ECO 202-FINAL EXAM TEST BANK QUESTIONS AND ANSWERS

1. Suppose you have a question about some of the ECO 202 course material that you want to ask your instructor. The best way to communicate with the instructor is by... a. Email b. Telephone c. Dropping by your instructors office d. All of the above. 2. Students who successfully complete this course will be able to... a. Distinguish positive and normative macroeconomic issues b. Make appropriate choices among alternative frames of reference for analyzing macroeconomic issues. c. Use relevant information to analyze macroeconomic issues. d. All of the above 3. Students who successfully complete this course will be able to... a. Identify macroeconomic issues. b. Analyze the behavior of individual markets. c. Both of the above. d. None of the above. 4. The required material can be found in... a. The Macroeconomics in Context text. b. The Critical Thinking in Economics text. c. Both of the above. d. Mankiw’s Principles of Macroeconomics text. e. All of the above are possible resources but none is required. 5. How will the quizzes and exams be taken? a. Online, at the course Canvas website. b. Through hardcopy exams. c. Either of the above. d. Online, at a third party’s website. 6. What restrictions are there when taking quizzes and exams? a. Each quiz and each exam can only be taken once. b. Each quiz can be taken twice, but each exam can only be taken once. c. Each quiz can be taken as many times as desired before the due date. d. Each quiz and exam must be taken in a fixed amount of time. e. Each exam must be completed in 30 minutes. 7. A term paper is required for this course. a. True b. False ECO 202-FINAL EXAM TEST BANK ECO 202 – Final Exam Test Bank 8. Which one of the following statements is consistent with the course makeup policy? a. There are no makeups for any quiz or exam. b. There are no makeups for any quiz, but it is possible to arrange a makeup midterm exam or final exam. c. With appropriate documentation, it is possible to arrange a makeup for any quiz or exam. d. A makeup final exam is possible, but only for circumstances beyond your control and with sufficient evidence of the circumstances. 9. Which one of the following statements is consistent with the course exam policy? a. Exams do not count toward the final course grade. b. Any exam can be dropped and replaced with the score from an exam with a higher grade. c. Only the final exam can be used to replace the grade for the first or second midterm exam. d. Exams are open book and open notes. 10. Based on the description of how grades are calculated, what would your final course grade be if your quiz average is 85, your discussion average is 100, your first exam grade is an 80, your second exam grade is a 75, and your final exam grade is a 90? a. 82.5 b. 85.75 c. 89.5 d. 90.00 11. Suppose your course average ends up being 79.99. What is the letter grade that you will get for the course? a. C+ because there is no rounding after calculating the course average to two decimal places. b. C because there are no plusses or minuses awarded. c. B- because 79.99 rounds to an 80. d. The syllabus doesn’t explain what letter grade is associated with a 79.99. 12. When do you have to take the final exam? a. May 9 from 1-4 pm. b. Any time from 12:01 am on May 3 to 11:59 pm on May 5. c. Any time between 8 am and 5 pm from May 8 to May 10. d. The time has yet to be determined. 13. Which one of the following is not a distinguishing characteristic of critical thinking? a. Intuitive b. Purposeful c. Self-aware d. Problem solving e. Rational 14. The process of critical thinking is useful in macroeconomics because... a. Macroeconomics is hard. b. Macroeconomics focuses on choosing effective policies. c. Macroeconomics deals with people. d. Macroeconomics involves statistics. ECO 202 – Final Exam Test Bank 15. The process of thinking critically is best described as... a. Deciding what the issue is, becoming aware of your initial frame of reference, gathering information, and constructing a conclusion. b. Deciding what the issue is, finding a solution to the issue, and criticizing other solutions. c. Choosing a question to answer, justifying your choice of question, and positing an answer. d. Analyzing an issue, supporting that analysis with data, and making a judgment. 16. Critical thinking about macroeconomic issues requires that you do what before analyzing the particular macroeconomic issue at hand? a. Take stock of any relevant macroeconomic information, theories, and conclusions that you already hold or believe. b. Ignore any macroeconomic information, theories, and conclusions that you already hold or believe. c. Don’t worry about what macroeconomic information, theories, and conclusions that you already hold or believe. d. Criticize mistaken macroeconomic information, theories, and conclusions that others have made. 17. What role do personal (or professional) values play in thinking critically about macroeconomic issues? a. They play no role. b. They play the primary role in deciding how to answer the macroeconomic question at hand. c. Their role depends on the nature of the macroeconomic issue being investigated. However, one should be aware of any values that one holds that might be relevant to the macroeconomic issue. d. Their role is a negative one because of the biases they create. 18. Which one of the following is not a part of the critical thinking step of gathering relevant information? a. Being skeptical of the value of the information. b. Deciding which possible answer you gather is the right one. c. Being aware of who is providing the information. d. Looking for confirmation of the trustworthiness of information you gather. 19. The critical thinking step of coming to a conclusion... a. Should include a consideration of the implications and consequences of your answer to the question at hand. b. Should result in an answer to the question at hand that doesn’t conflict with alternative possible answers that you had previously come across. c. Is optional. d. All of the above. 20. Which one of the following statements about the role of communication in the process of critical thinking is false? a. Communication can play a role, but more often than not its role is not important. b. Communication is typically key at the end of the critical thinking process when you let others know what you have concluded. c. Communication is essential in the information gathering part of the critical thinking process. d. Communication is useful in sorting through information and constructing an answer to the question at hand. ECO 202 – Final Exam Test Bank 21. What is the critical thinking issue in the story “What Do You Mean, Mr. President?” in Box 1.3? a. Kowing what the issue is. b. Becoming aware of one’s initial frame of reference. c. Gathering relevant information to answer the question. d. Constructing an answer to the question. 22. Suppose that you are doing a macroeconomic research paper on whether the Federal government should balance its budget in the coming year. Suppose further that in working on that paper you are frustrated by the inability to find statistics on government spending and economic growth in other countries. This frustration suggests you are having problems with what step of the critical thinking process? a. Knowing what the issue is. b. Becoming aware of one’s initial frame of reference. c. Gathering relevant information to answer the question. d. Constructing an answer to the question. 23. The process of critical thinking often involves formal and informal writing. Why do critical thinkers use both types of writing? a. Formal writing is used when you have time to type things out carefully and make sure that spelling and grammar are correct. Informal writing is used when you don’t have the time for such things. b. Formal writing is used to communicate the results of your critical thinking and to persuade others that you are right. Informal writing is primarily intended for yourself or others with whom you are working and is used to facilitate the critical thinking process itself. c. Formal writing is used when the critical thinking is conventional so that your writing can be fit into a standard form. Informal writing is used when the critical thinking process is innovative and therefore cannot be fit into a standard form. d. Formal writing is used when putting your thoughts on paper. Informal writing is used for electronic communication. 24. Caveat lector is... a. Latin for “let the buyer beware". b. A useful rule when defining the issue. c. A summary of the argument that one should be skeptical when gathering information. d. A common logical error. 25. The four essential economic activities are... a. production, consumption, distribution, and recycling. b. extraction, manufacturing, distribution, and consumption. c. extraction, consumption, distribution, and resource maintenance. d. production, consumption, distribution, and resource maintenance. e. production, distribution, recycling, and resource maintenance. 26. The normal boundary of the “macroeconomy” is... a. a neighborhood. b. a city. c. a state. d. a nation. e. none–the macroeconomy is normally considered to be global. ECO 202 – Final Exam Test Bank 27. Which one of the following is a positive statement? a. Economic growth is more important than environmental protection. b. Reducing unemployment should be the main goal of the government. c. The government should keep the inflation rate below 4%. d. Most economists believe the unemployment rate will increase next year. e. The benefits of economic growth should be equally distributed. 28. Economics is defined in the textbook as the study of... a. how people manage their resources to meet their needs and enhance their well-being. b. profit maximization by private enterprises. c. inflation, unemployment and taxation. d. how households, businesses and governments attain wealth. e. free markets. 29. According to the text, the three major macroeconomic goals are... a. good living standards, stability and security, and sustainability. b. low inflation, low unemployment, and economic growth. c. economic growth, stability and security, and good living standards. d. low inflation, low unemployment, and well-being. e. economic growth, well-being, and good living standards. 30. The term used to refer to fluctuations in the level of national production is... a. the inflation cycle. b. the stock market cycle. c. the sustainability cycle. d. the living standards cycle. e. the business cycle. 31. Chap 1 - Figure The chart above shows that, from 1960 to 2010, global economic production per capita increased by a factor of about… a. 1.25 b. 2.5 c. 5 d. 10 e. 20 32. Making sure that a country’s currently favorable macroeconomic environment will continue into the future would be part of which macroeconomic goal? a. Stability b. Equity c. Productivity d. Security e. Sustainability 33. The precautionary principle states that... a. it’s better to reduce unemployment than inflation. b. we should err on the side of caution when dealing with natural systems or human health. c. we should err on the side of caution when dealing with macroeconomic policy. d. it’s better to leave things as they are than to do anything different. e. we should err on the side of caution when dealing with the stock market. ECO 202 – Final Exam Test Bank 34. Which one of the following statements is false? a. Positive questions concern how things are. b. Well-being refers to the broad goal of promoting the sustenance and flourishing of life. c. In recent years GDP growth has been evenly distributed across countries. d. Economic development refers to movement from a situation of general poverty to one of increased production and plenty. e. Global economic production per capita has grown less rapidly than global economic production. 35. Who was the most famous classical economist? a. Milton Friedman b. Jean-Baptiste Say c. John Maynard Keynes d. Alan Greenspan e. Adam Smith 36. The term “laissez-faire” would be applied to which type of economy? a. An economy that promotes sustainability. b. An economy that seeks to equally distribute economic growth. c. An economy with policies to smooth business cycle fluctuations. d. An economy with a stable rate of economic growth. e. An economy with limited government regulation. 37. Say’s Law states that demand creates its own supply. a. True b. False 38. Which one of the following statements is not associated with classical economics? a. Governments should generally take a “laissez-faire” approach to economic policy. b. Supply creates its own demand. c. Markets are generally smoothly-functioning. d. Technological progress is one factor explaining the wealth of nations. e. Fiscal policy should be used to influence the level of aggregate demand. 39. Keynesian economics argues that the main way to get an economy out of a slump is to... a. lower interest rates. b. use fiscal policy to increase aggregate demand. c. use monetary policy to increase aggregate demand. d. keep the money supply steady. e. fine tune the economy to eliminate the business cycle. 40. Keynesian economics originated during what historical period? a. The American Revolution b. The Industrial Revolution c. The American Civil War d. The Great Depression e. World War II ECO 202 – Final Exam Test Bank 41. Which one of the following statements is false? a. Classical economists normally believe the economy should not be regulated by governments. b. Say’s Law states that supply creates its own demand. c. Monetarists believe that the economy can be fine tuned by governments. d. Fiscal policy concerns the levels of government spending and taxation. e. The issuance of currency is an example of monetary policy. 42. Monetarist economists argued that the government should primarily focus on... a. keeping inflation steady. b. keeping unemployment steady. c. keeping a balanced budget. d. keeping wages steady. e. keeping the money supply steady. 43. In the synthesis of classical and Keynesian thought that developed by the 1970s, it was argued that Keynesian economic principles apply in the short run because... a. the “stickiness” of wages prevents adjustment to full employment. b. workers fall into lower tax brackets and thus can increase spending. c. increases in the money supply boost aggregate demand. d. in the short run, supply creates its own demand. e. people can withdraw their savings and maintain levels of spending for a short period. 44. Basic living standards issues relate to the quality of people’s... a. diets. b. housing. c. access to transportation and communication. d. medical attention. e. All of the above 45. Macroeconomics emphasizes the economic activities and interactions of individuals and particular organizations. a. True b. False 46. “Economic growth in Spain was 4% last year” is an example of a positive statement. a. True b. False 47. The term “well-being” refers to the broad goal of promoting the sustenance and flourishing of life. a. True b. False 48. Economic growth has traditionally been measured within a country by its inflation rate. a. True b. False 49. Living standards growth is possible even in the absence of economic growth. a. True b. False ECO 202 – Final Exam Test Bank 50. The business (or trade) cycle refers to fluctuations in the level of national economic production. a. True b. False 51. John Maynard Keynes believed that the key to increasing aggregate demand is to have the government take a more active role in investment. a. True b. False 52. Keynesian economists prefer the use of fiscal policy over monetary policy. a. True b. False 53. Monetarists believe the growth of the money supply should be constantly adjusted according to the prevailing economic conditions. a. True b. False 54. Classical economists tend to believe that an economy will achieve full employment in the long run. a. True b. False 55. A downturn in economic activity lasting for two consecutive calendar quarters is referred to as… a. unemployment. b. inflation. c. a recession. d. an economic boom e. Gross Domestic Product. 56. An increase in the general level of prices is referred to as… a. inflation. b. unemployment. c. deflation. d. economic growth. e. development. 57. Labor productivity measures… a. the marginal product of labor. b. output per hour of work. c. economic growth. d. per capita GDP. e. None of the above 58. A population’s benefits from economic growth depend on… a. what kinds of goods are produced. b. who receives the goods. c. how the goods are produced. d. All of the above e. None of the above ECO 202 – Final Exam Test Bank 59. Which one of the following is a macroeconomic question? a. How much would the unemployment rate fall if the economy grows by 4% this year? b. What is the effect of unemployment on a worker’s lifetime earnings? c. Should the Federal government increase the level of regulation of the airline industry? d. What effect does a rise in the stock market have on the age at which one retires? 60. Which one of the following is not a macroeconomic question? a. Was the Federal Reserve right to try to stimulate the economy by reducing interest rates? b. How much will the California drought drive up the price of fresh vegetables? c. Would the nation’s growth rate increase if marijuana were legalized in all 50 states? d. How often has the country experienced a recession since World War II? 61. Which one of the following is a macroeconomic question? a. How should a firm in a perfectly competitive market react to an increase in input prices? b. Would an increase in the minimum wage increase inflation? c. What effect do higher interest rates have on a firm’s willingness to invest? d. What happens to the level of exports when the exchange rate changes? 62. Which one of the following is not a macroeconomic question? a. How much will the nation’s economy grow if household consumption rises by 10%? b. What is the effect of higher levels of education on a nation’s economic prosperity? c. Would legalization of marijuana nationwide result in a fall in the demand for cigarettes? d. Does an increase in business inventories predict a recovery from a recession? 63. In deciding whether to place economic sanctions on another country because of international political conflicts, what are the macroeconomic issues? a. The only economic issues are microeconomic. b. The macroeconomic issues center on the cost of those sanctions on the other country in terms of economic growth, unemployment, and inflation. c. There are macroeconomic issues for both countries such as the effect on the overall level of economic activity and unemployment. d. There may be a number of economic effects (microeconomic, international trade, labor market, etc.), b