Question 1

A(n) ________ variable is calculated from within the model. A(n) ________ variable can never be taken as given.
A) endogenous; endogenous
B) exogenous; endogenous
C) endogenous; exogenous
D) exogenous; exogenous
E) none of the above

Accepted Answer

An endogenous variable is calculated from within the model and is affected by other variables in the same model. It cannot be taken as given, as it is influenced by relationships within the model. Therefore, option A is the best choice. Option B is incorrect since an exogenous variable is not affected by other variables in the model but can be taken as given. Option C is incorrect since an endogenous variable cannot be an exogenous variable at the same time. Option D is incorrect since both variables being exogenous means they are not affected by other variables in the model. Option E is incorrect since one of the options (A) is the correct answer.

Question 2

Macroeconomics is the study of ________ while microeconomics studies ________.
A) large business enterprises; small business ventures
B) the overall household economic activity; market behavior
C) an individual firm; the overall economic performance of a nation
D) the overall economic performance of the world; the economy of a single country
E) none of the above

Accepted Answer

Macroeconomics focuses on the economy as a whole, including issues like inflation, unemployment, and economic growth, while microeconomics deals with individual and business decisions regarding prices, resource allocation, and demand. None of the provided options accurately capture this distinction.

Question 3

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

Accepted Answer

An exogenous variable in an economic model is typically a policy variable, such as government spending or taxation, that is outside the scope of the model and cannot be explained within it. Option A is incorrect because an exogenous variable can have a direct relation to endogenous variables, but it cannot be explained by them. Option B is incorrect because its value can be changed, though it is usually determined outside of the model. Option D is incorrect because an exogenous variable is not explained inside the model. Option E is incorrect because only option C is true.

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?
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.

Accepted Answer

Identifying the exogenous variables is the step in developing an economic model where a macroeconomist would consider changes in technology as a potential cause of unemployment. Exogenous variables are those external factors that the model takes as given, which could influence the endogenous variables (outcomes) the economist is trying to understand.

Question 5

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

Accepted Answer

The answer of Macroeconomic models particularly focus on the following...

Question 6

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?
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.

Accepted Answer

The macroeconomist comparing historical data on technology changes and unemployment changes is at the step of comparing the model with the data. This step involves assessing how well the model's predictions align with actual historical data.

Question 7

Real GDP measures ________.
A) the total hours the average U.S. citizen works a year
B) the percentage of income produced by workers and firms
C) how slowly interest rates grow.
D) the total market value of actual goods and services produced in an economy over a year
E) how rapidly the overall level of prices is rising.

Accepted Answer

Real GDP measures the total market value of actual goods and services produced in an economy over a year.

Question 8

Macroeconomics is the study of ________ while microeconomics studies ________.
A) large biological systems; political implications of nanotechnology
B) the overall economic activity and prices; an individual firm, household, or market
C) an individual firm; the overall economic performance of a nation
D) the overall economic performance of the world; the economy of a single country
E) firm behavior; market behavior

Accepted Answer

Macroeconomics is the study of the overall economic activity such as inflation, unemployment, and economic growth, while microeconomics studies the behavior of individual households, firms, and markets.

Question 9

A simple macroeconomic model might explain how an increase in the demand for new housing would lead to a decrease in the rate of unemployment. In such a model, which of these variables is likely to be exogenous?
A) the quantity sold of home furnishings
B) the degree of unionization of the construction industry
C) the wage rate for unskilled workers
D) the level of tax revenues
E) the demand for concrete

Accepted Answer

The degree of unionization of the construction industry is likely to be considered an exogenous variable in this context because it is determined outside the model and affects the model's outcomes (such as employment levels in construction) without being influenced by the changes within the model itself, like the increase in demand for new housing.

Question 10

To compare the conclusions of a model with what actually happens, historical data are entered into the model as ________.
A) endogenous variables
B) exogenous variables
C) equations
D) predictions
E) policies

Accepted Answer

Exogenous variables are variables that are outside the model and affect the endogenous variables, which are variables inside the model. Historical data would be considered an exogenous variable as it is outside of the model but influences the outcomes.

Question 11

Macroeconomics is the study of ________ while microeconomics studies ________.
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

Accepted Answer

Macroeconomics is concerned with the overall economic activity and prices in a nation or the world, while microeconomics focuses on the behavior of individual firms, households or markets.

Question 12

An exogenous variable is typically ________.
A) calculated by the model
B) only used to conduct policy analysis
C) explained inside the model
D) disregarded in economic models
E) none of the above

Accepted Answer

An exogenous variable is a variable that is not explained or determined within the economic model and is therefore outside of the model. It is an external factor or parameter that affects the model's output but is not influenced by the model itself. Thus, it is not calculated by the model, is not used only for policy analysis, and is not explained inside the model. Exogenous variables are typically considered important in economic models, as they help to capture the impact of external factors on the model's output.

Question 13

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

Accepted Answer

The correct sequence for developing an economic model starts with identifying the variables (endogenous then exogenous), developing the model, comparing it with real-world data, and finally conducting prediction and policy analysis.

Question 14

In a model of the saving rate, which of these relationships is most crucial?
A) the effect of the saving rate on government spending
B) the effect of government spending on the saving rate
C) the effect of the saving rate on taxes
D) the effect of taxes on the saving rate
E) the effect of the saving rate on the real wage

Accepted Answer

The saving rate is largely influenced by taxes, as individuals will save more if taxes are lower and have less disposable income if taxes are higher. Therefore, the relationship between taxes and the saving rate is crucial in modeling how individuals will save and invest their money.

Question 15

An exogenous variable is typically ________.
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

Accepted Answer

An exogenous variable is a variable that is taken as given and not explained inside the model. It is typically outside of the control of the model or analysis being conducted.

Question 16

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?
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.

Accepted Answer

The macroeconomist is at the step of conducting prediction and policy analysis, as they are making a prediction about how a change (in this case, a technological change) will affect an economic outcome (unemployment rate). This step comes after developing the model and identifying both the endogenous and exogenous variables.

Question 17

An endogenous variable is typically ________.
A) taken as given
B) strictly explained outside the model
C) strictly explained inside the model
D) strictly explained by data
E) strictly explained by graphical analysis

Accepted Answer

Endogenous variables are those that are explained inside the model, meaning that they are dependent on other variables included in the model. They are not taken as given, explained by data or graphical analysis, or strictly explained outside the model.

Question 18

An endogenous variable is typically ________.
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

Accepted Answer

Endogenous variables are variables that are strictly explained inside the model, meaning that their values are determined by the model itself. This is in contrast to exogenous variables, which are taken as given and do not depend on other variables within the model.

Question 19

In a macroeconomic model designed to explain why some countries grow faster than others, which of these variables is likely to be endogenous?
A) investment
B) economic policies
C) geographic size
D) population
E) none of the above

Accepted Answer

Investment is likely to be endogenous because it is influenced by various factors such as economic policies, human capital, and technological advancements, which are all endogenous variables. Economic policies (B) can also be endogenous to some extent, but they can also be exogenous if imposed by external entities like international organizations. Geographic size (C) and population (D) are typically exogenous variables that do not change much over time and are not influenced by the economic system in the short run. Therefore, the best choice for an endogenous variable is A) investment.

Question 20

Macroeconomic models particularly focus on the following three economic data series.
A) real GDP, the unemployment rate, and inflation
B) endogenous variables, exogenous variables, and GDP per person
C) inflation, recessions, and business cycles
D) real GDP, the employment rate, and interest rates
E) real GDP, the unemployment rate, and depressions

Accepted Answer

Macroeconomic models commonly focus on real GDP as a measure of overall economic activity, the unemployment rate as a measure of labor market conditions, and inflation as a measure of overall price level trends. These three variables are often referred to as the "trilogy" of macroeconomic indicators.

Quiz 1: The Policy and Practice of Macroeconomics

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

Macroeconomics is the study of while microeconomics studies .

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

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?

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

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?

Real GDP measures ________.

Macroeconomics is the study of while microeconomics studies .

A simple macroeconomic model might explain how an increase in the demand for new housing would lead to a decrease in the rate of unemployment. In such a model, which of these variables is likely to be exogenous?

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

Macroeconomics is the study of while microeconomics studies .

An exogenous variable is typically ________.

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

In a model of the saving rate, which of these relationships is most crucial?

An exogenous variable is typically ________.

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?

An endogenous variable is typically ________.

An endogenous variable is typically ________.

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

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