CHAPTER 1
Macroeconomics and the
Economic Perspective
1. Macroeconomics is the study of
a. employment in only the largest firms.
b. employment and prices in whole industries.
c. total employment and the general price level in the whole economy.
d. all organized laborers.
e. changes in the cost of living.
Answer: c Difficulty: 1
Topic: Macroeconomics
2. Macroeconomics is the study of
a. total employment in the whole economy.
b. total unemployment in the whole economy.
c. the general price level in the whole economy.
d. All of the above.
e. None of the above.
Answer: d Difficulty: 1
Topic: Macroeconomics
3. In October 1929 the stock market crash wiped out almost _____ percent of the value of the New
York stock market.
a. 20
b. 25
c. 35
d. 40
e. 50
Answer: b Difficulty: 1
Topic: Macroeconomics
,4. During the Great Depression our country, and the rest of the world, went through great hardship and
terrible economic conditions. Which of the following statements is not true?
a. One out of every four workers was unemployed.
b. The United States still had the same economic infrastructure.
c. Physical resources lay idle.
d. Human resources stood idle.
e. None, they are all true.
Answer: e Difficulty: 2
Topic: Macroeconomics
5. The field of macroeconomics with its emphasis on understanding fluctuations in employment and production
begins with which of the following economists?
a. Adam Smith
b. Milton Friedman
c. Alfred Marshall
d. John Maynard Keynes
e. Sir John R. Hicks
Answer: d Difficulty: 1
Topic: Macroeconomics
6. The Full Employment Act of 1946 requires the federal government to do all of the following
except promote maximum
a. employment.
b. production.
, c. purchasing power.
d. None of the above.
e. Only a and b.
Answer: d Difficulty: 1
Topic: Macroeconomics
7. The Full Employment Act of 1946 requires the federal government to do all of the following
except promote maximum
a. employment.
b. production.
c. purchasing power.
d. living standards.
e. price stability.
Answer: d Difficulty: 2
Topic: Macroeconomics
8. Which of the following government institutions/
programs is a direct outgrowth of the Great Depression?
a. the Federal Reserve system
b. minimum wage laws
c. Affirmative Action
d. the Equal Rights Amendment
e. the Social Security System
Answer: e Difficulty: 1
Topic: Macroeconomics
9. Whi ch of t he fol l owi ng began duri ng t he Great Depressi on?
a. Macroeconomics
b. Deposit Insurance
c. Social Security
d. All of the above.
e. Only b and c.
Answer: e Difficulty: 1
Topic: Macroeconomics
10. When the Great Depression hit, production in all major industrial economies declined. In which two
countries were those declines the greatest?
a. Germany and France
, b. Japan and Sweden
c. France and the United Kingdom
d. the United Kingdom and the United States
e. Germany and the United States
Answer: e Difficulty: 2
Topic: The Commitment to Full Employment and Growth
11. The United States economy only truly recovered from the Great Depression and returned to full employment
a. withthepassageoftheFullEmploymentActof1946.
b. through aggressive central bank intervention.
c. with the entrance of the United States into World War II.
d. through the provision of deposit insurance in 1934.
e. when Americans moved to the suburbs, built more homes, and had more children.
Answer: c Difficulty: 2
Topic: The Commitment to Full Employment and Growth
12. Which of the following did not occur during the World War II years?
a. shortages of some consumer goods
b. increased consumer saving
c. purchasesofwarbondstohelpfinancethewareffort
d. firms expanded and hired additional workers
e. inflation became a prominent concern
Answer: e Difficulty: 2
Topic: The Commitment to Full Employment and Growth
13. Following the end of World War II, all of the following events took place except
a. that the production of civilian goods replaced wartime production.
b. American population shifts to the suburbs.
c. an increase in the national birth rate.
d. a decline in the level of employment to prewar levels.
e. the passage of the Full Employment Act.
Answer: d Difficulty: 2
Topic: The Commitment to Full Employment and Growth
14. Following the end of World War II, all of the following events took place except
a. the passage of the Full Employment Act.
b. the establishment of the President’s Council of Economic Advisors.
Macroeconomics and the
Economic Perspective
1. Macroeconomics is the study of
a. employment in only the largest firms.
b. employment and prices in whole industries.
c. total employment and the general price level in the whole economy.
d. all organized laborers.
e. changes in the cost of living.
Answer: c Difficulty: 1
Topic: Macroeconomics
2. Macroeconomics is the study of
a. total employment in the whole economy.
b. total unemployment in the whole economy.
c. the general price level in the whole economy.
d. All of the above.
e. None of the above.
Answer: d Difficulty: 1
Topic: Macroeconomics
3. In October 1929 the stock market crash wiped out almost _____ percent of the value of the New
York stock market.
a. 20
b. 25
c. 35
d. 40
e. 50
Answer: b Difficulty: 1
Topic: Macroeconomics
,4. During the Great Depression our country, and the rest of the world, went through great hardship and
terrible economic conditions. Which of the following statements is not true?
a. One out of every four workers was unemployed.
b. The United States still had the same economic infrastructure.
c. Physical resources lay idle.
d. Human resources stood idle.
e. None, they are all true.
Answer: e Difficulty: 2
Topic: Macroeconomics
5. The field of macroeconomics with its emphasis on understanding fluctuations in employment and production
begins with which of the following economists?
a. Adam Smith
b. Milton Friedman
c. Alfred Marshall
d. John Maynard Keynes
e. Sir John R. Hicks
Answer: d Difficulty: 1
Topic: Macroeconomics
6. The Full Employment Act of 1946 requires the federal government to do all of the following
except promote maximum
a. employment.
b. production.
, c. purchasing power.
d. None of the above.
e. Only a and b.
Answer: d Difficulty: 1
Topic: Macroeconomics
7. The Full Employment Act of 1946 requires the federal government to do all of the following
except promote maximum
a. employment.
b. production.
c. purchasing power.
d. living standards.
e. price stability.
Answer: d Difficulty: 2
Topic: Macroeconomics
8. Which of the following government institutions/
programs is a direct outgrowth of the Great Depression?
a. the Federal Reserve system
b. minimum wage laws
c. Affirmative Action
d. the Equal Rights Amendment
e. the Social Security System
Answer: e Difficulty: 1
Topic: Macroeconomics
9. Whi ch of t he fol l owi ng began duri ng t he Great Depressi on?
a. Macroeconomics
b. Deposit Insurance
c. Social Security
d. All of the above.
e. Only b and c.
Answer: e Difficulty: 1
Topic: Macroeconomics
10. When the Great Depression hit, production in all major industrial economies declined. In which two
countries were those declines the greatest?
a. Germany and France
, b. Japan and Sweden
c. France and the United Kingdom
d. the United Kingdom and the United States
e. Germany and the United States
Answer: e Difficulty: 2
Topic: The Commitment to Full Employment and Growth
11. The United States economy only truly recovered from the Great Depression and returned to full employment
a. withthepassageoftheFullEmploymentActof1946.
b. through aggressive central bank intervention.
c. with the entrance of the United States into World War II.
d. through the provision of deposit insurance in 1934.
e. when Americans moved to the suburbs, built more homes, and had more children.
Answer: c Difficulty: 2
Topic: The Commitment to Full Employment and Growth
12. Which of the following did not occur during the World War II years?
a. shortages of some consumer goods
b. increased consumer saving
c. purchasesofwarbondstohelpfinancethewareffort
d. firms expanded and hired additional workers
e. inflation became a prominent concern
Answer: e Difficulty: 2
Topic: The Commitment to Full Employment and Growth
13. Following the end of World War II, all of the following events took place except
a. that the production of civilian goods replaced wartime production.
b. American population shifts to the suburbs.
c. an increase in the national birth rate.
d. a decline in the level of employment to prewar levels.
e. the passage of the Full Employment Act.
Answer: d Difficulty: 2
Topic: The Commitment to Full Employment and Growth
14. Following the end of World War II, all of the following events took place except
a. the passage of the Full Employment Act.
b. the establishment of the President’s Council of Economic Advisors.
