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| 1 | |
The lesson of Keynesian economics is that: |
| | A) | changes in aggregate demand can affect output, employment, and prices in the short-run. |
| | B) | changes in aggregate demand will have no affect on output, employment and prices in the short-run, but will in the long-run. |
| | C) | changes in aggregate supply are the driving force in determining recessions and periods of economic boom. |
| | D) | none of the above. |
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| 2 | |
Fluctuations in total national output, income, and employment, usually lasting 2-10 years, marked by periods of expansion or contraction in most sectors of the economy are called: |
| | A) | recessions. |
| | B) | depressions. |
| | C) | booms. |
| | D) | business cycles. |
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| 3 | |
A _______ is a recurring period of decline in total output, income, and employment, usually lasting from 6 months to a year and marked by widespread contractions in many sectors of the economy. |
| | A) | recession |
| | B) | depression |
| | C) | boom |
| | D) | business cycle |
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| 4 | |
A _______ is a large, long recession. |
| | A) | recession |
| | B) | depression |
| | C) | boom |
| | D) | business cycle |
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| 5 | |
Shifts in aggregate demand will: |
| | A) | occur because consumers, businesses, or governments change total spending relative to the economy's productive capacity. |
| | B) | necessarily increase GDP. |
| | C) | both a and b. |
| | D) | neither a nor b. |
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| 6 | |
Which of the following are typical characteristics of a recession? |
| | A) | Business profits fall sharply |
| | B) | Inflation slows |
| | C) | The length of the average workweek declines |
| | D) | All of the above |
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| 7 | |
One of the similarities between microeconomic and macroeconomic demand is that both: |
| | A) | rely on the substitution effect to explain demand. |
| | B) | vary inversely with price. |
| | C) | rely on the money-supply effect to explain demand. |
| | D) | hold the prices of all other goods constant. |
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| 8 | |
In 2007, which of the following events occurred to send the economy into a recession? |
| | A) | stock market boomed |
| | B) | banks and other financial institutions suffered large losses |
| | C) | housing bubble burst |
| | D) | only B and C |
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| 9 | |
The effects of business cycles tend to: |
| | A) | be limited to the construction industry. |
| | B) | reach even non-economic matters like births and alcoholism. |
| | C) | limit themselves to retail sales or construction. |
| | D) | come and go in a highly regular rhythm. |
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| 10 | |
The political theories of the business cycle: |
| | A) | focus on the declaration of war for an economic boom. |
| | B) | concentrate on politicians and their use of the economy to get elected. |
| | C) | focus on labor's wage bargaining and union elections. |
| | D) | focus on foreign money investments in the United States. |
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