A. When the Reserve Bank increases the money supply, interest rates decrease
B. Large budget deficits should be avoided
C. Higher taxes are needed to support education
D. A tax cut that benefits low-income households is acceptable
40. Which of the following statements is positive?
A. Tax increases tend to discourage saving
B. Large budget surpluses should be avoided
C. Higher taxes are needed to support education
D. A tax cut that benefits high-income households is acceptable
41. ‘The central bank should raise interest rates in order to keep inflation at an acceptably low level’ is a _______ statement about _______ policy.
A. positive; fiscal
B. normative; fiscal
C. positive; monetary
D. normative; monetary
42. ‘If Government cuts income taxes, demand for output is likely to increase’ is a _______ statement about ______ policy.
A. positive; fiscal
B. normative; fiscal
C. positive; monetary
D. normative; monetary
43. ‘Any tax cut to increase demand for output should favour lower-income people’ is a ______ statement about ______ policy.
A. positive; fiscal
B. normative; fiscal
C. positive; monetary
D. normative; monetary
44. Aggregation means the:
A. adding up of individual economic variables to obtain economy wide totals
B. participation in national economic policy discussions
C. worsening of an economic situation
D. enhancement of the power and wealth of a nation
45. Macroeconomists, instead of microeconomists, would deal with:
A. positive analysis
B. aggregation
C. the scarcity principle
D. individual firms
46. Which of the following is the most aggregated value?
A. Total output of a firm
B. Total output of a country
C. Total output of a city
D. Total output of an industry
47. A cost of aggregation is that:
A. details about individual households and firms are lost
B. the ‘big picture’ cannot be studied
C. economy-wide totals cannot be obtained
D. broad economic trends are obscured
48. To aggregate 300 tonnes of steel, 5000 bushels of wheat, and 1 million barrels of crude oil, economists add together the _____ of the three products
A. units
B. dollar value
C. weight
D. number of tonnes, bushels and barrels
49. Aggregation allows economists to ______ at the cost of ________.
A. see the big picture; obscuring the details
B. make positive statements; ignoring normative analysis
C. make normative statements; ignoring positive analysis
D. see the details; obscuring the big picture
50. In a debate on the state of the economy, Senator A pointed out that the price of clothing, fruits and computers had decreased slightly over the last year, while Senator B stated that the inflation rate had increased over the last year. In this example, aggregate data is being used by:
A. both senators
B. Senator A
C. Senator B
D. neither senator
Chapter 01 Testbank Key
1. The Great Depression:
A. occurred only in the United States
B. resulted in the development of microeconomics
C. was a period of low production and high unemployment
D. ended a few months after the share market crash of 1929
Ans: C
AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 1.1 What are the broad issues that macroeconomists study and the types of data they use and interpret?
Topic: The major macroeconomic issues
2. Economics is best defined as the study of:
A. inflation, interest rates and the stock market
B. supply and demand
C. how people make choices in the face of scarcity and the implications of those choices for society as a whole
D. the financial concerns of businesses and individuals
Ans: C
AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 1.1 What are the broad issues that macroeconomists study and the types of data they use and interpret?
Topic: The major macroeconomic issues
3. The field of macroeconomics developed when economists looked for causes of:
A. the wealth of nations
B. the Great Depression
C. World War I
D. poverty and inflation
Ans: B
AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 1.1 What are the broad issues that macroeconomists study and the types of data they use and interpret?
Topic: The major macroeconomic issues
4. Macroeconomic policies are government policies designed to affect:
A. the environmental impact of all industries
B. the performance of the economy as a whole