Question 1

If we cannot accurately measure potential GDP:

Accepted Answer

A)  we might overestimate the severity of a recession 
B)  we may adopt the wrong fiscal or monetary policy 
C)  we will never know the true state of the economy 
D)  All of these answers are correct. 
E)  None of these answers are correct. 
A)  we might overestimate the severity of a recession 
B)  we may adopt the wrong fiscal or monetary policy 
C)  we will never know the true state of the economy 
D)  All of these answers are correct. 
E)  None of these answers are correct. D

Question 2

In the short run, tight monetary policy can:

Accepted Answer

A)  spur economic growth 
B)  adversely affect net exports 
C)  exacerbate inflation 
D)  promote net exports 
E)  All of these answers are correct. 
A)  spur economic growth 
B)  adversely affect net exports 
C)  exacerbate inflation 
D)  promote net exports 
E)  All of these answers are correct. B

Question 3

What problems are economics still trying to answer?

Accepted Answer

• Why do countries have different long-run growth rates?
• How do institutions contribute to economic goals?
• How can policymakers lock in credibility?
• How should we accurately measure potential output-and therefore short-run output-in practice, thereby alleviating policy errors?
• How should society best deal with fiscal deficits associated with recessions and health
expenditures?
• Why are financial markets susceptible to bubbles, and how should policymakers respond when bubbles appear to be present?

Question 4

Which of the following has NOT contributed to higher standards of living in the long run?

Accepted Answer

A)  productivity 
B)  investment in human capital 
C)  the stock of technology 
D)  investment in physical capital 
E)  None of these answers are correct. 
A)  productivity 
B)  investment in human capital 
C)  the stock of technology 
D)  investment in physical capital 
E)  None of these answers are correct.

Question 5

The Asian and Argentinean crises led China to maintain strict capital controls.

Accepted Answer

A) True 
 B)False

Question 6

As a country devotes more of its resources to education, we can expect output to stay constant for all time.

Accepted Answer

A) True 
 B)False

Question 7

In the long run, the unemployment rate is determined primarily by structural features of the labor market.

Accepted Answer

A) True 
 B)False

Question 8

As a country devotes more of its resources to education, we can expect:

Accepted Answer

A)  output to stay constant for all time 
B)  output to fall in the short run but rise in the long run 
C)  output to rise in the short run but fall in the long run 
D)  output to rise in the short and long run 
E)  higher rates of inflation 
A)  output to stay constant for all time 
B)  output to fall in the short run but rise in the long run 
C)  output to rise in the short run but fall in the long run 
D)  output to rise in the short and long run 
E)  higher rates of inflation

Question 9

Standards of living in the long run have been improved by:

Accepted Answer

A)  investment in physical and human capital 
B)  printing more money 
C)  higher inflation 
D)  lower nominal interest rates 
E)  population growth 
A)  investment in physical and human capital 
B)  printing more money 
C)  higher inflation 
D)  lower nominal interest rates 
E)  population growth

Question 10

Name at least three contributing factors to standards of living in the long run.

Accepted Answer

Any of the following are correct:
• inve

Question 11

In the long run, the classical dichotomy holds; there is no trade-off between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following has NOT contributed to higher standards of living in the long run?

Accepted Answer

A)  the stock of technology 
B)  investment in physical capital 
C)  investment in human capital 
D)  stable monetary policy 
E)  productivity 
A)  the stock of technology 
B)  investment in physical capital 
C)  investment in human capital 
D)  stable monetary policy 
E)  productivity

Question 13

In the late 1990s, it is likely that potential GDP grew faster than it had in the previous 20 years.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following has NOT contributed to higher standards of living in the long run?

Accepted Answer

A)  productivity 
B)  investment in physical capital 
C)  investment in human capital 
D)  the stock of technology 
E)  lower interest rates 
A)  productivity 
B)  investment in physical capital 
C)  investment in human capital 
D)  the stock of technology 
E)  lower interest rates

Question 15

If we cannot accurately measure potential GDP, we might overestimate the severity of a recession.

Accepted Answer

A) True 
 B)False

Question 16

When the government has a deficit, it can:

Accepted Answer

A)  borrow by issuing debt 
B)  engage in intertemporal substitution by issuing debt 
C)  print money, although it might not want to 
D)  All of these answers are correct. 
E)  None of these answers are correct. 
A)  borrow by issuing debt 
B)  engage in intertemporal substitution by issuing debt 
C)  print money, although it might not want to 
D)  All of these answers are correct. 
E)  None of these answers are correct.

Question 17

In the short run, tight monetary policy can exacerbate inflation.

Accepted Answer

A) True 
 B)False

Question 18

In the short run:

Accepted Answer

A)  inflation has inertia 
B)  the classical dichotomy holds 
C)  inflation adjusts instantly 
D)  inflation is governed only by money 
E)  output is always above potential 
A)  inflation has inertia 
B)  the classical dichotomy holds 
C)  inflation adjusts instantly 
D)  inflation is governed only by money 
E)  output is always above potential

Question 19

In the long run, the classical dichotomy holds that:

Accepted Answer

A)  money is not neutral 
B)  there is constant tension between inflation and unemployment 
C)  the inflation and unemployment rates are zero 
D)  steady-state growth is a constant 2 percent 
E)  there is no trade-off between inflation and real GDP 
A)  money is not neutral 
B)  there is constant tension between inflation and unemployment 
C)  the inflation and unemployment rates are zero 
D)  steady-state growth is a constant 2 percent 
E)  there is no trade-off between inflation and real GDP

Question 20

The policies used by a successful economy should be adopted by aspiring economies.

Accepted Answer

A) True 
 B)False

Exam 21: Parting Thoughts

If we cannot accurately measure potential GDP:

In the short run, tight monetary policy can:

What problems are economics still trying to answer?

Which of the following has NOT contributed to higher standards of living in the long run?

The Asian and Argentinean crises led China to maintain strict capital controls.

As a country devotes more of its resources to education, we can expect output to stay constant for all time.

In the long run, the unemployment rate is determined primarily by structural features of the labor market.

As a country devotes more of its resources to education, we can expect:

Standards of living in the long run have been improved by:

Name at least three contributing factors to standards of living in the long run.

In the long run, the classical dichotomy holds; there is no trade-off between inflation and unemployment.

Which of the following has NOT contributed to higher standards of living in the long run?

In the late 1990s, it is likely that potential GDP grew faster than it had in the previous 20 years.

Which of the following has NOT contributed to higher standards of living in the long run?

If we cannot accurately measure potential GDP, we might overestimate the severity of a recession.

When the government has a deficit, it can:

In the short run, tight monetary policy can exacerbate inflation.

In the short run:

In the long run, the classical dichotomy holds that:

The policies used by a successful economy should be adopted by aspiring economies.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Filters