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.

Accepted Answer

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

Accepted Answer

Macroeconomics is concerned with analyzing the economy as a whole and answering questions related to overall economic performance, such as those listed in options i, ii, and iii. Therefore, choice B is the correct answer as it includes all three options.

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)  ;  .

Accepted Answer

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.

Accepted Answer

Economic fluctuations, inflation, and unemployment are the three main variables discussed in the short run. This is because changes in economic activity can lead to changes in the rate of inflation and the level of employment in the short term.

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

Accepted Answer

Macroeconomics deals with the big picture of the economy, including issues like economic growth, inflation, and unemployment. It does not focus on the price of a specific product like orange juice, which is a microeconomic issue.

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

Accepted Answer

The relationship between macroeconomics and microeconomics is similar to the relationship between cosmology and particle physics. Just as macroeconomics deals with the entire economy, cosmology deals with the entire universe, while microeconomics and particle physics deal with the specific parts of their respective fields.

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.

Accepted Answer

Actual GDP and potential GDP are rarely equal due to the presence of factors such as economic shocks, fluctuations, and changes in supply and demand that can affect the overall output of an economy.

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.

Accepted Answer

In equilibrium, the quantity of labor supplied equals the quantity of labor demanded. From the labor supply equation, we have: 
Ls = 10 - 2w 
And from the labor demand equation, we have: 
Ld = 4 + 2w 
To find the equilibrium quantity of labor, we set Ls = Ld: 
10 - 2w = 4 + 2w 
Solving for w, we get: 
w = 3 
Substituting w = 3 back into either the labor supply or demand equation, we can find the equilibrium quantity of labor: 
L* = 10 - 2w = 4 
Therefore, the equilibrium quantity of labor is 6 (Option C), and the equilibrium wage rate is $5 (Option C).

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

Accepted Answer

The correct order is to first document the facts, then develop a model based on those facts, compare the predictions of the model to the original facts, and finally use the model to make other predictions that may eventually be tested. This process allows for a systematic approach to studying macroeconomic behavior. Choice A lists these steps in the correct order.

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

Accepted Answer

The short run is characterized by economic fluctuations such as inflation and unemployment, while the long run is concerned with the determinants of economic growth such as technological progress, capital accumulation, and population growth. Choice C correctly identifies the short-run and long-run concerns.

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

Accepted Answer

Exogenous variables are external factors that affect the model but are not directly impacted by it, while endogenous variables are influenced by the model's parameters and other endogenous variables. Therefore, exogenous variables are fixed parameters in the model, and endogenous variables are the outcomes.

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

Accepted Answer

A successful model should be able to predict and explain economic phenomena, including differences in income levels between regions (i), the impact of economic expansion on unemployment (ii), and differences in unemployment rates between regions or countries (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

Accepted Answer

In the long run, economists are concerned with the causes of economic growth, which is the steady increase in the amount of goods and services an economy can produce over time. This includes factors such as technological progress, physical capital accumulation, and human capital development.

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

Accepted Answer

Macroeconomics is concerned with the broader issues and workings of an economy as a whole, such as inflation, unemployment, economic growth, and monetary and fiscal policy, while microeconomics focuses on the behavior of individual economic agents, such as individual consumers, firms, and industries.

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

Accepted Answer

A successful model should be able to predict the relationships between various economic factors and outcomes. All three questions are important economic relationships that a successful model should be able to predict.

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

Accepted Answer

A successful model should be able to predict how changes in government policies affect the labor market, how money supply influences inflation, and the relationship between inflation and unemployment. These are fundamental economic relationships and dynamics that models aim to understand and predict.

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

Accepted Answer

In the short run, the economy experiences fluctuations in terms of output, employment, and prices, which are affected by various factors such as changes in aggregate demand and supply, shocks, and monetary and fiscal policies. Therefore, in analyzing the short run, we are concerned with the causes of economic fluctuations.

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

Accepted Answer

Option A, C, D, and E can be ruled out easily based on the drastic difference in the income level mentioned in the options. Option A starts with a very low income of $2,500 per person in 1870, which seems unlikely considering the economic condition at the time. Similarly, option C and E mention unrealistically high incomes of $100,000 and $25,000 respectively, while option D suggests a fall in income over a period of 134 years, which is not the trend generally seen in developed countries. Therefore, option B is the best choice, which suggests that the income per person rose nearly 15 times over the 134-year period from $2,500 in 1870 to $37,000 in 2004.

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

Accepted Answer

The answer of Which of the following does macroeconomics endeavor...

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

Accepted Answer

Macroeconomics focuses on the overall performance and behavior of an economy, particularly in regards to issues such as inflation, recession, and government policy. The increase in the price of Exxon stock (choice B) and how a dairy farmer reacts to rising milk prices (choice C) are more specific microeconomic issues.

Quiz 1: Introduction to Macroeconomics

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

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:

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

Macroeconomic is to microeconomic what is to .

Actual GDP is __________ to potential GDP.

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:

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

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

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

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?

When we look at the we are concerned with .

Macroeconomics is the study of while microeconomics studies .

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?

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?

When we look at the we are concerned with the .

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

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?