Question 1

All of the following statements about sticky prices are true except:

Accepted Answer

A) in the short run, some wages and prices are sticky. 
B) the sticky-price model describes the equilibrium toward which the economy slowly gravitates. 
C) for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility. 
D) magazine publishers tend to change their newsstand prices only every three or four years. 
A) in the short run, some wages and prices are sticky. 
B) the sticky-price model describes the equilibrium toward which the economy slowly gravitates. 
C) for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility. 
D) magazine publishers tend to change their newsstand prices only every three or four years. B

Question 2

The study of the economy as a whole is called:

Accepted Answer

A) household economics. 
B) business economics. 
C) microeconomics. 
D) macroeconomics. 
A) household economics. 
B) business economics. 
C) microeconomics. 
D) macroeconomics. D

Question 3

Which of the following is the best example of a sticky price?

Accepted Answer

A) the price of a barrel of oil 
B) the price of the Canadian dollar in terms of euros 
C) the price of a share of stock 
D) the price of a can of pop in a vending machine 
A) the price of a barrel of oil 
B) the price of the Canadian dollar in terms of euros 
C) the price of a share of stock 
D) the price of a can of pop in a vending machine D

Question 4

In a simple model of the supply and demand for pizza, when buyers' income increases, the price of pizza _____ and the quantity purchased _____.

Accepted Answer

A) increases; decreases 
B) increases; increases 
C) decreases; increases 
D) decreases; decreases 
A) increases; decreases 
B) increases; increases 
C) decreases; increases 
D) decreases; decreases

Question 5

What is the difference between sticky prices and flexible prices? Explain.

Accepted Answer

With flexible prices, instantaneous adju

Question 6

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

Accepted Answer

An exogenous variable is the variable th

Question 7

The unemployment rate:

Accepted Answer

A) was zero during the 1990s in Canada. 
B) was zero on average between 1900 and 1950 in Canada. 
C) has never been zero in Canada. 
D) is usually zero when the economy is not in a recession or depression. 
A) was zero during the 1990s in Canada. 
B) was zero on average between 1900 and 1950 in Canada. 
C) has never been zero in Canada. 
D) is usually zero when the economy is not in a recession or depression.

Question 8

Assume that the equation for demand for bread at a small bakery is Qd = 60 - 10Pb + 3Y, where Qd is the quantity of bread demanded in loaves, Pb is the price of bread in dollars per loaf, and Y is the average income in the town in thousands of dollars. Assume also that the equation for supply of bread is Qs = 30 + 20Pb - 30Pf, where Qs is the quantity supplied and Pf is the price of flour in dollars per pound. Assume finally that markets clear, so that Qd = Qs.
​
a.If Y is 10 and Pf is $1, solve mathematically for equilibrium Q and Pb.
b.If the average income in the town increases to 15, solve for the new equilibrium Q and Pb.​

Accepted Answer

a. Q = 60 loaves, P_b

Question 9

Recessions are periods when the real GDP:

Accepted Answer

A) increases slowly. 
B) increases rapidly. 
C) decreases mildly. 
D) decreases severely. 
A) increases slowly. 
B) increases rapidly. 
C) decreases mildly. 
D) decreases severely.

Question 10

Macroeconomics does not try to answer the question of:

Accepted Answer

A) why some countries experience rapid growth. 
B) what is the rate of return on education. 
C) why some countries have high rates of inflation. 
D) what causes recessions and depressions. 
A) why some countries experience rapid growth. 
B) what is the rate of return on education. 
C) why some countries have high rates of inflation. 
D) what causes recessions and depressions.

Question 11

The annual inflation rate in Canada averaged:

Accepted Answer

A) nearly zero between 1920 and 1945. 
B) nearly zero between 1950 and 2000. 
C) about 10 percent between 1920 and 1945. 
D) about 10 percent between 2000 and 2017. 
A) nearly zero between 1920 and 1945. 
B) nearly zero between 1950 and 2000. 
C) about 10 percent between 1920 and 1945. 
D) about 10 percent between 2000 and 2017.

Question 12

Deflation occurs when:

Accepted Answer

A) the real GDP decreases. 
B) the unemployment rate decreases. 
C) prices fall. 
D) prices increase but at a slower rate. 
A) the real GDP decreases. 
B) the unemployment rate decreases. 
C) prices fall. 
D) prices increase but at a slower rate.

Question 13

A measure of how fast the general level of prices is rising is called the:

Accepted Answer

A) growth rate of real GDP. 
B) inflation rate. 
C) unemployment rate. 
D) market-clearing rate. 
A) growth rate of real GDP. 
B) inflation rate. 
C) unemployment rate. 
D) market-clearing rate.

Question 14

The inflation rate is a measure of how fast:

Accepted Answer

A) the total income of the economy is growing. 
B) unemployment in the economy is increasing. 
C) the general level of prices in the economy is rising. 
D) the number of jobs in the economy is expanding. 
A) the total income of the economy is growing. 
B) unemployment in the economy is increasing. 
C) the general level of prices in the economy is rising. 
D) the number of jobs in the economy is expanding.

Question 15

Which of the following is the best example of a flexible price?

Accepted Answer

A) the price of a cup of coffee in a coffee shop 
B) the price of gasoline at a service station 
C) the price of a ticket at a movie theatre 
D) the price of a book in a bookstore 
A) the price of a cup of coffee in a coffee shop 
B) the price of gasoline at a service station 
C) the price of a ticket at a movie theatre 
D) the price of a book in a bookstore

Question 16

The total income of everyone in the economy adjusted for the level of base year prices is called:

Accepted Answer

A) a recession. 
B) an inflation. 
C) real GDP. 
D) a business fluctuation. 
A) a recession. 
B) an inflation. 
C) real GDP. 
D) a business fluctuation.

Question 17

Real GDP _____ over time, and the growth rate of real GDP _____.

Accepted Answer

A) grows; fluctuates 
B) is steady; is steady 
C) grows; is steady 
D) is steady; fluctuates 
A) grows; fluctuates 
B) is steady; is steady 
C) grows; is steady 
D) is steady; fluctuates

Question 18

A period of falling prices is called:

Accepted Answer

A) deflation. 
B) inflation. 
C) a depression. 
D) a recession. 
A) deflation. 
B) inflation. 
C) a depression. 
D) a recession.

Question 19

In a simple model of the supply and demand for pizza, the endogenous variables are:

Accepted Answer

A) the price of pizza and the price of cheese. 
B) aggregate income and the quantity of pizza sold. 
C) aggregate income and the price of cheese. 
D) the price of pizza and the quantity of pizza sold. 
A) the price of pizza and the price of cheese. 
B) aggregate income and the quantity of pizza sold. 
C) aggregate income and the price of cheese. 
D) the price of pizza and the quantity of pizza sold.

Question 20

A typical trend during a recession is that:

Accepted Answer

A) the unemployment rate falls. 
B) the popularity of the prime minister rises. 
C) incomes fall. 
D) the inflation rate rises. 
A) the unemployment rate falls. 
B) the popularity of the prime minister rises. 
C) incomes fall. 
D) the inflation rate rises.

All of the following statements about sticky prices are true except:

The study of the economy as a whole is called:

Which of the following is the best example of a sticky price?

In a simple model of the supply and demand for pizza, when buyers' income increases, the price of pizza _ and the quantity purchased _.

What is the difference between sticky prices and flexible prices? Explain.

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

The unemployment rate:

Recessions are periods when the real GDP:

Macroeconomics does not try to answer the question of:

The annual inflation rate in Canada averaged:

Deflation occurs when:

A measure of how fast the general level of prices is rising is called the:

The inflation rate is a measure of how fast:

Which of the following is the best example of a flexible price?

The total income of everyone in the economy adjusted for the level of base year prices is called:

Real GDP _ over time, and the growth rate of real GDP _.

A period of falling prices is called:

In a simple model of the supply and demand for pizza, the endogenous variables are:

A typical trend during a recession is that:

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

Exam 1: The Science of Macroeconomics

All of the following statements about sticky prices are true except:

The study of the economy as a whole is called:

Which of the following is the best example of a sticky price?

In a simple model of the supply and demand for pizza, when buyers' income increases, the price of pizza _____ and the quantity purchased _____.

What is the difference between sticky prices and flexible prices? Explain.

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

The unemployment rate:

Recessions are periods when the real GDP:

Macroeconomics does not try to answer the question of:

The annual inflation rate in Canada averaged:

Deflation occurs when:

A measure of how fast the general level of prices is rising is called the:

The inflation rate is a measure of how fast:

Which of the following is the best example of a flexible price?

The total income of everyone in the economy adjusted for the level of base year prices is called:

Real GDP _____ over time, and the growth rate of real GDP _____.

A period of falling prices is called:

In a simple model of the supply and demand for pizza, the endogenous variables are:

A typical trend during a recession is that:

The Data of Microeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

In a simple model of the supply and demand for pizza, when buyers' income increases, the price of pizza _ and the quantity purchased _.

Real GDP _ over time, and the growth rate of real GDP _.