Questions & concepts in macroeconomics review | Trường Đại học Duy Tân

ECO 152 Introduction to Macroeconomics Review questions I.Multiple Choice
1. In a business cycle, a period in which aggregate output and employment declines is called_______. A. boom B. growth C. recession D. expansion
2. When a nation’s imports exceed its exports, it is referred to as _____. A. Trade surplus B. Trade deficit
C. Trade balance D. Trade imports
3. Goods that are produced by one firm for use in further processing by another firm is referred to as _____. A. intermediate goods B. final goods C. capital D. entrepreneurship
4. “Unemployment” is defined as the number of people who are ____.
A. looking for a job, and got one
B. looking for a job, but did not get one C. not looking for a job
D. unable to work due to retirement age
5. The unemployment wherein the workers’ skills do not match the jobs that are available
for the current economy is called _____. A. seasonal B. cyclical C. frictional D. structural
6. If GDP of a country with population of 5 million is $900 million, GDP per capita in that country is ____. A. $ 180 B. $ 180 million C. $ 180,000 D. $4.5 billion
7. A measure of outputs produced by factors of production owned by a country’s citizens
regardless of where the output is produced is ______. A. Economic production B. Gross Domestic Product
C. Gross National Product D. Output growth rate
8. To compare GDP per capita between countries and understanding equality between
economies, comparing a basket of similar goods is referred to as _____.
A. purchasing power parity (PPP) B. quantity of products C. price of products D. GDP deflator
9. Which of the following is a gainer during inflation period? A. debtors B. creditors C. fixed income group D. banks who lend the money
10. All of the following factors will create demand-pull inflation, EXCEPT _____. A. wages increase
B. households have less income C. low unemployment rate
D. consumer will have more money to spend on consumer goods
11. A measure of the average change over time in the prices of goods and services bought
bymanufacturers is referred to as _____. A. Consumer Prices B. Consumer Price Index C. Producer Index
D. Producer Price Index
12. In an aggregate demand curve, an increase in the price level of goods and services leads to ____.
A. lower quantity of total spending
B. higher quantity of total spending
C. a moderate level of increase in quantity of outputs
D. no changes in spending level
13. All of the following will increase aggregate supply, EXCEPT ____.
A. A significant decrease in nominal wages B. A decrease in productivity
C. An increase in corporate taxes on producers
D. An increase in supply of land and resources
14. If country C exports $100 million and imports $200 million worth of goods, then there is_______ A. $100 trade surplus B. $100 trade deficit C. $300 trade surplus D. $300 trade balanced
15. A decrease in the overall level of prices refers to _________. A. inflation B. hyperinflation C. deflation D. purchasing power parity
16. Which of the following is a gainer during inflation period? A. debtors B. creditors C. fixed income group D. banks who lend the money
17. A measure that examines the average cost of typical basket of goods and services
boughtby consumers is referred to as _____. A. velocity B. Aggregate Supply C. GNP D. CPI
18. If country A’s GDP is 2,000,000 USD and Velocity of money is 5, the money supply is _____ USD. A. 10,000,000
B. 400,000 ( velocity of money = GDP/money supply ) C. tho2,000,005
D. Not sufficient data to calculate
19. Which of the following will make Aggregate Demand curve shift to left?
A. Increase in household income B. Lower interest rate
C. Less government spending D. Decrease in corporate tax
20. If the government reduce its spending and increase the tax rate, which of the following is being used?
(a) expansionary monetary policy
(b) contractionary monetary policy
(c) expansionary fiscal policy
(d) contractionary fiscal policy
21. If the central bank reduces interest rates, which of the following is being used?
A. expansionary monetary policy
B. contractionary monetary policy
C. expansionary fiscal policy
D. contractionary fiscal policy
22. A legal limit on the imported quantity of a good that is produced abroad and can be
soldin domestic markets is referred to as _____. (a) import quota (b) export quota (c) tariff (d) subsidies
23. An amount of money, grants, or assistance given directly to firms by the government to
encourage production and consumption and to encourage exports is called _____. A. Export subsidies B. Import subsidies C. Trade balance D. Export tariff
24. Which of the following is NOT a type of trade restrictions imposed by nations? A. Tariff B. Quota C. Subsidy D. Money supply
25. A field of economics that focuses on the determinants of total national income, deals
with aggregates such as aggregate consumption and investment, and looks at the overall
level of prices is ______.
A. Managerial economics B. Business Economics C. Microeconomics D. Macroeconomics
26. A method of computing GDP which measures the income like wages, rents, interest,
profits, taxes, and other income received by all factors of production in producing final
goods and services is referred to as ____.
A. Expenditure approach B. Income approach C. Product approach D. Factor approach
27. In a business cycle, a period in which aggregate output and employment declines is called _______. A. boom B. growth C. recession D. expansion
28. The statistic used by economists to measure the value of economic output is ____. A. the CPI B. GDP C. the GDP deflator
D. the unemployment rate
29. When a nation’s imports exceed its exports, it is referred to as _____. A. Trade surplus B. Trade deficit C. Trade balance D. Trade exports
30. Goods that are produced by one firm for use in further processing by another firm is referred to as _____. A. intermediate goods B. final goods C. capital D. entrepreneurship
31. The period in the business cycle from a trough up to a peak is referred to as _____. A. burst B. inflation period C. expansion D. recession
32. “Unemployment” is defined as the number of people who are ____.
A. looking for a job, and got one
B. looking for a job, but did not get one
C. not looking for a job
D. unable to work due to retirement age
33. ____is a method of computing GDP which measures the total amount spent on all final
goods and services during a given period. A. income approach
B. Expenditure approach C. Product approach D. Transfer payments
34. The unemployment wherein the workers’ skills do not match the jobs that are available
for the current economy is called _____. A. seasonal B. cyclical C. frictional D. structural
35. If GDP of a country with population of 20 million is $400 million, GDP per capita in that country is ____. A. $20 million B. $200 C. $20 D. $8,000 million
36. A measure of outputs produced by factors of production owned by a country’s citizens
regardless of where the output is produced is ______. A. Economic production
B. Gross Domestic Product
C. Gross National Product D. Output growth rate
37. Goods, services, and intermediate products produced in other countries and delivered
to Vietnam for consumption is an example of ___________. deficit surplus import export
38. To compare GDP per capita between countries and understanding equality between
economies, comparing a basket of similar goods is referred to as _____.
A. purchasing power parity (PPP)
B. quantity of products C. price of products D. GDP deflator
39. In country A, GDP is $75,000 in year one. In year two, GDP is $80,000. What was the growth rate? A. 93.75% B. 7% C. 6.25% D. 6.67%
40. The unemployment associated with the ups and downs of the business cycle is referred to as ____. A. seasonal B. cyclical C. structural D. frictional
41. If money supply is increased in an economy, velocity _____. A. remains the same B. increases
C. decreases ( velocity money = gdp/supply money nên là supply increased thì velocity decrease )
D. is not relevant to money supply
42. The factories, machinery, technology, etc. that are necessary to sustain an industry is
________. A. capital goods B. natural resource C. human capital D. technical resources
43. All of the following are benefits of economic growth, EXCEPT _____.
A. Increase tax revenue B. Increase production
C. decrease inflation rate
D. Increase unemployment rate
44. In an economy, there are 8 million unemployed people, 110 million employed, and 85
million people out of labor force. What is the rate of unemployment?
A. 6.78% [ số người thất nghiệp/ lực lượng lao động *100 (lực lượng lao động ko tính
ngươi ko thể lao động)] B. 7.27% C. 3.94% D. 2.56%
45. All of the following factors will create demand-pull inflation, EXCEPT _____. A. wages increase
B. households have less income
C. low unemployment rate
D. consumer will have more money to spend on consumer goods
46. A measure of the average change over time in the prices of goods and services bought
bymanufacturers is referred to as _____. A. Consumer Prices
B. Consumer Price Index C. Producer Index
D. Producer Price Index
47. ALL of the following are gainers during inflation period, EXCEPT _____.
A. flexible income group B. fixed income group C. debtors D. Speculators
48. How inflation affects the price of the commodities?
A. Price of the commodities decreases
B. Price of the commodities increases
C. prices of the commodities remain the same
D. prices of capital goods decreases
49. In an aggregate demand curve, an increase in the price level of goods and services leads to ____.
A. lower quantity of total spending
B. higher quantity of total spending
C. a moderate level of increase in quantity of outputs
D. no changes in spending level
50. An increase in the cost of production shifts the aggregate _____ curve to the _____. A. supply; right B. supply; left C. demand; right D. demand; left
51. A measure of the relationship between a nation’s level of real output and the amount of
resources used to produce that output is referred to as _____. A. GDP B. GNP C. Productivity D. Supplies
52. Grants and assistance provided by the government to domestic firms and industries to
keep them running competitively is referred to as _____. taxes quotas subsidies tariffs
53. When domestic income rises and households get richer, they will _____ and _____.
A. demand more imports; net exports will rise
B. demand more imports; net exports will fall
C. demand more exports; net import will fall
D. demand more exports; net exports will rise
54. The aggregate supply curve shows the relationship between _______.
A. total quantity of inputs that firms required and sell at each price level
B. total quantity of labor that firms required and sell at each price level
C. total quantity of services that firms produce and sell at each price level
D. total quantity of output that firms produce and sell at each price level 55. When
country’s debt increases, all of the following may occur, EXCEPT ____. A. the government raise taxes
B. the government print more money to pay off the debt
C. the government reduce corporate taxes
D. increase in the money supply
56. All of the following will increase aggregate supply, EXCEPT ____.
A. A significant decrease in nominal wages
B. A decrease in productivity
C. An increase in corporate taxes on producers
D. An increase in supply of land and resources
57. The increase in the production of goods and services over a specific period is _____. A. capital goods B. output growth C. net export D. production
58. If the world price of cotton is lower than Vietnam’s domestic price of cotton without
trade, then Vietnam _____.
A. should import cotton
B. should produce just enough cotton to satisfy domestic demand
C. has a comparative advantage in cotton
D. should produce no cotton domestically
59. If country C exports $100 million and imports $200 million worth of goods, then there is_______ A. $100 trade surplus A. $100 trade deficit B. $300 trade surplus C. $300 trade balanced
60. If county D exports $400 million and imports $300 million, then there is _______ B. $100 trade deficit C. $300 trade surplus D. $300 trade deficit E. $100 trade surplus
61. Which of the following will make Aggregate Demand curve shift to left?
A. Increase in household income B. Lower interest rate
C. Less government spending D. Decrease in corporate tax
62. If the government reduce its spending and increase the tax rate, which of the following is being used?
A. expansionary monetary policy
B. contractionary monetary policy C. expansionary fiscal policy
D. contractionary fiscal policy
63. If the central bank reduces interest rates, which of the following is being used?
A. expansionary monetary policy
B. contractionary monetary policy C. expansionary fiscal policy
D. contractionary fiscal policy
64. In aggregate demand curve, changes in price level will lead to ____.
A. shifting the demand curve to left
B. shifting the demand curve to right
C. movement along the demand curve D. either (a) or (b)
65. A tariff is _____.
A. a legal limit on the imported quantity of a good
B. a legal limit on the exported quantity of a good
C. a tax on goods exported to other countries
D. a tax on goods imported into the country
66. A legal limit on the imported quantity of a good that is produced abroad and can be
soldin domestic markets is referred to as _____. A. import quota B. export quota C. tariff D. subsidies
67. An amount of money, grants, or assistance given directly to firms by the government to
encourage production and consumption and to encourage exports is called _____. A. Export subsidies B. Import subsidies C. Trade balance D. Export tariff
68. A firm or industry sells goods to the world market at prices below the cost of
productionis referred to as _____. export quota export assistance dumping protectionism
69. Which of the following NOT a type of trade restrictions imposed by nations to protect local firms? A. Quota B. Tariff C. Subsidy D. Money supply
70. Government actions and policies that restrict or restrain international trade to protect
local businesses and jobs from foreign competition is referred to as _____. A. Open market B. Dumping C. trade opening D. trade protectionism
Part II. Short Questions and Problem Solving
1. What is gross national product?
Countries can measure the output produced y factors of production owned by a country’s
citizens regardless of where the output is produced. This measure is called gross national product (GNP).
2. Identify factors of production.
Land, labor, capital and entrepreneurship.
3. What is the difference between final goods and intermediate goods. Give examples.
Final goods: Is an item bought by its final user during a specificed time period,
Example: a smartphone, television, milk, chocolate, medicines,…
Intermediate goods: Goods that are produced by one firm for use in further processing by
another firm. These are goods that go into the production of other goods. Example: wheat,
soil, steel, sugar, oil, rice,…
4. What is trade surplus?
Trade surplus: exists when a nation’s exports exceed its imports and is calculated as exportsimports.
5. What is trade deficit?
Trade Deficit: exists when a nation’s imports exceed its exports and is calculated as importsexports. 6. What is recession?
Recession: the period in the business cycle from a peak down to a trough, a period during
which aggregate output and employment declines, when more people sells than buy, the
economy contracts, if it continues, it becomes a recession.
7. What is depression?
Depression: a deep recession that is prolonged or lasts for a decade, output and employment fall.
8. What is inflation? Deflation?
Infation is a situation in which the economy’s overall price level is rising.
Deflation is decrease in the overall price level.
9. What is demand-pull inflation?
Inflation from strong consumer demand for a product or service and low unemployment.
10. What is cost-push inflation?
Cost-push inflation occurs when prices increase due to increases in production costs, such as raw materials and wages.
11. Define the term “unemployment”.
A measure of the number of people looking for work, but who are without jobs.
12. What is frictional unemployment? Provide 2 examples.
Occurs naturally when people change jobs, get laid off from their current jobs, take some time
to find the right job after they finish their schooling, or take off from working for a variety of other reasons.
Example: 1. College graduates looking for their first job.
2. People relocating to a new city or country.
13. What is seasonal unemployment? Give 2 examples.
Occurs when industries slow or shut down for a seasonal or make seasonal shifts in their production schedules.
Example: 1. Tourist Destinations 2. Agricultural Work
14. What is aggregate demand?
Aggregate demand: the amount of total spending on domestic goods and services in an
economy, total demand for a nation’s goods and services in a period of time at a range of price levels.
15. What is aggregate supply?
Aggregate supply: the total quantity of output firms produce and sell in an ecocnomy.
16. What is monetary policy?
Monetary policy: the tools used by the Central Bank to control the quantity of money, which in turn affects interst rates.
17. What is fiscal policy?
Fiscal policy refers to the government ‘s decisions about how much to tax and spend
(increasing or decreasing tax and public spending).
18. Describe economic growth.
Economic growth - is an increase in the total output of the economy (GDP),
- it occurs when a society accquires new resources or when it produce more by using existing resources,
- used to measure the comparative health of an economy over time.
19. Explain the term “dumping” in international trade.
Dumping is a firm or industry sells products on the world market at prices below the costs of production.
20. What is meant by trade protectionism?
Trade protectionism refers to government acitons and policies that restrict or restrain
international trade to protect local businesses and jobs from foreign competition.
21. What is consumer price index (CPI)?
CPI is a measure of the overall cost of typical basket of goods and services bought by
consumers, used to calculate inflation: an increase in the average level of prices.
22. When the government implements expansionary fiscal policy, what does it do to
government spending and taxation? (Raise or lower) Increases in government spending or cuts in taxes.
23. When the government implements contractionary fiscal policy, what does it do to
government spending and taxation? (Raise or lower) Cuts in government spending or increases in taxes.
24. Explain the term “Tariffs”.
Tariffs: a tax on goods shipped internationally.
25. What is import quota?
Import quotas is a legal limit on the imported quantity of a good that is produced abroad and
can be sold in domestic markets. 26. What is meant by export subsidies?
Export subsidies is an amount of money given directly to firms by the government to
encourage production and consumption and to encourage exports. 27. Identify the two
tools used by a government in its monetary policy.
Reserve Requirement, Discount Rate
28. Who are considered as out of labor force? Give three examples.
Those who are not working and not looking for work.
29. How does government’s expansionary monetary policy affect unemployment, economic growth and inflation?
Reduce unemployment, increase growth, increase inflation.
30. Explain equilibrium point in AD-AS curve?
Equilibrium – the intersection of the aggregate supply and aggregate demand curves shows
the equilibrium level of real GDP and the equilibrium price level in the economy. Equilibrium
occurs at the price level that equalizes the amounts of real output demanded and supplied.
Part III.Problem Solving:
1.GDP calculation: Expenditure approach, summarizing the results : GDP= C+I+G-(EX-IM)
- C: Households (Clothing, food, health care,..)
- I: Investment (Spending of businesses)
- G: Government (salaries of public servants, purchase of weapons, and infrastructure projects)
2. GDP calculation: Income approach, summarizing the results
GPD= (W + R + i + P + T + D + F) + or – statistical discrepancy - W: wages - R: rent - i: interest - P: profits - T: tax - D: depreciation
- F: net foreign factor income
- Statistical discrepancy: difference of GDP using expenditure approach. 3. GDP growth:
Calculation: (GDPYear2 – GDPYear1)/GDPYear1 x 100
Summarizing the results
4. GDP per capita calculation (GDP/Population)
GDP per capital Formula= GDP of the country/ Population of that country 5. Unemployment Rate:
Percentage of population in the labor force; Summary
% PILF = (population in the labor force/population) x 100
Percentage of population out of the labor force; Summary
%POLF = (population out the labor force/population) x 100
Employment Rate; Summary
Employment rate= (# people unemployed / # of people in the labor fore) x 100
Unemployment Rate; Summary
Unemployment rate= (# of people unemployed / # of people in the labor fore) x 100 6. Inflation: Calculation of CPI :
CPI = (weighted current price/weighted base period price) x 100
CPI = (Current price of basket of goodsin given year x 100) / Price of basket of goods in base year
Calculation of Inflation; Summary:
Inflation rate = [(CPI this year – CPI last year)/CPI last year] x 100%