Question 1

Variables that a model takes as given are called:

Accepted Answer

A) endogenous. 
B) exogenous. 
C) market clearing. 
D) macroeconomic. 
A) endogenous. 
B) exogenous. 
C) market clearing. 
D) macroeconomic.

Question 2

The assumption of continuous market clearing means that:

Accepted Answer

A) sellers can sell all that they want at the going price. 
B) buyers can buy all that they want at the going price. 
C) in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price. 
D) at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price. 
A) sellers can sell all that they want at the going price. 
B) buyers can buy all that they want at the going price. 
C) in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price. 
D) at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.

Question 3

Why do we call macroeconomics an imperfect science? Explain.

Accepted Answer

The study of macroeconomics depends main

Question 4

An assumption of _____ is more plausible for studying the short-run behaviour of the economy, while an assumption of _____ is more plausible for studying the long-run equilibrium behaviour of the economy.

Accepted Answer

A) deflation; inflation 
B) inflation; deflation 
C) flexible prices; sticky prices 
D) sticky prices; flexible prices 
A) deflation; inflation 
B) inflation; deflation 
C) flexible prices; sticky prices 
D) sticky prices; flexible prices

Question 5

Important characteristics of macroeconomic models include all of the following except:

Accepted Answer

A) simplifying assumptions. 
B) functional relationships based on randomized control trials. 
C) endogenous and exogenous variables. 
D) implicit or explicit consistency with microeconomic foundations. 
A) simplifying assumptions. 
B) functional relationships based on randomized control trials. 
C) endogenous and exogenous variables. 
D) implicit or explicit consistency with microeconomic foundations.

Question 6

Macroeconomics is the study of the:

Accepted Answer

A) activities of individual units of the economy. 
B) decision-making by households and firms. 
C) economy as a whole. 
D) interaction of firms and households in the marketplace. 
A) activities of individual units of the economy. 
B) decision-making by households and firms. 
C) economy as a whole. 
D) interaction of firms and households in the marketplace.

Question 7

Which of the combinations listed is not a prime minister and an important economic issue of his administration?

Accepted Answer

A) Prime Minister Pierre Trudeau, inflation 
B) Prime Minister Brian Mulroney, budget deficits 
C) Prime Minister Stephen Harper, low productivity growth 
D) Prime Minister Justin Trudeau, inflation 
A) Prime Minister Pierre Trudeau, inflation 
B) Prime Minister Brian Mulroney, budget deficits 
C) Prime Minister Stephen Harper, low productivity growth 
D) Prime Minister Justin Trudeau, inflation

Question 8

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

Accepted Answer

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

Question 9

Which of the following statements about economic models is true?

Accepted Answer

A) There is only one correct economic model. 
B) All economic models are based on the same assumptions. 
C) The purpose of economic models is to show how endogenous variables affect exogenous variables. 
D) Economists use different models to address different economic phenomena. 
A) There is only one correct economic model. 
B) All economic models are based on the same assumptions. 
C) The purpose of economic models is to show how endogenous variables affect exogenous variables. 
D) Economists use different models to address different economic phenomena.

Question 10

In an economic model:

Accepted Answer

A) exogenous variables and endogenous variables are both determined outside the model. 
B) endogenous variables and exogenous variables are both determined within the model. 
C) endogenous variables affect exogenous variables. 
D) exogenous variables affect endogenous variables. 
A) exogenous variables and endogenous variables are both determined outside the model. 
B) endogenous variables and exogenous variables are both determined within the model. 
C) endogenous variables affect exogenous variables. 
D) exogenous variables affect endogenous variables.

Question 11

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

Accepted Answer

A) from minute to minute. 
B) from year to year. 
C) in the long run. 
D) in the short run. 
A) from minute to minute. 
B) from year to year. 
C) in the long run. 
D) in the short run.

Question 12

When studying the short-run behaviour of the economy, an assumption of _____ is more plausible, whereas when studying the long-run equilibrium behaviour of an economy, an assumption of _____ is more plausible.

Accepted Answer

A) inflation; unemployment 
B) unemployment; inflation 
C) flexible prices; sticky prices 
D) sticky prices; flexible prices 
A) inflation; unemployment 
B) unemployment; inflation 
C) flexible prices; sticky prices 
D) sticky prices; flexible prices

Question 13

Exogenous variables are:

Accepted Answer

A) determined outside the model. 
B) determined within the model. 
C) the outputs of the model. 
D) explained by the model. 
A) determined outside the model. 
B) determined within the model. 
C) the outputs of the model. 
D) explained by the model.

Question 14

A graph of the rate of inflation in Canada over the twentieth century shows:

Accepted Answer

A) an overall upward trend interrupted by a large downturn in the 1930s. 
B) some periods of deflation mixed with mostly positive rates of inflation before 1955 but only positive rates of inflation after 1955. 
C) a relatively steady, positive level throughout the century except for deflation in the 1930s. 
D) a constant rate of inflation in the first half of the century followed by an upward trend in the second half. 
A) an overall upward trend interrupted by a large downturn in the 1930s. 
B) some periods of deflation mixed with mostly positive rates of inflation before 1955 but only positive rates of inflation after 1955. 
C) a relatively steady, positive level throughout the century except for deflation in the 1930s. 
D) a constant rate of inflation in the first half of the century followed by an upward trend in the second half.

Question 15

Compared with the real GDP during a recession, real GDP during a depression:

Accepted Answer

A) increases more rapidly. 
B) increases at approximately the same rate. 
C) decreases at approximately the same rate. 
D) decreases more severely. 
A) increases more rapidly. 
B) increases at approximately the same rate. 
C) decreases at approximately the same rate. 
D) decreases more severely.

Question 16

All of the following are types of macroeconomics data except the:

Accepted Answer

A) price of a computer. 
B) growth rate of real GDP. 
C) inflation rate. 
D) unemployment rate. 
A) price of a computer. 
B) growth rate of real GDP. 
C) inflation rate. 
D) unemployment rate.

Question 17

In the relationship expressed in functional form Y = G(K, L), Y stands for real GDP, K stands for the amount of capital in the economy, and L stands for the amount of labour in the economy. In this case G( ):

Accepted Answer

A) is the growth rate of real GDP when the amount of capital and labour in the economy is fixed. 
B) indicates that the variables inside the parentheses are endogenous variables in the model. 
C) is the symbol that stands for government input into the production process. 
D) is the function telling how the variables in the parentheses determine real GDP. 
A) is the growth rate of real GDP when the amount of capital and labour in the economy is fixed. 
B) indicates that the variables inside the parentheses are endogenous variables in the model. 
C) is the symbol that stands for government input into the production process. 
D) is the function telling how the variables in the parentheses determine real GDP.

Question 18

The quantity of coffee demanded, Qd, depends on the price of coffee, Pc, and the price of tea, PT. The quantity of coffee supplied, Qs, depends on the price of coffee, Pc, and the price of electricity, PE , according to the following equation:
​
​
Qd = 17 - 2Pc + 10PT
​
Qs = 2 + 3Pc - 5PE
a.If the price of tea is $1.00 and the price of electricity is $0.50, what are the equilibrium price and quantity of coffee?
b.What is/are the endogenous variable(s) in this model?
c.What is/are the exogenous variable(s) in this model?​

Accepted Answer

a.The equilibrium pr

Variables that a model takes as given are called:

The assumption of continuous market clearing means that:

Why do we call macroeconomics an imperfect science? Explain.

An assumption of _ is more plausible for studying the short-run behaviour of the economy, while an assumption of _ is more plausible for studying the long-run equilibrium behaviour of the economy.

Important characteristics of macroeconomic models include all of the following except:

Macroeconomics is the study of the:

Which of the combinations listed is not a prime minister and an important economic issue of his administration?

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

Which of the following statements about economic models is true?

In an economic model:

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

When studying the short-run behaviour of the economy, an assumption of _ is more plausible, whereas when studying the long-run equilibrium behaviour of an economy, an assumption of _ is more plausible.

Exogenous variables are:

A graph of the rate of inflation in Canada over the twentieth century shows:

Compared with the real GDP during a recession, real GDP during a depression:

All of the following are types of macroeconomics data except the:

In the relationship expressed in functional form Y = G(K, L), Y stands for real GDP, K stands for the amount of capital in the economy, and L stands for the amount of labour in the economy. In this case G( ):

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

Variables that a model takes as given are called:

The assumption of continuous market clearing means that:

Why do we call macroeconomics an imperfect science? Explain.

An assumption of _____ is more plausible for studying the short-run behaviour of the economy, while an assumption of _____ is more plausible for studying the long-run equilibrium behaviour of the economy.

Important characteristics of macroeconomic models include all of the following except:

Macroeconomics is the study of the:

Which of the combinations listed is not a prime minister and an important economic issue of his administration?

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

Which of the following statements about economic models is true?

In an economic model:

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

When studying the short-run behaviour of the economy, an assumption of _____ is more plausible, whereas when studying the long-run equilibrium behaviour of an economy, an assumption of _____ is more plausible.

Exogenous variables are:

A graph of the rate of inflation in Canada over the twentieth century shows:

Compared with the real GDP during a recession, real GDP during a depression:

All of the following are types of macroeconomics data except the:

In the relationship expressed in functional form Y = G(K, L), Y stands for real GDP, K stands for the amount of capital in the economy, and L stands for the amount of labour in the economy. In this case G( ):

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

An assumption of _ is more plausible for studying the short-run behaviour of the economy, while an assumption of _ is more plausible for studying the long-run equilibrium behaviour of the economy.

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

When studying the short-run behaviour of the economy, an assumption of _ is more plausible, whereas when studying the long-run equilibrium behaviour of an economy, an assumption of _ is more plausible.