Question 1

An advantage of macroeconomic policy based on pre-specified rules might be that ________.

Accepted Answer

A) it is easier to stick to long-run considerations and avoid bad long-run outcomes 
B) it is more flexible than discretionary policy 
C) it is easier to adapt to short-run changes and avoid a bad short-run outcome 
D) all of the above 
E) none of the above 
A) it is easier to stick to long-run considerations and avoid bad long-run outcomes 
B) it is more flexible than discretionary policy 
C) it is easier to adapt to short-run changes and avoid a bad short-run outcome 
D) all of the above 
E) none of the above

Question 2

If a macroeconomist studying the causes of unemployment asserts that a particular change in technology will cause the rate of unemployment to decrease by ten percent,then this macroeconomist is at which step in the process of developing an economic model?

Accepted Answer

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

Question 3

Policies to encourage higher personal saving rates include ________.

Accepted Answer

A) raising income taxes 
B) raising sales taxes 
C) lowering taxes on pension plans 
D) A and B but not C 
E) B and C but not A 
A) raising income taxes 
B) raising sales taxes 
C) lowering taxes on pension plans 
D) A and B but not C 
E) B and C but not A

Question 4

A business manager who observes that prices in general keep rising might infer,correctly,that now is a good time to ________.

Accepted Answer

A) invest to expand the business 
B) raise the price of her product 
C) expect an increase in business profits 
D) expect a higher return on personal savings 
E) all of the above 
A) invest to expand the business 
B) raise the price of her product 
C) expect an increase in business profits 
D) expect a higher return on personal savings 
E) all of the above

Question 5

Which statement is true of an exogenous variable in an economic model?

Accepted Answer

A) It has no direct relation to the endogenous variables. 
B) Its value within the model cannot be changed. 
C) It is often a policy variable. 
D) It is explained inside the model. 
E) All of the above. 
A) It has no direct relation to the endogenous variables. 
B) Its value within the model cannot be changed. 
C) It is often a policy variable. 
D) It is explained inside the model. 
E) All of the above.

Question 6

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 7

Why might most people,as in the United States,save less than is good for themselves and for the economy as a whole? How might policymakers encourage more saving?

Accepted Answer

The saving rate is determined by incenti

Question 8

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 9

The Federal Reserve ________.

Accepted Answer

A) is the U.S.central bank 
B) controls the amount of money in the economy 
C) sets interest rates 
D) all of the above 
E) none of the above 
A) is the U.S.central bank 
B) controls the amount of money in the economy 
C) sets interest rates 
D) all of the above 
E) none of the above

Question 10

When households have very low savings ________.

Accepted Answer

A) investment decreases 
B) they are less able to cope with severe economic downturns 
C) bankruptcies increase 
D) all of the above 
E) none of the above 
A) investment decreases 
B) they are less able to cope with severe economic downturns 
C) bankruptcies increase 
D) all of the above 
E) none of the above

Question 11

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 12

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 13

Compared to other economies,the unemployment rate in the United States ________.

Accepted Answer

A) is relatively high 
B) is relatively low 
C) is remarkably stable 
D) is neither particularly high nor low 
E) varies too much for a reasonable comparison 
A) is relatively high 
B) is relatively low 
C) is remarkably stable 
D) is neither particularly high nor low 
E) varies too much for a reasonable comparison

Question 14

Economists apply the term "Great Inflation" to which decade?

Accepted Answer

A) 1930s 
B) 1940s 
C) 1950s 
D) 1960s 
E) 1970s 
A) 1930s 
B) 1940s 
C) 1950s 
D) 1960s 
E) 1970s

Question 15

An increase in government spending might be an example of a ________ policy for the purpose of ________.

Accepted Answer

A) monetary;lowering unemployment 
B) monetary;reducing inflation 
C) monetary;increasing saving 
D) fiscal;reducing inflation 
E) fiscal;lowering unemployment 
A) monetary;lowering unemployment 
B) monetary;reducing inflation 
C) monetary;increasing saving 
D) fiscal;reducing inflation 
E) fiscal;lowering unemployment

Question 16

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 17

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 18

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 19

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 20

The unemployment rate measures,at a point in time,the ________.

Accepted Answer

A) percentage of workers who do not have a job 
B) percentage of workers who do not have a job but are looking for work 
C) percentage of workers who stop working 
D) percentage of workers who are looking for work 
E) none of the above 
A) percentage of workers who do not have a job 
B) percentage of workers who do not have a job but are looking for work 
C) percentage of workers who stop working 
D) percentage of workers who are looking for work 
E) none of the above

Exam 1: The Policy and Practice of Macroeconomics

An advantage of macroeconomic policy based on pre-specified rules might be that ________.

If a macroeconomist studying the causes of unemployment asserts that a particular change in technology will cause the rate of unemployment to decrease by ten percent,then this macroeconomist is at which step in the process of developing an economic model?

Policies to encourage higher personal saving rates include ________.

A business manager who observes that prices in general keep rising might infer,correctly,that now is a good time to ________.

Which statement is true of an exogenous variable in an economic model?

Which of these economies has the highest saving rate?

Why might most people,as in the United States,save less than is good for themselves and for the economy as a whole? How might policymakers encourage more saving?

An endogenous variable is typically ________.

The Federal Reserve ________.

When households have very low savings ________.

Since World War II the U.S.________.

The Federal Reserve ________.

Compared to other economies,the unemployment rate in the United States ________.

Economists apply the term "Great Inflation" to which decade?

An increase in government spending might be an example of a ________ policy for the purpose of ________.

The U.S.central bank ________.

Policies to keep inflation in check ________.

Policies to encourage higher personal saving rates include ________.

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?

The unemployment rate measures,at a point in time,the ________.

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

An increase in government spending might be an example of a policy for the purpose of .