Deck 1: Introduction to Macroeconomics

Question 1

Consider the following model of the labor market:
Labor supply:
Labor demand:
The endogenous variables are

A) and .
B) and the equilibrium wage,w.
C) and the equilibrium wage,w.
D)the equilibrium quantity of labor,L,and wage,w.
E) and the equilibrium quantity of labor,L.

Answer 1

D

Question 2

Which of the following does macroeconomics endeavor to answer?
I)Why is the typical person in the United States today more than ten times richer than the typical person a century ago?
Ii)Why has the unemployment rate been nearly twice as high in Europe as in the United States in recent years?
Iii)What determines the rate of inflation? What determines how rapidly the overall price level in an economy is increasing?

A)i only
B)i,ii,and iii
C)ii only
D)i and ii
E)ii and iii

Answer 2

B

Question 3

Consider the following model of the labor market:
Labor supply:
Labor demand:
The values of the equilibrium quantity of labor,L,and wage,w,are:

A) ; .
B) ; .
C) ; .
D) ; .
E) ; .

Answer 3

A

Question 4

The three main variables we discuss in the short run are:

A)economic fluctuations;interest rates;unemployment.
B)economic fluctuations;inflation;money.
C)economic fluctuations;inflation;unemployment.
D)interest rates;money supply;taxes.
E)economic fluctuations;interest rates;money.

Question 5

Which of the following does macroeconomics not endeavor to answer?
I)Why is the typical person in the United States today more than ten times richer than the typical person a century ago?
Ii)Why has the unemployment rate been nearly twice as high in Europe as in the United States in recent years?
Iii)Why has the price of orange juice risen sharply?

A)ii and iii
B)i only
C)ii only
D)i,ii,and iii
E)iii only

Question 6

Macroeconomic is to microeconomic what __________ is to __________.

A)cosmology;particle physics
B)particle physics;cosmology
C)physics;biology
D)chemistry;organic chemistry
E)biology;zoology

Question 7

Actual GDP is __________ to potential GDP.

A)rarely not equal
B)always equal
C)always not equal
D)rarely equal
E)Not enough information is given.

Question 8

Consider the following model of the labor market:
Labor supply:
Labor demand:
)
The value of the equilibrium quantity of labor,L,and wage,w,are:

A) ; .
B)L* = 5;w* = 6.
C)L* = 6;w* = 5.
D)L* = 6;w* = 6.
E)Not enough information is given.

Question 9

Which of the following lists the four steps we use to study macroeconomic behavior in the correct order?

A)(1)document the facts; (2)develop a model; (3) compare the predictions of the model to the original facts; (4)use the model to make other predictions that may eventually be tested
B)(1)document the facts; (2)use the model to make other predictions that may eventually be tested; (3)compare the predictions of the model to the original facts; (4)develop a model
C)(1)compare the predictions of the model to the original facts; (2)develop a model; (3)document the facts; (4)use the model to make other predictions that may eventually be tested
D)(1)develop a model; (2)document the facts; (3)compare the predictions of the model to the original facts; (4)use the model to make other predictions that may eventually be tested
E)None of the above

Question 10

The short run is concerned with __________ while the long run is concerned with __________.

A)inflation;unemployment
B)causes of economic fluctuations;inflation
C)causes of economic fluctuations;determinants of economic growth
D)determinants of economic growth;causes of economic fluctuations
E)causes of economic fluctuations;the money supply

Question 11

__________ variables are parameters to the model and generally are fixed over time,while __________ variables are the outcome of the model.

A)Shocks;parameters
B)Endogenous;exogenous
C)Endogenous;shocks
D)Exogenous;endogenous
E)Parameters;system

Question 12

Which of the following questions should a successful model predict?
I)Why,in general,do Americans have higher incomes than Africans?
Ii)How much less unemployment is there during an economic expansion?
Iii)Why does the United States have a lower unemployment rate than Europe?

A)i and ii
B)ii only
C)iii only
D)i,ii,and iii
E)i and iii

Question 13

When we look at the __________ we are concerned with __________.

A)long run;money supply
B)long run;causes of economic fluctuations
C)long run;causes of economic growth
D)long run;causes of inflation
E)long run;unemployment

Question 14

Macroeconomics is the study of __________ while microeconomics studies __________.

A)the cosmos;particle physics
B)the overall performance of an economy;an individual market
C)an individual market;the overall performance of an economy
D)the overall performance of the economy;the individual firm
E)consumer behavior;firm behavior

Question 15

Which of the following questions should a successful model predict?
I)How do changes in government policies change the labor market?
Ii)How does money supply influence inflation?
Iii)How does investment affect economic growth?

A)ii only
B)i,ii,and iii
C)iii only
D)i and ii
E)i and iii

Question 16

Which of the following questions should a successful model predict?
I)How do changes in government policies change the labor market?
Ii)How does money supply influence inflation?
Iii)What is the relationship between inflation and unemployment?

A)iii only
B)ii only
C)i,ii,and iii
D)i and ii
E)i and iii

Question 17

When we look at the __________ we are concerned with the __________.

A)short run;causes of economic fluctuations
B)long run;causes of economic fluctuations
C)short run;determinants of economic growth
D)long run;causes of inflation
E)long run;money supply

Question 18

Income per person began at __________ in 1870 and __________ by nearly a factor of 15 to end at __________ in 2004.

A)$2,500;rose;$25,000
B)$2,500;rose;$37,000
C)$2,500;rose;$100,000
D)$37,000;fell;$2,500
E)$25,000;fell;$2,500

Question 19

Which of the following does macroeconomics endeavor to answer?
I)What role does the government play in recessions and booms and in determining the rate of inflation?
Ii)What caused the currency crises in Mexico in the mid-1990s and in many Asian economies at the end of the 1990s?
Iii)How does a dairy farmer react to rising milk prices?

A)iii only
B)ii only
C)i and ii
D)i,ii,and iii
E)i and iii

Question 20

Which of the following does macroeconomics endeavor to answer?
I)What role does the government play in recessions and booms and in determining the rate of inflation?
Ii)What causes an increase in the price of Exxon stock?
Iii)How does a dairy farmer react to rising milk prices?

A)i only
B)ii only
C)iii only
D)i,ii,and iii
E)ii and iii

Question 21

An exogenous variable is one that is taken as given,that is,a parameter.

Question 22

What are at least four of the main concerns of the study of macroeconomics?

Question 23

An economic model is an exact replica of the macroeconomy.

Question 24

In the short run,we are concerned with the causes of economic growth.

Question 25

The four steps,and in the following order,are used to study macroeconomic behavior:
(1)document the facts;
(2)use the model to make other predictions that may eventually be tested;
(3)compare the predictions of the model to the original facts;
(4)develop a model.

Question 26

An endogenous variable is often called a parameter.

Question 27

In the long run,we are concerned about the causes economic fluctuations.

Question 28

Describe the differences between the long and the short run.

Question 29

The four steps,and in the following order,are used to study macroeconomic behavior: (1)document the facts; (2)develop a model; (3)compare the predictions of the model to the original facts; (4)use the model to make other predictions that eventually may be tested.

Question 30

Macroeconomics is the study of an individual market.

Question 31

What are the steps macroeconomists use to analyze the economy?

Question 32

In the long run,we are concerned about the causes of economic growth.

Question 33

Consider the following model of the labor market:
Labor Supply:
Labor Demand:
i.Identify the model's parameters.
ii.Identify the exogenous variables.
iii.Solve the model.
iv.In the labor supply equation,if the "1" increases to some constant
,what would happen to the equilibrium wage and equilibrium labor?

Question 34

In the short run,we are concerned with the causes of economic fluctuations and how to fix them.