Question 1

The U.S.central bank ________.

Accepted Answer

A) usually raises taxes to stabilize a slowing economy 
B) encourages higher savings rates by raising the national sales tax 
C) is known as the Federal Reserve 
D) all of the above 
E) none of the above 
A) usually raises taxes to stabilize a slowing economy 
B) encourages higher savings rates by raising the national sales tax 
C) is known as the Federal Reserve 
D) all of the above 
E) none of the above

Question 2

Which of these economies has the highest saving rate?

Accepted Answer

A) Greece 
B) China 
C) United States 
D) Brazil 
E) Japan 
A) Greece 
B) China 
C) United States 
D) Brazil 
E) Japan

Question 3

Policies to encourage higher personal saving rates include ________.

Accepted Answer

A) raising income taxes 
B) lowering sales taxes 
C) raising taxes on pension plans 
D) all of the above 
E) none of the above 
A) raising income taxes 
B) lowering sales taxes 
C) raising taxes on pension plans 
D) all of the above 
E) none of the above

Question 4

Opponents of rule-determined policies might point out that ________.

Accepted Answer

A) markets self-correct quickly so rules become obsolete 
B) unforeseen changes in the structure of the economy may make a rule obsolete 
C) policies that kick in at the wrong time may lead to undesirable results 
D) all of the above 
E) none of the above 
A) markets self-correct quickly so rules become obsolete 
B) unforeseen changes in the structure of the economy may make a rule obsolete 
C) policies that kick in at the wrong time may lead to undesirable results 
D) all of the above 
E) none of the above

Question 5

When households increase their personal savings ________.

Accepted Answer

A) investment decreases 
B) they are better able to cope with severe economic downturns 
C) interest rates are likely to rise,as well 
D) all of the above 
E) none of the above 
A) investment decreases 
B) they are better able to cope with severe economic downturns 
C) interest rates are likely to rise,as well 
D) all of the above 
E) none of the above

Question 6

An endogenous variable is typically ________.

Accepted Answer

A) strictly explained inside the model 
B) taken as given 
C) strictly explained outside the model 
D) constant inside the model 
E) explained by unemployment 
A) strictly explained inside the model 
B) taken as given 
C) strictly explained outside the model 
D) constant inside the model 
E) explained by unemployment

Question 7

Since World War II the U.S.________.

Accepted Answer

A) has seen a substantial increase in the inflation rate 
B) has seen less frequent periods of deflation 
C) has seen a significant upward trend in real GDP 
D) all of the above 
E) none of the above 
A) has seen a substantial increase in the inflation rate 
B) has seen less frequent periods of deflation 
C) has seen a significant upward trend in real GDP 
D) all of the above 
E) none of the above

Question 8

Policies to encourage higher personal saving rates include ________.

Accepted Answer

A) lowering income taxes 
B) lowering sales taxes 
C) increasing the quantity of money 
D) raising asset prices 
E) reducing interest rates 
A) lowering income taxes 
B) lowering sales taxes 
C) increasing the quantity of money 
D) raising asset prices 
E) reducing interest rates

Question 9

The U.S.personal saving rate ________.

Accepted Answer

A) is much higher than the percentage the Chinese citizens save 
B) is higher than the saving rate of most countries 
C) cannot fall below zero 
D) increased by a factor of five every year since the 1970s 
E) none of the above 
A) is much higher than the percentage the Chinese citizens save 
B) is higher than the saving rate of most countries 
C) cannot fall below zero 
D) increased by a factor of five every year since the 1970s 
E) none of the above

Question 10

The long-standing debate over rules versus discretion in macroeconomics centers on the following statement ________.

Accepted Answer

A) "discretionary policy can lead to bad long-run outcomes but rules lack flexibility in the short-run" 
B) "the speed with which the self-correcting mechanism in the economy acts is in question" 
C) "the speed with which unemployment tends to disappear is debatable" 
D) all of the above 
E) none of the above 
A) "discretionary policy can lead to bad long-run outcomes but rules lack flexibility in the short-run" 
B) "the speed with which the self-correcting mechanism in the economy acts is in question" 
C) "the speed with which unemployment tends to disappear is debatable" 
D) all of the above 
E) none of the above

Question 11

The Federal Reserve ________.

Accepted Answer

A) engages in stabilization policy by setting interest rates 
B) engages in fiscal policy by setting interest rates 
C) addresses financial crises by raising taxes 
D) all of the above 
E) none of the above 
A) engages in stabilization policy by setting interest rates 
B) engages in fiscal policy by setting interest rates 
C) addresses financial crises by raising taxes 
D) all of the above 
E) none of the above

Question 12

In the 2000s,the U.S.economy had both a ________ and a ________.

Accepted Answer

A) large trade deficit;large capital inflow 
B) large trade surplus;large capital inflow 
C) large trade deficit;high saving rate 
D) large capital inflow;high saving rate 
E) large capital inflow;small government budget deficit 
A) large trade deficit;large capital inflow 
B) large trade surplus;large capital inflow 
C) large trade deficit;high saving rate 
D) large capital inflow;high saving rate 
E) large capital inflow;small government budget deficit

Question 13

From 1929 to 2013,the unemployment rate in the U.S.________.

Accepted Answer

A) has continued to grow but has always remained well above zero 
B) has fluctuated around zero 
C) has gone up and down but has always remained well above zero 
D) has decreased in most recessions 
E) has grown by a factor of four 
A) has continued to grow but has always remained well above zero 
B) has fluctuated around zero 
C) has gone up and down but has always remained well above zero 
D) has decreased in most recessions 
E) has grown by a factor of four

Question 14

Since World War II the U.S.________.

Accepted Answer

A) has seen a substantial decrease in the inflation rate 
B) has seen frequent periods of deflation 
C) has seen significant variations in unemployment 
D) has seen real GDP grow slower,on average,than in the pre-war period 
E) none of the above 
A) has seen a substantial decrease in the inflation rate 
B) has seen frequent periods of deflation 
C) has seen significant variations in unemployment 
D) has seen real GDP grow slower,on average,than in the pre-war period 
E) none of the above

Question 15

To compare the conclusions of a model with what actually happens,historical data are entered into the model as ________.

Accepted Answer

A) endogenous variables 
B) exogenous variables 
C) equations 
D) predictions 
E) policies 
A) endogenous variables 
B) exogenous variables 
C) equations 
D) predictions 
E) policies

Question 16

Policies to keep inflation in check ________.

Accepted Answer

A) are,typically,fiscal policies 
B) are a potential cause of high unemployment 
C) are unlikely to be needed,so long as government spending remains high 
D) include increasing the quantities of money and saving 
E) are desirable in the short run,but may produce bad long-run outcomes 
A) are,typically,fiscal policies 
B) are a potential cause of high unemployment 
C) are unlikely to be needed,so long as government spending remains high 
D) include increasing the quantities of money and saving 
E) are desirable in the short run,but may produce bad long-run outcomes

Question 17

If a macroeconomist studying the causes of unemployment finds that,historically,changes in technology seem to have caused between five and 15 percent of changes in unemployment,then this macroeconomist is at which step in the process of developing an economic model?

Accepted Answer

A) Identify the exogenous variables. 
B) Identify the endogenous variables. 
C) Develop a model. 
D) Compare the model with the data. 
E) Conduct prediction and policy analysis. 
A) Identify the exogenous variables. 
B) Identify the endogenous variables. 
C) Develop a model. 
D) Compare the model with the data. 
E) Conduct prediction and policy analysis.

Question 18

Consider an economic policy regime in which rules are well-known but frequently ignored.Which of these statements is true?

Accepted Answer

A) This regime might work in the long-run,but is unlikely to produce good outcomes in the short run. 
B) Policymakers in this regime might find that rules are being broken with increasing frequency. 
C) This regime is more likely to be supported by nonactivist,than by activist policymakers. 
D) This regime is more likely to result in high unemployment than in high inflation. 
E) This regime is unlikely to produce large government budget deficits. 
A) This regime might work in the long-run,but is unlikely to produce good outcomes in the short run. 
B) Policymakers in this regime might find that rules are being broken with increasing frequency. 
C) This regime is more likely to be supported by nonactivist,than by activist policymakers. 
D) This regime is more likely to result in high unemployment than in high inflation. 
E) This regime is unlikely to produce large government budget deficits.

Question 19

Activists believe ________.

Accepted Answer

A) the self-correcting mechanism in the economy is very slow 
B) in the adoption of policies to eliminate excessive unemployment 
C) doing nothing will leave too many people out of work for too long 
D) all of the above 
E) none of the above 
A) the self-correcting mechanism in the economy is very slow 
B) in the adoption of policies to eliminate excessive unemployment 
C) doing nothing will leave too many people out of work for too long 
D) all of the above 
E) none of the above

Question 20

The old adage "rules are made to be broken" would typically be associated with economists who might advocate ________.

Accepted Answer

A) stabilization policy 
B) monetary policy 
C) rule-determined policy 
D) discretionary policy 
E) fiscal policy 
A) stabilization policy 
B) monetary policy 
C) rule-determined policy 
D) discretionary policy 
E) fiscal policy

Exam 1: The Policy and Practice of Macroeconomics

The U.S.central bank ________.

Which of these economies has the highest saving rate?

Policies to encourage higher personal saving rates include ________.

Opponents of rule-determined policies might point out that ________.

When households increase their personal savings ________.

An endogenous variable is typically ________.

Since World War II the U.S.________.

Policies to encourage higher personal saving rates include ________.

The U.S.personal saving rate ________.

The long-standing debate over rules versus discretion in macroeconomics centers on the following statement ________.

The Federal Reserve ________.

In the 2000s,the U.S.economy had both a ________ and a ________.

From 1929 to 2013,the unemployment rate in the U.S.________.

Since World War II the U.S.________.

To compare the conclusions of a model with what actually happens,historical data are entered into the model as ________.

Policies to keep inflation in check ________.

If a macroeconomist studying the causes of unemployment finds that,historically,changes in technology seem to have caused between five and 15 percent of changes in unemployment,then this macroeconomist is at which step in the process of developing an economic model?

Consider an economic policy regime in which rules are well-known but frequently ignored.Which of these statements is true?

Activists believe ________.

The old adage "rules are made to be broken" would typically be associated with economists who might advocate ________.

Measuring Macroeconomic Data

Aggregate Production and Productivity

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

The Aggregate Demand and Supply Model

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters

In the 2000s,the U.S.economy had both a and a .