Question 1

In building an economic model,variables that are taken as given are referred to as ________ variables.
A) exogenous
B) endogenous
C) concrete
D) presumptive

Accepted Answer

Exogenous variables are outside factors that are taken as given and not influenced by the model. Endogenous variables, on the other hand, are influenced by the model and can change as a result of it. Concrete and presumptive are not commonly used terms in economics to describe variables.

Question 2

If you were building a macroeconomic model that explores the effect of the aging population on the needed expenditure for social security and health care,the exogenous variable(s)would be the
A) aging population.
B) needed expenditure on social security.
C) needed expenditure on health care.
D) needed expenditure on both social security and health care.

Accepted Answer

The aging population is the exogenous variable in this model, as it is outside the control of the government or other actors in the economy. The needed expenditure on social security and health care are endogenous variables that will be affected by changes in the aging population.

Question 3

All of the following are part of an economic model,except
A) data.
B) opinions.
C) assumptions.
D) hypotheses.

Accepted Answer

Economic models are built upon data, assumptions, and hypotheses. Opinions are subjective and can vary from person to person, and therefore are not a reliable basis for an economic model.

Question 4

Which of the following statements would make a reasonable hypothesis to test?
A) Deflation is worse than inflation in any economy.
B) An unemployment rate below 4% is bad for the economy.
C) As tax rates increase, eventually tax revenues will decline.
D) Higher real GDP per capita figures lead to happier citizens.

Accepted Answer

Statement C presents a cause-and-effect relationship between increasing tax rates and declining tax revenues, which can be tested through observation and analysis. Statements A, B, and D are either subjective opinions or make generalizations without specific variables to test.

Question 5

In building an economic model,variables that will be explained by the model are referred to as ________ variables.
A) exogenous
B) endogenous
C) fluctuating
D) demonstrative

Accepted Answer

Endogenous variables are those that are explained by the economic model itself, while exogenous variables are external factors that influence the model. Fluctuating and demonstrative are not commonly used terms in economic modeling.

Question 6

A hypothesis in an economic model is a statement that ________ about an economic variable.
A) is correct
B) is incorrect
C) may be either correct or incorrect
D) cannot be proven either correct or incorrect

Accepted Answer

A hypothesis in an economic model may or may not be correct, as it is a testable statement that has not yet been proven. Therefore, it can be either correct or incorrect until it is tested and the data gathered supports or refutes it.

Question 7

Which of the following is a positive economic statement?
A) Income tax rates for the rich should be increased.
B) The Bank of Canada should not increase interest rates until the unemployment rate falls below 7%.
C) Rising global demand for gasoline has led to an increase in the price of oil.
D) The government should increase spending on infrastructure to lower the unemployment rate.

Accepted Answer

This statement presents a factual observation about the relationship between global demand for gasoline and the price of oil. It does not include any subjective opinions or value judgments. Choices A, B, and D all involve normative statements about what policies or actions should or should not be taken, which are not objective statements of fact.

Question 8

If you were building a macroeconomic model that explores the effect of the aging population on the needed expenditure for social security and health care,the endogenous variable(s)would be the
A) aging population.
B) needed expenditure on social security.
C) needed expenditure on health care.
D) needed expenditure on both social security and health care.

Accepted Answer

The endogenous variables would be the needed expenditure on both social security and health care, as they directly relate to the aging population. The aging population itself would be an exogenous variable in this model.

Question 9

The severity of the 2007-2009 recession was due to the severity of the accompanying financial crisis.Explain what is meant by financial crisis.

Accepted Answer

The answer of The severity of the 2007-2009 recession was...

Question 10

What does the inflation rate measure,and what is deflation?

Accepted Answer

The answer of What does the inflation rate measure,and what...

Question 11

Which of the following statements about economic analysis is true?
A) Unlike positive economic analysis, normative economic analysis can be tested.
B) Neither positive nor normative analysis can be tested.
C) Positive economic analysis is concerned with "what is," whereas normative economic analysis is concerned with "what ought to be."
D) Economics is primarily about normative analysis, which measures the costs and benefits of different courses of action.

Accepted Answer

Positive economic analysis is concerned with describing and explaining economic phenomena, while normative economic analysis involves making value judgments about how the economy should operate. As such, positive analysis can be tested and evaluated based on empirical evidence, while normative analysis is more subjective and open to debate.

Question 12

If you were building a macroeconomic model that explores the effect of an increase in income tax rates on the size of the labour force,the endogenous variable(s)would be
A) income tax rates.
B) the size of the labour force.
C) both income tax rates and the size of the labour force.
D) neither income tax rates nor the size of the labour force.

Accepted Answer

The endogenous variable is the one that the model seeks to explain or predict, which in this case is the size of the labour force. Income tax rates would be an exogenous variable, as they are determined outside the model.

Question 13

What is monetary policy?

Accepted Answer

The answer of What is monetary policy?...

Question 14

Economic models do all of the following,except
A) simplify some aspect of economic life.
B) answer economic questions.
C) make economic ideas explicit and concrete for use by decision makers.
D) portray reality in all its minute details.

Accepted Answer

Economic models generally do not portray reality in all its minute details. Instead, they simplify some aspect of economic life and make economic ideas more explicit and concrete for use by decision makers. They also aim to answer economic questions.

Question 15

If you were building a macroeconomic model that explores the effect of the increase in interest rates on the inflation rate in Great Britain,interest rates would be an ________ variable and the inflation rate would be an ________ variable.
A) endogenous; endogenous
B) endogenous; exogenous
C) exogenous; exogenous
D) exogenous; endogenous

Accepted Answer

Interest rates would be considered an exogenous variable, as they are determined by the central bank or monetary authority, while the inflation rate would be considered an endogenous variable, as it is affected by other variables within the model, such as economic output and consumption.

Question 16

The economic analysis of extending the duration of unemployment benefits to 99 weeks involves both positive and normative analysis.Consider the following consequences of extending the duration of unemployment benefits: 
a. Extending the duration of unemployment benefits to 99 weeks will create less incentive for some unemployed workers to seek employment.
b) Extending the duration of unemployment benefits to 99 weeks will increase the total amount of government expenditure on unemployment benefits.
c) The benefits received by those collecting unemployment benefits should be valued more highly than the increase in government expenditure needed to pay the benefits.
d) By extending the duration of unemployment benefits to 99 weeks,the unemployed will have more time to acquire new skills before reentering the workforce.
Which of the consequences above are positive statements and which are normative statements?
A) a and b are positive statements; c and d are normative statements.
B) Only b is a positive statement; a, c, and d are normative statements.
C) a and d are positive statements; b and c are normative statements.
D) a, b, and d, are positive statements; only c is a normative statement.

Accepted Answer

The answer of The economic analysis of extending the duration...

Question 17

What is fiscal policy?

Accepted Answer

The answer of What is fiscal policy?...

Question 18

How do economists measure the "openness" of an economy? Explain if the Canadian economy has become more or less "open" over the past 30 years.

Accepted Answer

The answer of How do economists measure the "openness" of...

Question 19

If you were building a macroeconomic model that explores the effect of an increase in income tax rates on the size of the labour force,the exogenous variable(s)would be
A) income tax rates.
B) the size of the labour force.
C) both income tax rates and the size of the labour force.
D) neither income tax rates nor the size of the labour force.

Accepted Answer

The exogenous variable in this case would be income tax rates since it is the variable that is being changed in order to explore its effect on the labour force size. The size of the labour force would be the endogenous variable, meaning that it is affected by the change in income tax rates.

Question 20

Which of the following is a normative economic statement?
A) Income tax revenues decreased during the recession.
B) Despite government stimulus spending, the unemployment rate remained above 9% in 2010.
C) When the price of gasoline rises, transportation costs rise.
D) The government should decrease spending on foreign aid to lower the federal deficit.

Accepted Answer

This statement expresses a value judgment about what the government should do, rather than describing an objective fact.

Quiz 1: Introduction to Macroeconomics and the Great Recession

In building an economic model,variables that are taken as given are referred to as ________ variables.

If you were building a macroeconomic model that explores the effect of the aging population on the needed expenditure for social security and health care,the exogenous variable(s) would be the

All of the following are part of an economic model,except

Which of the following statements would make a reasonable hypothesis to test?

In building an economic model,variables that will be explained by the model are referred to as ________ variables.

A hypothesis in an economic model is a statement that ________ about an economic variable.

Which of the following is a positive economic statement?

If you were building a macroeconomic model that explores the effect of the aging population on the needed expenditure for social security and health care,the endogenous variable(s) would be the

The severity of the 2007-2009 recession was due to the severity of the accompanying financial crisis.Explain what is meant by financial crisis.

What does the inflation rate measure,and what is deflation?

Which of the following statements about economic analysis is true?

If you were building a macroeconomic model that explores the effect of an increase in income tax rates on the size of the labour force,the endogenous variable(s) would be

What is monetary policy?

Economic models do all of the following,except

If you were building a macroeconomic model that explores the effect of the increase in interest rates on the inflation rate in Great Britain,interest rates would be an variable and the inflation rate would be an variable.

What is fiscal policy?

How do economists measure the "openness" of an economy? Explain if the Canadian economy has become more or less "open" over the past 30 years.

If you were building a macroeconomic model that explores the effect of an increase in income tax rates on the size of the labour force,the exogenous variable(s) would be

Which of the following is a normative economic statement?