Question 1

When estimating a regression line,a high R²‚ tells us we have

Accepted Answer

A) a good fit. 
B) large residuals. 
C) correctly determined the direction of causation. 
D) all of the above 
E)  none of the above 
A) a good fit. 
B) large residuals. 
C) correctly determined the direction of causation. 
D) all of the above 
E)  none of the above A

Question 2

Which of the following is not included in investment?

Accepted Answer

A) the purchase of new equipment by firms 
B) nondurable goods 
C) the purchase of a new home 
D) none of the above 
A) the purchase of new equipment by firms 
B) nondurable goods 
C) the purchase of a new home 
D) none of the above B

Question 3

Which of the following problems would lead an economist to use instrument variable methods?

Accepted Answer

A) The dependent variable has an impact on the independent variable. 
B) There are too few quarters of data. 
C) There are too many independent variables. 
D) The R² is too high. 
E)  The residuals are too small. 
A) The dependent variable has an impact on the independent variable. 
B) There are too few quarters of data. 
C) There are too many independent variables. 
D) The R² is too high. 
E)  The residuals are too small. A

Question 4

A key step in using instrument variable methods is to

Accepted Answer

A) find one or more exogenous variables that influence your dependent variable. 
B) decrease the number of lags in the regression equation. 
C) conduct interviews to determine how accurate your data really is. 
D) run the regression on two different computers to see if the results differ. 
E)  eliminate the dependent variable. 
A) find one or more exogenous variables that influence your dependent variable. 
B) decrease the number of lags in the regression equation. 
C) conduct interviews to determine how accurate your data really is. 
D) run the regression on two different computers to see if the results differ. 
E)  eliminate the dependent variable.

Question 5

Which of the following is included in National Income?

Accepted Answer

A) indirect taxes 
B) consumption of fixed capital 
C) proprietors' income 
D) all of the above 
A) indirect taxes 
B) consumption of fixed capital 
C) proprietors' income 
D) all of the above

Question 6

Suppose exports are greater than imports.Given this information,we know with certainty that

Accepted Answer

A) a trade surplus exists. B) GNP > GDP. C) GNP < GDP. D) the change in business inventories is positive. A) a trade surplus exists. B) GNP > GDP. C) GNP < GDP. D) the change in business inventories is positive.

Question 7

If GDP is less than GNP,we know with certainty that

Accepted Answer

A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) none of the above 
A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) none of the above

Question 8

When we estimate a regression to determine the relationship between changes in consumption and changes in current income,we find that

Accepted Answer

A) there are no residuals. 
B) the R² is zero. 
C) the MPC is larger than one. 
D) all of the above 
E)  none of the above 
A) there are no residuals. 
B) the R² is zero. 
C) the MPC is larger than one. 
D) all of the above 
E)  none of the above

Question 9

When we use ordinary least squares to determine the relationship between changes in consumption and changes in both current and lagged income,we find that

Accepted Answer

A) only current income influences current consumption. 
B) current income has no impact on current consumption. 
C) consumption is not affected by income in any quarter. 
D) current income, last quarter's income, and income two quarter's ago all have the same impact on current consumption. 
E)  current income has a greater impact on consumption than income lagged one quarter. 
A) only current income influences current consumption. 
B) current income has no impact on current consumption. 
C) consumption is not affected by income in any quarter. 
D) current income, last quarter's income, and income two quarter's ago all have the same impact on current consumption. 
E)  current income has a greater impact on consumption than income lagged one quarter.

Question 10

If GDP is more than GNP,we know with certainty that

Accepted Answer

A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) none of the above 
A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) none of the above

Question 11

Changes in business inventories will be negative when

Accepted Answer

A) production exceeds sales. 
B) production is less than sales. 
C) a trade surplus exists. 
D) a budget surplus exists. 
A) production exceeds sales. 
B) production is less than sales. 
C) a trade surplus exists. 
D) a budget surplus exists.

Question 12

Suppose exports are less than imports.Given this information,we know with certainty that

Accepted Answer

A) a trade deficit exists. B) GNP > GDP. C) GNP < GDP. D) the change in business inventories is positive. A) a trade deficit exists. B) GNP > GDP. C) GNP < GDP. D) the change in business inventories is positive.

Question 13

Which of the following is not included in National Income?

Accepted Answer

A) indirect taxes 
B) wages and salaries 
C) net interest 
D) rental income of persons 
A) indirect taxes 
B) wages and salaries 
C) net interest 
D) rental income of persons

Question 14

Net national product (NNP)is equal to

Accepted Answer

A) personal income minus taxes. 
B) GNP minus consumption of fixed capital. 
C) GDP plus consumption of fixed capital. 
D) national income plus consumption of fixed capital. 
A) personal income minus taxes. 
B) GNP minus consumption of fixed capital. 
C) GDP plus consumption of fixed capital. 
D) national income plus consumption of fixed capital.

Question 15

If GDP exceeds GNP,we know with certainty that

Accepted Answer

A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world. 
A) a budget deficit exists. 
B) a trade surplus exists. 
C) a trade deficit exists. 
D) receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world.

Question 16

"Ordinary least squares" is a technique that can be used to

Accepted Answer

A) identify the best model. 
B) determine which variables in a model are endogenous and which are exogenous. 
C) obtain a bar graph showing successive quarterly increases in output. 
D) obtain a line describing consumption behavior in the real world. 
E)  determine the direction of causation between consumption and income. 
A) identify the best model. 
B) determine which variables in a model are endogenous and which are exogenous. 
C) obtain a bar graph showing successive quarterly increases in output. 
D) obtain a line describing consumption behavior in the real world. 
E)  determine the direction of causation between consumption and income.

Question 17

Which of the following is not a component of consumption?

Accepted Answer

A) nondurable goods 
B) purchase of a new condominium 
C) education expenses 
D) none of the above 
A) nondurable goods 
B) purchase of a new condominium 
C) education expenses 
D) none of the above

Question 18

Changes in business inventories will be positive when

Accepted Answer

A) production exceeds sales. 
B) production is less than sales. 
C) a trade surplus exists. 
D) a budget surplus exists. 
A) production exceeds sales. 
B) production is less than sales. 
C) a trade surplus exists. 
D) a budget surplus exists.

Question 19

A large "T-statistic" tell us that

Accepted Answer

A) a tiny change in the independent variable will cause a relatively large change in the dependent variable. 
B) we do not have enough data to obtain an accurate regression line. 
C) we can be confident that our estimated coefficient is not zero. 
D) we should have included more "lags" in our model. 
E)  we have incorrectly switched the dependent and independent variables in our model. 
A) a tiny change in the independent variable will cause a relatively large change in the dependent variable. 
B) we do not have enough data to obtain an accurate regression line. 
C) we can be confident that our estimated coefficient is not zero. 
D) we should have included more "lags" in our model. 
E)  we have incorrectly switched the dependent and independent variables in our model.

Exam 25: Appendix

When estimating a regression line,a high R²‚ tells us we have

Which of the following is not included in investment?

Which of the following problems would lead an economist to use instrument variable methods?

A key step in using instrument variable methods is to

Which of the following is included in National Income?

Suppose exports are greater than imports.Given this information,we know with certainty that

If GDP is less than GNP,we know with certainty that

When we estimate a regression to determine the relationship between changes in consumption and changes in current income,we find that

When we use ordinary least squares to determine the relationship between changes in consumption and changes in both current and lagged income,we find that

If GDP is more than GNP,we know with certainty that

Changes in business inventories will be negative when

Suppose exports are less than imports.Given this information,we know with certainty that

Which of the following is not included in National Income?

Net national product (NNP)is equal to

If GDP exceeds GNP,we know with certainty that

"Ordinary least squares" is a technique that can be used to

Which of the following is not a component of consumption?

Changes in business inventories will be positive when

A large "T-statistic" tell us that

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

Financial Markets Ii: the Extended Is-Lm Model

The Labor Market

The Phillips Curve, the Natural Rate of Unemployment, and Inflation

From the Short to the Medium Run: the Is-Lm-Pc Model

The Facts of Growth

Saving, capital Accumulation, and Output

Technological Progress and Growth

Technological Progress: the Short, the Medium, and the Long Run

Financial Markets and Expectations

Expectations, consumption, and Investment

Expectations, output, and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output, the Interest Rate, and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Fiscal Policy: a Summing up

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

Filters