of both increased productivity and technological (D) Writing and Mathematic the most basic of human skills are crucial element in economic progress.

13) If Y= real GDP, and L,K and T represent the quantities of labor capital and technology respectively then the most appropriate representation of the aggregate production function is.
A) L=F(K,Y,T) (B) Y= F(T,K) (C) Y=F(K,T,L) (D) T=F(Y,T,L)

14)A central proposition of the new growth theory is that
A) growth will cease but prosperity will persist(B) Knowledge is not subject to diminishing(C) government direction and oversight is necessary for consistent growth (D) growth is often just an illusion fostered by growth accounting

15) Given the list of assets below, which is the most liquid
A)$500 worth of General Motors common stock.(B) $ 500 worth of General Motors bonds (C) $500 travelers checks (D) one ounce gold coin

16) Which of the following statement concerning commercial bank is true?
A)Bank need to maintain cash reserves equal to their deposits(B) Most banks maintain cash reserves equal to a fraction of deposists(C) Cash reserves earn the highest rate of return of any asset for a bank.(D) Since the advent of the Federal Reserve bank do not need to maintain cash reserve.

17)Suppose you hold $50 to by groceries weekly and then the price of groceries increase by 5%. To be able to buy the same amount of groceries, what must happen to your nominal money holding.
A) They must increase by $5(B) They can decrease by $5 (C) They must increase $2.50 (D)They must increase, but the amount of the increase in different than the above answers

18) The Fed carries out an open market operation and buy U.S government securities the interest rate
A) falls and the quantity of money increases(B) rise and the quantity of money decrease (C) falls and the quantity of money decrease(D) rise and the quantity of money decrease

19)An initial increase in aggregate demand that is Not followed by an increase in the quantity of money results in a long-run equilibrium with .
A)A higher price level but the same real GDP(B) Higher price level and increase level of real GDP (C) the same price level and a lower level real GDP. (D) None of the above answer are correct.

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