Question 1

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

Question 2

The U.S. personal saving rate ________.

Accepted Answer

A)  is much higher than the percentage the Chinese citizens save 
B)  is higher than the saving rate of most countries 
C)  cannot fall below zero. 
D)  increased by a factor of five every year since the 1970s 
E)  none of the above 
A)  is much higher than the percentage the Chinese citizens save 
B)  is higher than the saving rate of most countries 
C)  cannot fall below zero. 
D)  increased by a factor of five every year since the 1970s 
E)  none of the above

Question 3

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 4

Up until World War II inflation in the U.S. ________.

Accepted Answer

A)  remained around zero on average 
B)  rose and remained quite high for an extended period of time 
C)  has gone up and down but has always remained well above zero 
D)  increased by a factor of four every year 
E)  decreased by 30% every year 
A)  remained around zero on average 
B)  rose and remained quite high for an extended period of time 
C)  has gone up and down but has always remained well above zero 
D)  increased by a factor of four every year 
E)  decreased by 30% every year

Question 5

Apart from the Great Depression of the 1930s, which decade saw the largest rise in unemployment in the U.S.?

Accepted Answer

A)  1950s 
B)  1970s 
C)  1980s 
D)  1990s 
E)  2000s 
A)  1950s 
B)  1970s 
C)  1980s 
D)  1990s 
E)  2000s

Question 6

What explains the rise in income in the U.S. between 1900 and 2010?

Accepted Answer

A)  business cycles 
B)  inflation 
C)  recessions 
D)  depressions 
E)  none of the above 
A)  business cycles 
B)  inflation 
C)  recessions 
D)  depressions 
E)  none of the above

Question 7

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 8

Financial crises are typically ________.

Accepted Answer

A)  characterized by sharp declines in asset prices 
B)  associated with increases in business failures 
C)  accompanied by sharp economic downturns 
D)  all of the above 
E)  none of the above 
A)  characterized by sharp declines in asset prices 
B)  associated with increases in business failures 
C)  accompanied by sharp economic downturns 
D)  all of the above 
E)  none of the above

Question 9

From 1929 to 2010, the unemployment rate in the U.S. ________.

Accepted Answer

A)  has continued to grow but has always remained well above zero 
B)  has fluctuated around zero 
C)  has gone up and down but has always remained well above zero 
D)  has decreased in most recessions 
E)  has grown by a factor of four 
A)  has continued to grow but has always remained well above zero 
B)  has fluctuated around zero 
C)  has gone up and down but has always remained well above zero 
D)  has decreased in most recessions 
E)  has grown by a factor of four

Question 10

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 11

Fiscal policy involves ________.

Accepted Answer

A)  taxes and government spending 
B)  setting interest rates 
C)  controlling the amount of money in the economy 
D)  all of the above 
E)  none of the above 
A)  taxes and government spending 
B)  setting interest rates 
C)  controlling the amount of money in the economy 
D)  all of the above 
E)  none of the above

Question 12

Nonactivists propose doing nothing in the face of economic hardship because ________.

Accepted Answer

A)  activist policies can kick in at the wrong time and be counterproductive 
B)  markets can take quite a bit of time to self-correct 
C)  while households feel the hardship, firms typically benefit 
D)  all of the above 
E)  none of the above 
A)  activist policies can kick in at the wrong time and be counterproductive 
B)  markets can take quite a bit of time to self-correct 
C)  while households feel the hardship, firms typically benefit 
D)  all of the above 
E)  none of the above

Question 13

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 14

The old adage "rules are made to be broken" would typically be associated with economists who might advocate ________.

Accepted Answer

A)  stabilization policy 
B)  monetary policy 
C)  rule-determined policy 
D)  discretionary policy 
E)  fiscal policy 
A)  stabilization policy 
B)  monetary policy 
C)  rule-determined policy 
D)  discretionary policy 
E)  fiscal policy

Question 15

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 16

From 1900 to 2010 real GDP per person has had two important attributes.

Accepted Answer

A)  It has grown substantially over time and there are small differences from country to country 
B)  It has grown unevenly over time in the U.S. but it has grown substantially. 
C)  It has grown evenly over time in the U.S. and there are huge differences from country to country 
D)  It has fluctuated around a trend in the U.S. but it has not grown much for all the Southeast Asian countries 
E)  It has doubled in the U.S. but there have been many recession periods 
A)  It has grown substantially over time and there are small differences from country to country 
B)  It has grown unevenly over time in the U.S. but it has grown substantially. 
C)  It has grown evenly over time in the U.S. and there are huge differences from country to country 
D)  It has fluctuated around a trend in the U.S. but it has not grown much for all the Southeast Asian countries 
E)  It has doubled in the U.S. but there have been many recession periods

Question 17

Activist policymakers, compared to nonactivists, are more likely to emphasize ________ considerations and to prefer ________.

Accepted Answer

A)  short-run; rule-determined 
B)  long-run; discretionary policy 
C)  short-run; discretionary policy 
D)  long-run; rule determined 
E)  business; flexible plans 
A)  short-run; rule-determined 
B)  long-run; discretionary policy 
C)  short-run; discretionary policy 
D)  long-run; rule determined 
E)  business; flexible plans

Question 18

Cutting income taxes without decreasing spending ________.

Accepted Answer

A)  might give households and firms more incentives to work hard 
B)  could encourage households to save more and purchase government bonds 
C)  could lead to additional savings the government can use to finance deficits without printing money 
D)  all of the above 
E)  none of the above 
A)  might give households and firms more incentives to work hard 
B)  could encourage households to save more and purchase government bonds 
C)  could lead to additional savings the government can use to finance deficits without printing money 
D)  all of the above 
E)  none of the above

Question 19

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 20

Macroeconomics is the study of ________ while microeconomics studies ________.

Accepted Answer

A)  an individual firm; the overall economic performance of a nation 
B)  the overall economic performance of the world; the economy of a single country 
C)  the overall economic activity and prices; an individual firm, household, or market 
D)  firm choices; market behavior 
E)  consumer choices; government behavior 
A)  an individual firm; the overall economic performance of a nation 
B)  the overall economic performance of the world; the economy of a single country 
C)  the overall economic activity and prices; an individual firm, household, or market 
D)  firm choices; market behavior 
E)  consumer choices; government behavior

Exam 1: The Policy and Practice of Macroeconomics

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

The U.S. personal saving rate ________.

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

Up until World War II inflation in the U.S. ________.

Apart from the Great Depression of the 1930s, which decade saw the largest rise in unemployment in the U.S.?

What explains the rise in income in the U.S. between 1900 and 2010?

Policies to keep inflation in check ________.

Financial crises are typically ________.

From 1929 to 2010, the unemployment rate in the U.S. ________.

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?

Fiscal policy involves ________.

Nonactivists propose doing nothing in the face of economic hardship because ________.

An endogenous variable is typically ________.

The old adage "rules are made to be broken" would typically be associated with economists who might advocate ________.

An exogenous variable is typically ________.

From 1900 to 2010 real GDP per person has had two important attributes.

Activist policymakers, compared to nonactivists, are more likely to emphasize ________ considerations and to prefer ________.

Cutting income taxes without decreasing spending ________.

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

Macroeconomics is the study of ________ while microeconomics studies ________.

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

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

Activist policymakers, compared to nonactivists, are more likely to emphasize considerations and to prefer .

Macroeconomics is the study of while microeconomics studies .