Fall 2001 ECO 132: Intermediate Macroeconomics Professor Byrns Quiz 1.
PRINT your name legibly at the top of the page. PRINT a CAPITAL letter in the left margin for answers.
1. The most comprehensive measure of aggregate output is (a) gross domestic product. (b)
net national product. (b) the stock value of the industrial 500. (d) national income.
2. The three major macroeconomic goals do not include: (a) full employment. (b) price level
stability. (c) sustained economic growth. (d) high levels of environmental quality.
3. Historically, the magnitude and duration of U.S. business cycles have tended to be: (a)
dynamically unstable. (b) relatively irregular. (c) indicative of a trend toward stagnation.
(d) smooth and regular. (e) opposite those for the rest of the world.
4. The notion that market adjustments automatically cure swings in business cycles is
central to the ideas of: (a) Malthus and his population S-curves. (b) Schumpeter long
waves. (c) Marxist cycles of exploitation. (d) modern business psychology. (e) classical
and neo-classical macroeconomic theorists.
5. According to Thomas Malthus, man's economic condition would continue to worsen over
time because: (a) capitalism results in increasingly inequitable income distribution. (b)
food grows at an arithmetic rate while population grows at an exponential rate. (c)
innovations cannot keep pace with human needs. (d) only the nobility should eat cake.
6. According to classical economics, unemployment indicates that the: (a) level of aggregate
demand is inadequate. (b) wage rate of labor is too high relative to other prices. (c)
unions need to raise wages to clear labor markets. (d) government needs to stimulate
7. Which group least directly accounts for a major component of Aggregate Demand? (a)
Consumers. (b) Exporters. (c) Foreigners. (d) Government. (e) Investors.
8. Classical economics would view excessive unemployment as a symptom that wage rates
relative to output prices: (a) cause excessive Aggregate Demand. (b) are too high to clear
labor markets. (c) are too low to clear labor markets. (d) require militant unionism to be
9. Classical macroeconomics tends to stress expanding: (a) Aggregate Supply to deal with
the problem of scarcity. (b) Aggregate Demand to reduce unemployment. (c)
government's role to ensure economic stability. (d) the price level to stimulate economic
10. According to classical economists, Aggregate Demand primarily determines: (a) levels of
national output and income. (b) total production in the economy. (c) Aggregate Supply at
full employment. (d) the price level.
11. The income/output version of the Equation of Exchange (as opposed to the transactions
version) is written: (a) MQ = PV. (b) M = QVP. (c) MV = PQ. (d) VP = MQ
12. Classical economists would rebut “underconsumptionist” theories of economic
downturns by stressing that all saving will be invested because of the flexibility of (a)
interest rates. (b) wage rates. (c) relative prices. (d) nominal prices for goods. (e)