102 Tutorial CH 6 BIG PICTURE

Chowdhury Shameem Mahmoud

2023-01-22

1. (1 point) If the economy grew at 3% this year, and average prices increased ___,
then people would be better off this year than the last year.
A. by 3%
B. more quickly than 3%
C. less than 3%
D. more quickly than 10%
2. When the great depression reached its trough in 1933 the unemployment rate was
approximately,
A. 5%
B. 25%
C. 15%
D. 20%
E. 33%
3. If the macroeconomic policy has been successful over time, it is likely that the economy
has NOT seen:
A. any inflation
B. any severe recession
C. any unemployment
D. a business cycle
4. Does a country with a trade deficit necessarily have a serious problem?
A. No. Trade deficit can occur when a country’s investment spending is higher
than its level of saving.
B. Yes. Trade deficits always occur when a country has low productivity.
C. Yes. Trade deficits always occur when a country does not have a comparative
advantage in production.

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 D. Yes. Trade deficit always occur when a country has a high budget surplus.
E. No. Trade deficits can occur when a country investment spending is lower
than its level of saving.
5. Fiscal policy involves changes in
A. interest rate
B. the quantity of money
C. banking regulation
D. government spending
6. Which is the most likely to be a macroeconomic, and not a microeconomic question?
A. the national unemployment rate rising or falling?
B. Are consumers buying more bottled water and less juice?
C. Are salaries of nurses rising or falling?
D. Should a tax be levied on each unit of carbon dioxide a factory emits
7. The primary tools of economic policy at the macro level are ___ policy and ___
policy.
A. tax and competition policy
B. monetary and the exchange rate
C. fiscal and monetary
D. capital; labor
8. Which statement is true about inflation and deflation?
A. Both are good for the economy.
B. Inflation is always good for the economy and deflation is always bad for the
economy.
C. Moderate inflation is good for the economy but deflation is always bad for
the economy.
D. Moderate inflation as well as moderate deflation are both good for the
economy.
9. Let the ongoing interest in the bank account is 12%. If you are offered $182 today or
asked to wait patiently for one more year and get, 214.84 dollar one year from now
then which option will you choose, deciding rationally?
10. (Present value calculation) Consider a situation where the government wants to borrow
from you $1200 and pledges that will return after two years, $1,373.88. Also imagine
you have the option, instead to put the money into a bank account that offers you 8%

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interest. What will you do? Choose an option based on a rational decision where you
seek to maximize your return from lending.
A. YES I will lend the money to the government.
B. NO I will not lend the money to the government.