Chapter 20 Preliminary Quiz
Overview of Macroeconomics

Multiple Choice Questions:

Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!

	1. Which of the following is a key question of macroeconomics? a. Why do output and employment sometimes fall, and how can unemployment be reduced? b. What are the sources of price inflation, and how can it be kept under control? c. How can a nation increase its rate of economic growth? d. All of the above.
	2. The measure of the market value of all final goods and services produced in a country during a year is called: a. total product. b. gross domestic product. c. total domestic product. d. none of the above.
	3. Which of the following is GDP measured in actual market prices? a. Actual GDP b. Potential GDP c. Nominal GDP d. Real GDP
	4. Which of the following is GDP calculated in constant or invariant prices? a. Actual GDP b. Potential GDP c. Nominal GDP d. Real GDP
	5. Which of the following represents the maximum amount the economy can produce while maintaining price stability? a. Actual GDP b. Potential GDP c. Nominal GDP d. Real GDP
	6. The unemployment rate is: a. the total number of people unemployed in the economy. b. the percentage of the population that is unemployed. c. the percentage of the labor force that is unemployed. d. none of the above.
	7. The labor force is: a. equal to the size of the population. b. equal to the size of the adult population. c. all individuals employed or unemployed and seeking a job. d. none of the above.
	8. The _______ measures the cost of a basket of goods bought by the average urban consumer. a. PPF b. PPI c. CPI d. GDP
	9. The _______ denotes the rate of growth or decline of the price level from one year to the next. a. PPF b. PPI c. CPI d. rate of inflation
	10. _______ occurs when prices decline. a. Inflation b. Hyperinflation c. Deflation d. Economic growth
	11. A rise in the price level of more than a thousand percent per year is called: a. price growth. b. hyperinflation c. deflation d. a recession.
	12. Which of the follow is not a goal of macroeconomic policy? a. A stable or gently rising price level. b. A high and growing level of national output. c. Inflation over 1000% per year. d. High employment with low unemployment.
	13. _______ policy denotes the use of taxes and government spending in order to achieve the macroeconomic goals. a. Fiscal b. Tax c. Public good d. Monetary
	14. _______ policy is carried out by the central bank by managing the economy's money, credit, and banking system. a. Fiscal b. Tax c. Public good d. Monetary
	15. Money is: a. the return paid to owners of resources used in production. b. the means of exchange. c. a method of payment. d. b and c
	16. Exports minus imports equals: a. GDP. b. CPI. c. Net exports. d. Inflation.
	17. Which of the following refers to the total quantity of goods and services that an economy's firms willingly produce in a given year? a. GDP b. Net exports c. Aggregate supply d. Aggregate demand
	18. Which of the following refers to the total quantity that different sectors in the economy willingly spend in a given year? a. GDP b. Net exports c. Aggregate supply d. Aggregate demand
	19. The overall price and quantity at which all buyers and sellers are satisfied with their purchases, sales, and prices is called: a. the CPI. b. potential GDP. c. macroeconomic equilibrium. d. none of the above.
	20. A supply shock is: a. a rightward shift in the supply curve for any good. b. a sudden change in input costs or productivity that shifts aggregate supply sharply. c. both a and b. d. neither a nor b.