ECO372 Principles Of Macroeconomics Week 1 KNOWLEDGE CHECK

1.

The two frameworks conventional economists generally use to analyze macroeconomic issues are

• A.

the inflation and the unemployment frameworks

• B.

the short-run and the long-run frameworks

• C.

the business cycle and the growth cycle frameworks

• D.

the stagnationist and the Post-Keynesian frameworks

2.

The relationship between real and nominal interest rate can be expressed by

• A.

real interest rate = nominal interest rate + inflation

• B.

real interest rate = inflation - nominal interest rate

• C.

real interest rate = nominal interest rate - inflation

• D.

The real interest rate cannot be calculated.

3.

Which of the following economic activities would be included in the U.S. domestic gross product (GDP)?

• A.

Illegal drug sales

• B.

Pure services, such as haircuts

• C.

Illegal prostitution

• D.

Work performed and paid for in cash to avoid income tax

4.

Cyclical unemployment is defined as unemployment that results from

• A.

fluctuations in economic activity

• B.

structural changes in the economy

• C.

changes in technology

• D.

the aging of the population

5.

The longest business cycle expansion in U.S. history occurred in the 10 years from

• A.

1919 until 1929

• B.

1938 until 1948

• C.

1959 until 1969

• D.

1991 until 2001

6.

Economics is the study of how

• A.

governments allocate resources in the face of constraints

• B.

government policies can be used to meet individuals' wants and desires

• C.

human beings coordinate their wants and desires

• D.

scarce resources are allocated to their most productive uses

Concept: LAW OF DEMAND

7.

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to

• A.

increase the demand for diesel cars

• B.

decrease the demand for gasoline

• C.

decrease the demand for diesel cars

• D.

increase the demand for gasoline