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Chapter 1 Introduction to Macroeconomics T Multiple Choice Questions 1. The two major reasons for the tremendous growth in output in the U.S. economy over the last 125 years are (a) population growth and low inflation. (b) population growth and increased productivity. (c) low unemployment and low inflation. (d) low inflation and low trade deficits. Answer: B Level of difficulty: 1 Section: 1.1 The main reason that the United States has such a high standard of living is (a) low unemployment. (b) high average labor productivity. (c) low inflation. (d) high government budget deficits. Answer: B Level of difficulty: 1 Section: 1.1 Average labor productivity is the (a) amount of workers per machine. (b) amount of machines per worker. (c) ratio of employed to unemployed workers. (d) amount of output per worker. Answer: D Level of difficulty: 1 Section: 1.1 In which of the following periods did average labor productivity in the United States grow the fastest? (a) 1929 to 1935 (b) 1949 to 1973 (c) 1973 to 1995 (d) 1995 to 2002 Answer: B Level of difficulty: 1 Section: 1.1 2. 3. 4. 2 Abel/Bernanke • Macroeconomics, Fifth Edition 5. The most direct effect of an increase in the growth rate of average labor productivity would be an increase in (a) the inflation rate. (b) the unemployment rate. (c) the long–run economic growth rate. (d) imported goods. Answer: C Level of difficulty: 1 Section: 1.1 Short-run contractions and expansions in economic activity are called (a) recessions. (b) expansions. (c) deficits. (d) the business cycle. Answer: D Level of difficulty: 1 Section: 1.1 When national output rises, the economy is said to be in (a) an expansion. (b) a deflation. (c) an inflation. (d) a recession. Answer: A Level of difficulty: 1 Section: 1.1 Which of the following best describes a typical business cycle? (a) Economic expansions are followed by
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