Macroeconomics Principles and Policy 13th Edition by William J. Baumol – Test Bank

Macroeconomics Principles and Policy 13th Edition by William J. Baumol – Test Bank

Chapter 09

True / False

1. Free markets coordinate economic activity in such a way as to eliminate the possibility of inflation or unemployment.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Markets, market failure, a – DISC: Markets, market failure, and externalities
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Markets, market failure, and ext – Markets, market failure, and externalities
TOPICS: Issue: Why Does the Market Permit Unemployment?
KEYWORDS: BLOOM’S: Comprehension

2. The counterpart to the unsold output of firms is the lack of jobs for workers willing to work.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Labor markets
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Labor markets
TOPICS: Issue: Why Does the Market Permit Unemployment?
KEYWORDS: BLOOM’S: Comprehension

3. Investment spending is a leakage from the circular flow model.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

4. When demand for goods and services is high, firms are more likely to hire more workers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

5. If the economy is suffering a recession, inventories are probably falling.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Markets, market failure, a – DISC: Markets, market failure, and externalities
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Markets, market failure, and ext – Markets, market failure, and externalities
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

6. When spending falls short of output, additional inventories are created.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

7. Equilibrium GDP occurs when total spending equals total output.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Equilibrium
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Equilibrium
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

8. Producers will change their prices when GDP is at the equilibrium level.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Equilibrium
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Equilibrium
TOPICS: The Meaning of Equilibrium GDP
KEYWORDS: BLOOM’S: Comprehension

9. The expenditure schedule includes the consumption function.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: The Mechanics of Income Determination
KEYWORDS: BLOOM’S: Comprehension

10. When income rises, total expenditures remain constant.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: The Mechanics of Income Determination
KEYWORDS: BLOOM’S: Comprehension