Question 1

Why do we call macroeconomics an imperfect science? Explain.

Accepted Answer

The study of macroeconomics depends main

Question 2

All of the following are important macroeconomic variables except:

Accepted Answer

A)  real GDP. 
B)  the unemployment rate. 
C)  the marginal rate of substitution. 
D)  the inflation rate. 
A)  real GDP. 
B)  the unemployment rate. 
C)  the marginal rate of substitution. 
D)  the inflation rate.

Question 3

Do you agree with the statement, "macroeconomics rests on the foundation of microeconomics"? Explain.

Accepted Answer

Macroeconomics involves studying the agg

Question 4

During the period between 1900 and 2000, the unemployment rate in the United States was highest in the:

Accepted Answer

A)  1920s. 
B)  1930s. 
C)  1970s. 
D)  1980s. 
A)  1920s. 
B)  1930s. 
C)  1970s. 
D)  1980s.

Question 5

An assumption of _______ is more plausible for studying the short-run behavior of the economy, while an assumption of ______ is more plausible for studying the long-run, equilibrium behavior of the economy.

Accepted Answer

A)  deflation; inflation 
B)  inflation; deflation 
C)  flexible prices; sticky prices 
D)  sticky prices; flexible prices 
A)  deflation; inflation 
B)  inflation; deflation 
C)  flexible prices; sticky prices 
D)  sticky prices; flexible prices

Question 6

All of the following are types of macroeconomics data except the:

Accepted Answer

A)  price of an IBM computer. 
B)  growth rate of real GDP. 
C)  inflation rate. 
D)  unemployment rate. 
A)  price of an IBM computer. 
B)  growth rate of real GDP. 
C)  inflation rate. 
D)  unemployment rate.

Question 7

Real GDP ______ over time and the growth rate of real GDP ______.

Accepted Answer

A)  grows; fluctuates 
B)  is steady; is steady 
C)  grows; is steady 
D)  is steady; fluctuates 
A)  grows; fluctuates 
B)  is steady; is steady 
C)  grows; is steady 
D)  is steady; fluctuates

Question 8

What is the difference between recession and depression in an economy? Provide an example of depression from the real world that has hit the global economy.

Accepted Answer

When there is a mild fall in the gross d

Question 9

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

Accepted Answer

An exogenous variable is the variable wh

Question 10

In a simple model of the supply and demand for pizza, when the price of cheese increases, the price of pizza ______ and the quantity purchased ______.

Accepted Answer

A)  increases; increases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; decreases 
A)  increases; increases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; decreases

Question 11

Are the terms "market clearing" and "equilibrium" one and the same? Explain.

Accepted Answer

Yes, both terms represent the same notio

Question 12

A graph of the U.S. unemployment rate over the twentieth century shows:

Accepted Answer

A)  an overall upward trend in the unemployment rate interrupted by a large upturn in the 1930s. 
B)  an overall downward trend in the unemployment rate interrupted by a large upturn in the 1930s. 
C)  rates of unemployment always greater than zero with substantial variations from year to year. 
D)  alternating periods of positive and negative rates of unemployment. 
A)  an overall upward trend in the unemployment rate interrupted by a large upturn in the 1930s. 
B)  an overall downward trend in the unemployment rate interrupted by a large upturn in the 1930s. 
C)  rates of unemployment always greater than zero with substantial variations from year to year. 
D)  alternating periods of positive and negative rates of unemployment.

Question 13

Macroeconomic models:

Accepted Answer

A)  assume all wages and prices are sticky. 
B)  assume all wages and prices are flexible. 
C)  make different assumptions to explain different aspects of the macroeconomy. 
D)  focus primarily on the optimizing behavior of households and firms. 
A)  assume all wages and prices are sticky. 
B)  assume all wages and prices are flexible. 
C)  make different assumptions to explain different aspects of the macroeconomy. 
D)  focus primarily on the optimizing behavior of households and firms.

Question 14

Macroeconomics is:

Accepted Answer

A)  based on microeconomic foundations. 
B)  completely separate from microeconomics. 
C)  explicitly based on microeconomic behavior. 
D)  a subsidiary branch of microeconomics. 
A)  based on microeconomic foundations. 
B)  completely separate from microeconomics. 
C)  explicitly based on microeconomic behavior. 
D)  a subsidiary branch of microeconomics.

Question 15

A period of falling prices is called:

Accepted Answer

A)  deflation. 
B)  inflation. 
C)  a depression. 
D)  a recession. 
A)  deflation. 
B)  inflation. 
C)  a depression. 
D)  a recession.

Question 16

Macroeconomics is the study of the:

Accepted Answer

A)  activities of individual units of the economy. 
B)  decision making by households and firms. 
C)  economy as a whole. 
D)  interaction of firms and households in the marketplace. 
A)  activities of individual units of the economy. 
B)  decision making by households and firms. 
C)  economy as a whole. 
D)  interaction of firms and households in the marketplace.

Question 17

Macroeconomics is based on microeconomics for all of the following reasons except:

Accepted Answer

A)  when we study the economy as a whole, we must consider the decisions of individual economic actors. 
B)  aggregate variables are simply the sum of variables describing many individual decisions. 
C)  macroeconomic decision makers, when they make their choices, are required to maximize utility functions. 
D)  to understand the determinants of aggregate investment, we must think about a firm's deciding whether to build a new factory. 
A)  when we study the economy as a whole, we must consider the decisions of individual economic actors. 
B)  aggregate variables are simply the sum of variables describing many individual decisions. 
C)  macroeconomic decision makers, when they make their choices, are required to maximize utility functions. 
D)  to understand the determinants of aggregate investment, we must think about a firm's deciding whether to build a new factory.

Question 18

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

Accepted Answer

A)  from minute to minute. 
B)  from year to year. 
C)  in the long run. 
D)  in the short run. 
A)  from minute to minute. 
B)  from year to year. 
C)  in the long run. 
D)  in the short run.

Question 19

Which of the following is the best example of a sticky price?

Accepted Answer

A)  the price of a barrel of oil 
B)  the price of the U.S. dollar in terms of euros 
C)  the price of a share of stock 
D)  the price of a soda in a vending machine 
A)  the price of a barrel of oil 
B)  the price of the U.S. dollar in terms of euros 
C)  the price of a share of stock 
D)  the price of a soda in a vending machine

Question 20

The total income of everyone in the economy adjusted for the level of base year prices is called:

Accepted Answer

A)  a recession. 
B)  an inflation. 
C)  real GDP. 
D)  a business fluctuation. 
A)  a recession. 
B)  an inflation. 
C)  real GDP. 
D)  a business fluctuation.

Why do we call macroeconomics an imperfect science? Explain.

All of the following are important macroeconomic variables except:

Do you agree with the statement, "macroeconomics rests on the foundation of microeconomics"? Explain.

During the period between 1900 and 2000, the unemployment rate in the United States was highest in the:

An assumption of _ is more plausible for studying the short-run behavior of the economy, while an assumption of is more plausible for studying the long-run, equilibrium behavior of the economy.

All of the following are types of macroeconomics data except the:

Real GDP over time and the growth rate of real GDP .

What is the difference between recession and depression in an economy? Provide an example of depression from the real world that has hit the global economy.

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

In a simple model of the supply and demand for pizza, when the price of cheese increases, the price of pizza and the quantity purchased .

Are the terms "market clearing" and "equilibrium" one and the same? Explain.

A graph of the U.S. unemployment rate over the twentieth century shows:

Macroeconomic models:

Macroeconomics is:

A period of falling prices is called:

Macroeconomics is the study of the:

Macroeconomics is based on microeconomics for all of the following reasons except:

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

Which of the following is the best example of a sticky price?

The total income of everyone in the economy adjusted for the level of base year prices is called:

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand Ii: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

Exam 1: The Science of Macroeconomics

Why do we call macroeconomics an imperfect science? Explain.

All of the following are important macroeconomic variables except:

Do you agree with the statement, "macroeconomics rests on the foundation of microeconomics"? Explain.

During the period between 1900 and 2000, the unemployment rate in the United States was highest in the:

An assumption of _______ is more plausible for studying the short-run behavior of the economy, while an assumption of ______ is more plausible for studying the long-run, equilibrium behavior of the economy.

All of the following are types of macroeconomics data except the:

Real GDP ______ over time and the growth rate of real GDP ______.

What is the difference between recession and depression in an economy? Provide an example of depression from the real world that has hit the global economy.

What is an exogenous variable? Illustrate with graphs the effect of a change in the exogenous variable on a demand and supply relationship. Mark the x-axis and y-axis clearly.

In a simple model of the supply and demand for pizza, when the price of cheese increases, the price of pizza ______ and the quantity purchased ______.

Are the terms "market clearing" and "equilibrium" one and the same? Explain.

A graph of the U.S. unemployment rate over the twentieth century shows:

Macroeconomic models:

Macroeconomics is:

A period of falling prices is called:

Macroeconomics is the study of the:

Macroeconomics is based on microeconomics for all of the following reasons except:

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

Which of the following is the best example of a sticky price?

The total income of everyone in the economy adjusted for the level of base year prices is called:

The Data of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labor Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand Ii: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Understanding Consumer Behavior

The Theory of Investment

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

Filters

An assumption of _ is more plausible for studying the short-run behavior of the economy, while an assumption of is more plausible for studying the long-run, equilibrium behavior of the economy.

Real GDP over time and the growth rate of real GDP .

In a simple model of the supply and demand for pizza, when the price of cheese increases, the price of pizza and the quantity purchased .