Question 1

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 D

Question 2

Which of the following is NOT one of the questions left unanswered at the end of the text?

Accepted Answer

A)  What are the best institutions in a wide range of settings? 
B)  Why do countries have different investment rates, technologies, and total factor productivity levels? 
C)  What is the relationship between money and output in the very long run? 
D)  How can policymakers lock in the credibility gains in monetary policy and the low inflation that have been achieved? 
E)  How do we measure potential output, and therefore short-run output, in practice? 
A)  What are the best institutions in a wide range of settings? 
B)  Why do countries have different investment rates, technologies, and total factor productivity levels? 
C)  What is the relationship between money and output in the very long run? 
D)  How can policymakers lock in the credibility gains in monetary policy and the low inflation that have been achieved? 
E)  How do we measure potential output, and therefore short-run output, in practice? C

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

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.

Question 5

In the late 1990s, it was likely that:

Accepted Answer

A)  the GDP gap was almost zero. 
B)  actual GDP grew more slowly than it had in the previous 20 years. 
C)  the GDP gap was larger than it had been in the previous 20 years. 
D)  potential GDP grew faster than it had in the previous 20 years. 
E)  None of these answers is correct. 
A)  the GDP gap was almost zero. 
B)  actual GDP grew more slowly than it had in the previous 20 years. 
C)  the GDP gap was larger than it had been in the previous 20 years. 
D)  potential GDP grew faster than it had in the previous 20 years. 
E)  None of these answers is correct.

Question 6

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

Accepted Answer

Any of the following are correct:
• inve

Question 7

The accurate calculation of potential output is important because:

Accepted Answer

A)  it is necessary to calculate the size of short-run output fluctuations. 
B)  we need it to find inflation rates. 
C)  policymakers can make serious errors about the state of the economy. 
D)  without it, we cannot determine long-run growth rates. 
E)  All of these answers are correct. 
A)  it is necessary to calculate the size of short-run output fluctuations. 
B)  we need it to find inflation rates. 
C)  policymakers can make serious errors about the state of the economy. 
D)  without it, we cannot determine long-run growth rates. 
E)  All of these answers are correct.

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

What problems are macroeconomists still trying to answer?

Accepted Answer

• Why do countries have different long-r

Question 11

The Asian and Argentinean crises have led China to:

Accepted Answer

A)  rely on inflation taxes. 
B)  allow its currency to float. 
C)  decrease its domestic investment. 
D)  maintain strict capital controls. 
E)  keep interest rates close to zero. 
A)  rely on inflation taxes. 
B)  allow its currency to float. 
C)  decrease its domestic investment. 
D)  maintain strict capital controls. 
E)  keep interest rates close to zero.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Different rates of economic growth across countries reflect:

Accepted Answer

A)  differences in saving rates. 
B)  differences in initial endowments. 
C)  the principle of transition dynamics. 
D)  All of these answers are correct. 
E)  None of these answers is correct. 
A)  differences in saving rates. 
B)  differences in initial endowments. 
C)  the principle of transition dynamics. 
D)  All of these answers are correct. 
E)  None of these answers is correct.

Question 14

In the long run, real GDP is determined by very low rates of unemployment.

Accepted Answer

A) True 
 B)False

Question 15

According to the principle of transition dynamics, we should expect China's economy to:

Accepted Answer

A)  grow at a relatively high rate forever. 
B)  grow relatively slowly now but speed up over time. 
C)  grow relatively fast now but slow down over time. 
D)  catch up to the United States in the next 50 years or so. 
E)  reach its steady state by the year 2100. 
A)  grow at a relatively high rate forever. 
B)  grow relatively slowly now but speed up over time. 
C)  grow relatively fast now but slow down over time. 
D)  catch up to the United States in the next 50 years or so. 
E)  reach its steady state by the year 2100.

Question 16

With economic growth, we should see low income countries like China and India:

Accepted Answer

A)  pollute less. 
B)  see significant brain drain. 
C)  contribute to the global stock of knowledge. 
D)  demand fewer natural resources. 
E)  begin to close their economies to trade. 
A)  pollute less. 
B)  see significant brain drain. 
C)  contribute to the global stock of knowledge. 
D)  demand fewer natural resources. 
E)  begin to close their economies to trade.

Question 17

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 runs. 
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 runs. 
E)  higher rates of inflation.

Question 18

Standards of living in the long run have been improved by higher inflation.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 21: Parting Thoughts

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

Which of the following is NOT one of the questions left unanswered at the end of the text?

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

In the short run, tight monetary policy can:

In the late 1990s, it was likely that:

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

The accurate calculation of potential output is important because:

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

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

What problems are macroeconomists still trying to answer?

The Asian and Argentinean crises have led China to:

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

Different rates of economic growth across countries reflect:

In the long run, real GDP is determined by very low rates of unemployment.

According to the principle of transition dynamics, we should expect China's economy to:

With economic growth, we should see low income countries like China and India:

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

Standards of living in the long run have been improved by higher inflation.

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

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

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