Principles of Macroeconomics E conomics 2002.01 Principles of M a croeconomics Homework Two (Chapters 5 and 6 ) 11 Points The following assignment contains 11 multiple choice problems. Select the best answer . 1. The three macroeconomic goals are ___. a. full employment, balanced budgets, and stable prices b. balanced budgets, stable prices, and stable growth c. balanced budgets, full employment, and stable growth d. stable growth, full employment, and stable prices Answer: d. stable growth, full employment, and stable prices 2. The lowest point of a business cycle is the ___ . a. the expansion b. the trough c. the contraction d. the peak Answer: b. the trough 3. Use the following information to determine the value of the price index . Base Year Price Quantity Current Year Price Food $5 400 $4 Clothing $30 150 $50 Shelter $200 25 $200 a. price index = 14,100 b. price index = .82 c. price index = 1.23 d. price index = 1.08 Answer: price index = .82 4. Suppose five years ago, the price index had a value of 135 and it now has a value of 147. Based on this information, the rate of inflation over the five years is ___ . a. 8.1% b. 12.3% c. 11.25% d. 8.9% Answer: a. 8.1%