1. Economic fluctuations are regular and easily predictable.
2. True
3. False

2 points

Question 2

1. Most macroeconomic quantities fluctuate together.
2. True
3. False

2 points

Question 3

1. As output falls, unemployment rises.
2. True
3. False

2 points

Question 4

1. Which of the following effects would occur if a new natural resource was discovered in the country?
2. A. Increase aggregate demand
3. B. Decrease aggregate demand
4. C. Increase aggregate supply
5. D. Decrease aggregate supply

2 points

Question 5

1. Which of the following effects would occur if a large portion of consumers decided to save more of their money instead of spending?
2. A. Increase aggregate demand
3. B. Decrease aggregate demand
4. C. Increase aggregate supply
5. D. Decrease aggregate supply

2 points

Question 6

1. Which of the following effects would occur if college graduation rates improve?
2. A. Increase aggregate demand
3. B. Decrease aggregate demand
4. C. Increase aggregate supply
5. D. Decrease aggregate supply

2 points

Question 7

1. Which of the following effects would occur if several Asian countries recovered from a recession, thus increasing American exports to those countries?
2. A. Increase aggregate demand
3. B. Decrease aggregate demand
4. C. Increase aggregate supply
5. D. Decrease aggregate supply

2 points

Question 8

1. Which one of the following is an example of monetary policy?
2. A. Government lowers tax rates across the board in order to increase aggregate demand.
3. B. The Fed lowers the interest rate in order to increase aggregate demand.
4. C. The federal government passes a stimulus spending bill in order to increase aggregate demand.
5. D. Government passes legislation to automatically make payments to people who become unemployed.

2 points

Question 9

1. In the American economy, what determines the money supply?
2. A. The amount of gold and silver backing the dollar
3. B. The amount of gold backing the dollar
4. C. The Federal Reserve
5. D. A random index

2 points

Question 10

1. True or False: If the government increases spending by increasing taxes, that spending won't cause a net increase in aggregate demand.
2. True
3. False

2 points

Question 11

1. Which economist pioneered the concepts of aggregate demand and aggregate supply?
2. A. David Hume
3. B. Adam Smith
4. C. Friedrich Hayek
5. D. John Maynard Keynes