Question 1

Macroeconomics is the study of ________ while microeconomics studies ________.

Accepted Answer

A) large business enterprises;small business ventures 
B) the overall household economic activity;market behavior 
C) an individual firm;the overall economic performance of a nation 
D) the overall economic performance of the world;the economy of a single country 
E) none of the above 
A) large business enterprises;small business ventures 
B) the overall household economic activity;market behavior 
C) an individual firm;the overall economic performance of a nation 
D) the overall economic performance of the world;the economy of a single country 
E) none of the above E

Question 2

Which of these is among the principal determinants of economic growth?

Accepted Answer

A) inflation 
B) the financial system 
C) the central bank 
D) the government budget deficit 
E) stabilization policy 
A) inflation 
B) the financial system 
C) the central bank 
D) the government budget deficit 
E) stabilization policy B

Question 3

Real GDP measures ________.

Accepted Answer

A) the total amount of income of every person and firm in the economy 
B) the percentage of income produced by workers and firms 
C) how rapidly the overall level of prices is rising 
D) how many hours the average U.S.citizen works a year 
E) how many automobiles are produced in a month 
A) the total amount of income of every person and firm in the economy 
B) the percentage of income produced by workers and firms 
C) how rapidly the overall level of prices is rising 
D) how many hours the average U.S.citizen works a year 
E) how many automobiles are produced in a month A

Question 4

In a macroeconomic model designed to explain why some countries grow faster than others,which of these variables is likely to be endogenous?

Accepted Answer

A) investment 
B) economic policies 
C) geographic size 
D) population 
E) none of the above 
A) investment 
B) economic policies 
C) geographic size 
D) population 
E) none of the above

Question 5

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 6

Real GDP measures ________.

Accepted Answer

A) the total hours the average U.S.citizen works a year 
B) the percentage of income produced by workers and firms 
C) how slowly interest rates grow 
D) the total market value of actual goods and services produced in an economy over a year 
E) how rapidly the overall level of prices is rising 
A) the total hours the average U.S.citizen works a year 
B) the percentage of income produced by workers and firms 
C) how slowly interest rates grow 
D) the total market value of actual goods and services produced in an economy over a year 
E) how rapidly the overall level of prices is rising

Question 7

An endogenous variable is typically ________.

Accepted Answer

A) taken as given 
B) strictly explained outside the model 
C) strictly explained inside the model 
D) strictly explained by data 
E) strictly explained by graphical analysis 
A) taken as given 
B) strictly explained outside the model 
C) strictly explained inside the model 
D) strictly explained by data 
E) strictly explained by graphical analysis

Question 8

The low saving rate in the United States is no cause for concern,so long as people in other countries are saving and are willing to send their savings into the U.S.economy by buying our assets.Comment.

Accepted Answer

Capital inflow does help to sustain inve

Question 9

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 10

Common sense suggests (and macroeconomists agree!)that sustained economic growth over extended time periods is more important than the economy's short-term fluctuations.Why,then,do macroeconomists (and policymakers,and the general public)care so much about the business cycle?

Accepted Answer

One reason is impatience.Periods of high

Question 11

An exogenous variable is typically ________.

Accepted Answer

A) not considered in an economic model 
B) only used to conduct policy analysis 
C) taken as given 
D) explained inside the model 
E) explained by interest rates 
A) not considered in an economic model 
B) only used to conduct policy analysis 
C) taken as given 
D) explained inside the model 
E) explained by interest rates

Question 12

Historically,the U.S.government seems to have ________.

Accepted Answer

A) run budget surpluses as often as budget deficits 
B) generally spent less than what it collected in taxes each year 
C) had difficulty running budget surpluses 
D) not needed to borrow to finance wars 
E) none of the above 
A) run budget surpluses as often as budget deficits 
B) generally spent less than what it collected in taxes each year 
C) had difficulty running budget surpluses 
D) not needed to borrow to finance wars 
E) none of the above

Question 13

A(n)________ variable is calculated from within the model.A(n)________ variable can never be taken as given.

Accepted Answer

A) endogenous;endogenous 
B) exogenous;endogenous 
C) endogenous;exogenous 
D) exogenous;exogenous 
E) none of the above 
A) endogenous;endogenous 
B) exogenous;endogenous 
C) endogenous;exogenous 
D) exogenous;exogenous 
E) none of the above

Question 14

If a macroeconomist studying the causes of unemployment suspects that changes in technology might play a role,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) Compare the model with the data. 
D) Conduct prediction and policy analysis. 
E) Develop a model. 
A) Identify the exogenous variables. 
B) Identify the endogenous variables. 
C) Compare the model with the data. 
D) Conduct prediction and policy analysis. 
E) Develop a model.

Question 15

An advantage of discretionary policy might be that ________.

Accepted Answer

A) it has been shown to be more efficient than rules 
B) it is more flexible than rules 
C) it requires a binding plan in advance to deal with economic problems 
D) all of the above 
E) none of the above 
A) it has been shown to be more efficient than rules 
B) it is more flexible than rules 
C) it requires a binding plan in advance to deal with economic problems 
D) all of the above 
E) none of the above

Question 16

Assume that a high proportion of recent college graduates decides to stay in school seeking advanced degrees,rather than confront the challenge of landing a good job in the midst of generally high unemployment.What is the direct impact of this behavior on the unemployment rate? In the longer term,what indirect impacts might there be on the unemployment rate?

Accepted Answer

Staying in school means that these gradu

Question 17

Macroeconomic models particularly focus on the following three economic data series.

Accepted Answer

A) endogenous variables,exogenous variables,and taxes 
B) inflation,unemployment,and business cycles 
C) nominal GDP,the employment rate,and budget deficits 
D) bankruptcies,the unemployment rate,and depressions 
E) none of the above 
A) endogenous variables,exogenous variables,and taxes 
B) inflation,unemployment,and business cycles 
C) nominal GDP,the employment rate,and budget deficits 
D) bankruptcies,the unemployment rate,and depressions 
E) none of the above

Question 18

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 19

Raising household savings could be beneficial because ________.

Accepted Answer

A) it translates into higher investment 
B) severe economic downturns can be "better-weathered" 
C) it provides a cushion to avoid bankruptcies 
D) all of the above 
E) none of the above 
A) it translates into higher investment 
B) severe economic downturns can be "better-weathered" 
C) it provides a cushion to avoid bankruptcies 
D) all of the above 
E) none of the above

Question 20

Policies to reduce the likelihood of financial crises might include ________.

Accepted Answer

A) enlarging government budget deficits 
B) reducing imbalances in global trade and capital flows 
C) keeping the inflation rate near or below zero 
D) more aggressive use of stabilization policy 
E) all of the above 
A) enlarging government budget deficits 
B) reducing imbalances in global trade and capital flows 
C) keeping the inflation rate near or below zero 
D) more aggressive use of stabilization policy 
E) all of the above

Exam 1: The Policy and Practice of Macroeconomics

Macroeconomics is the study of ________ while microeconomics studies ________.

Which of these is among the principal determinants of economic growth?

Real GDP measures ________.

In a macroeconomic model designed to explain why some countries grow faster than others,which of these variables is likely to be endogenous?

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

Real GDP measures ________.

An endogenous variable is typically ________.

The low saving rate in the United States is no cause for concern,so long as people in other countries are saving and are willing to send their savings into the U.S.economy by buying our assets.Comment.

Policies to encourage higher personal saving rates include ________.

Common sense suggests (and macroeconomists agree!)that sustained economic growth over extended time periods is more important than the economy's short-term fluctuations.Why,then,do macroeconomists (and policymakers,and the general public)care so much about the business cycle?

An exogenous variable is typically ________.

Historically,the U.S.government seems to have ________.

A(n)________ variable is calculated from within the model.A(n)________ variable can never be taken as given.

If a macroeconomist studying the causes of unemployment suspects that changes in technology might play a role,then this macroeconomist is at which step in the process of developing an economic model?

An advantage of discretionary policy might be that ________.

Macroeconomic models particularly focus on the following three economic data series.

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

Raising household savings could be beneficial because ________.

Policies to reduce the likelihood of financial crises might include ________.

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

Macroeconomics is the study of while microeconomics studies .

A(n) variable is calculated from within the model.A(n) variable can never be taken as given.