Question 1

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 2

To compare the conclusions of a model with what actually happens, historical data are entered into the model as ________.

Accepted Answer

A)  endogenous variables 
B)  exogenous variables 
C)  equations 
D)  predictions 
E)  policies 
A)  endogenous variables 
B)  exogenous variables 
C)  equations 
D)  predictions 
E)  policies

Question 3

Which of these is not among the principal determinants of economic growth?

Accepted Answer

A)  institutions 
B)  education 
C)  research and development 
D)  balanced trade 
E)  saving and investment 
A)  institutions 
B)  education 
C)  research and development 
D)  balanced trade 
E)  saving and investment

Question 4

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 5

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 6

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 7

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 8

Since 1930 the period of highest government budget deficits for the U.S. took place in ________.

Accepted Answer

A)  the 1930s 
B)  the 1940s 
C)  the 1950s 
D)  the 1980s 
E)  the 1990s 
A)  the 1930s 
B)  the 1940s 
C)  the 1950s 
D)  the 1980s 
E)  the 1990s

Question 9

By 2010, the U.S. economy had emerged from the recession that had begun in 2007. Despite an economic growth rate well above zero, unemployment showed little sign of declining much below ten percent. Focusing on the definition of the unemployment rate, explain how it is possible to have positive economic growth without declining unemployment.

Accepted Answer

To lower the unemployment rate, the numb

Question 10

The percentage of income that Americans save each year ________.

Accepted Answer

A)  is much higher than the percentage the Chinese citizens save 
B)  is higher than the saving rate of most industrialized countries 
C)  is lower than the saving rate of most industrialized countries 
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 industrialized countries 
C)  is lower than the saving rate of most industrialized countries 
D)  increased by a factor of five every year since the 1970s 
E)  none of the above

Question 11

In the Great Depression of the 1930s, the unemployment rate in the U.S. climbed to what percentage?

Accepted Answer

A)  5 
B)  10 
C)  15 
D)  20 
E)  25 
A)  5 
B)  10 
C)  15 
D)  20 
E)  25

Question 12

The term "business cycle" refers to ________.

Accepted Answer

A)  the opening and eventual closing down of businesses 
B)  the rising and later declining of the purchasing power of the dollar 
C)  the acquiring of raw materials and ultimate selling of a finished product 
D)  the tendency for rich economies to be inevitably out-paced by other economies 
E)  the slowing and eventual accelerating of economic growth 
A)  the opening and eventual closing down of businesses 
B)  the rising and later declining of the purchasing power of the dollar 
C)  the acquiring of raw materials and ultimate selling of a finished product 
D)  the tendency for rich economies to be inevitably out-paced by other economies 
E)  the slowing and eventual accelerating of economic growth

Question 13

Since World War II the U.S. ________.

Accepted Answer

A)  has seen a substantial increase in the inflation rate 
B)  has seen less frequent periods of deflation 
C)  has seen real GDP grow as fast, on average, as in the pre-war period 
D)  all of the above 
E)  none of the above 
A)  has seen a substantial increase in the inflation rate 
B)  has seen less frequent periods of deflation 
C)  has seen real GDP grow as fast, on average, as in the pre-war period 
D)  all of the above 
E)  none of the above

Question 14

Develop a simple model of inflation by identifying at least two exogenous variables and describing, briefly, how the value of these exogenous variables will impact the rate of increase in the overall level of prices in the economy.

Accepted Answer

Answers will vary. The most appropriate

Question 15

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 16

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 17

From 1900 to 2010 real GDP per person in the U.S. has ________.

Accepted Answer

A)  doubled 
B)  grown by a factor of four 
C)  grown by a factor of eight 
D)  grown by a factor of twenty 
E)  declined 
A)  doubled 
B)  grown by a factor of four 
C)  grown by a factor of eight 
D)  grown by a factor of twenty 
E)  declined

Question 18

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 19

All governments face a budget constraint: none can spend more than the sum of current government revenues plus the amount that creditors are willing to lend. Why, then, do government budget deficits matter?

Accepted Answer

Deficits matter because they are costly,

Question 20

Which of the following sequences best describes the five necessary steps to develop an economic model in the correct order?

Accepted Answer

A)  (1): Identify the endogenous variables; (2): identify the exogenous variables; (3): develop a model; (4): compare the model with the data; (5): conduct prediction and policy analysis. 
B)  (1): Develop a model; (2): identify the exogenous variables; (3): identify the endogenous variables; (4): compare the model with the data; (5): conduct prediction and policy analysis. 
C)  (1): Conduct prediction and policy analysis; (2): develop a model; (3): identify the endogenous variables; (4): identify the exogenous variables; (5): compare the model with the data. 
D)  (1): Conduct prediction and policy analysis; (2): compare the model with the data; (3):identify the endogenous variables; (4): identify the exogenous variables; (5): develop a model. 
E)  none of the above 
A)  (1): Identify the endogenous variables; (2): identify the exogenous variables; (3): develop a model; (4): compare the model with the data; (5): conduct prediction and policy analysis. 
B)  (1): Develop a model; (2): identify the exogenous variables; (3): identify the endogenous variables; (4): compare the model with the data; (5): conduct prediction and policy analysis. 
C)  (1): Conduct prediction and policy analysis; (2): develop a model; (3): identify the endogenous variables; (4): identify the exogenous variables; (5): compare the model with the data. 
D)  (1): Conduct prediction and policy analysis; (2): compare the model with the data; (3):identify the endogenous variables; (4): identify the exogenous variables; (5): develop a model. 
E)  none of the above

Exam 1: The Policy and Practice of Macroeconomics

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

To compare the conclusions of a model with what actually happens, historical data are entered into the model as ________.

Which of these is not among the principal determinants of economic growth?

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?

The U.S. central bank ________.

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

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

Since 1930 the period of highest government budget deficits for the U.S. took place in ________.

The percentage of income that Americans save each year ________.

In the Great Depression of the 1930s, the unemployment rate in the U.S. climbed to what percentage?

The term "business cycle" refers to ________.

Since World War II the U.S. ________.

Develop a simple model of inflation by identifying at least two exogenous variables and describing, briefly, how the value of these exogenous variables will impact the rate of increase in the overall level of prices in the economy.

Policies to encourage higher personal saving rates include ________.

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

From 1900 to 2010 real GDP per person in the U.S. has ________.

When households have very low savings ________.

All governments face a budget constraint: none can spend more than the sum of current government revenues plus the amount that creditors are willing to lend. Why, then, do government budget deficits matter?

Which of the following sequences best describes the five necessary steps to develop an economic model in the correct order?

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