Question 1

Expectations are hard to test even though economists know the model the public uses when forming expectations.

Accepted Answer

The answer of Expectations are hard to test even though...

Question 2

Any test of the rational expectations hypothesis must show that expectations are formed rationally and
A) the model being used is the true model.
B) the velocity of money is constant.
C) there are no price surprises.
D) all policy changes are anticipated.

Accepted Answer

The rational expectations hypothesis requires that the model being used accurately reflects the true model of the economy, as it assumes that individuals form expectations based on a correct understanding of the economic model and all available information.

Question 3

Macroeconomic models differ in ways that are hard to standardize.

Accepted Answer

Macroeconomic models can vary in their assumptions, variables included, and methods used, making it difficult to standardize them across the field.

Question 4

Competing macroeconomic models may be hard to test because people may change how they react when economic policies are changed.

Accepted Answer

Competing macroeconomic models often make different assumptions about how individuals and firms will react to changes in economic policies. If these assumptions do not hold true, it can be difficult to test which model is more accurate because people's behavior may not match the model's predictions. This is known as the Lucas Critique, named after economist Robert Lucas who argued that macroeconomic models need to account for how people will respond to changes in policies.

Question 5

Most empirical testing in macroeconomics uses data beginning from about 1950.

Accepted Answer

This is generally true as the post-war era saw significant changes in economic policy and institutions, making it a relevant time period for macroeconomic analysis. However, some empirical testing may use data from earlier periods as well.

Question 6

Because people may change how they react when economic policies are changed, comparing macroeconomic models is
A) difficult.
B) impossible.
C) not attempted by legitimate economists.
D) only effective for long-run analysis.

Accepted Answer

People's behavior can be unpredictable and may change based on economic policy changes, making it difficult to compare macroeconomic models. However, this does not make it impossible or not attempted by legitimate economists. Comparing macroeconomic models can still be effective for both short- and long-term analysis, depending on the specific focus of the research.

Question 7

SInce 1950, the United States has experienced about 20 business cycles.

Accepted Answer

The answer of SInce 1950, the United States has experienced...

Question 8

Any test of rational expectations is a joint test of the underlying model that expectations are formed rationally.

Accepted Answer

The statement is true. Testing for rational expectations involves testing the validity of the model assumptions underlying the rational expectations hypothesis.

Question 9

A problem with comparing macroeconomic models is that
A) people may change how they react when economic policies are changed.
B) macroeconomic models do not predict the same outcomes from policies.
C) macroeconomic models cannot be expressed in mathematical terms.
D) macroeconomic models must meet government standards for uniformity.

Accepted Answer

People may change their behavior in response to changes in economic policies, a phenomenon known as the Lucas critique, which complicates the comparison of macroeconomic models.

Question 10

It is difficult to empirically test alternative macroeconomic models against one another because
A) macroeconomic models do not predict the same outcomes from policies.
B) macroeconomic models differ in ways that are hard to standardize for.
C) macroeconomic models cannot be expressed in mathematical terms.
D) macroeconomic models are always expressed in scientific terms.

Accepted Answer

Macro models are often difficult to compare empirically because they differ in important ways that make it difficult to standardize their findings. For example, different models may use different assumptions or variables, and adjustments would need to be made in order to compare the models directly. Additionally, it can be difficult to isolate the effects of a given model from other factors that also influence macroeconomic outcomes.

Question 11

It is difficult in economics to perform controlled experiments.

Accepted Answer

In economics, it is often not possible to completely control all of the factors that can influence an outcome, making it difficult to perform controlled experiments. Instead, economists often rely on observational studies or simulations to analyze economic behavior and outcomes.

Question 12

There is very little disagreement when it comes to macroeconomic theory.

Accepted Answer

While there may be general consensus on some macroeconomic theories, there is still debate and disagreement among economists on various aspects, such as the effectiveness of certain policies or the interpretation of economic data.

Question 13

It is ________ to empirically test alternative macroeconomic models against one another ________ macroeconomic models differ in ways that are hard to standardize.
A) pointless; because
B) difficult; because
C) relatively easy; even though
D) impossible; because

Accepted Answer

It is difficult to empirically test alternative macroeconomic models against one another because macroeconomic models differ in ways that are hard to standardize.

Question 14

Too much data is available to test macroeconomic models.

Accepted Answer

Macroeconomic models often face the challenge of limited data availability, especially for long-term historical data or data from less developed countries, making it difficult to comprehensively test these models.

Quiz 17: Alternative Views in Macroeconomics

Expectations are hard to test even though economists know the model the public uses when forming expectations.

Any test of the rational expectations hypothesis must show that expectations are formed rationally and

Macroeconomic models differ in ways that are hard to standardize.

Competing macroeconomic models may be hard to test because people may change how they react when economic policies are changed.

Most empirical testing in macroeconomics uses data beginning from about 1950.

Because people may change how they react when economic policies are changed, comparing macroeconomic models is

SInce 1950, the United States has experienced about 20 business cycles.

Any test of rational expectations is a joint test of the underlying model that expectations are formed rationally.

A problem with comparing macroeconomic models is that

It is difficult to empirically test alternative macroeconomic models against one another because

It is difficult in economics to perform controlled experiments.

There is very little disagreement when it comes to macroeconomic theory.

It is to empirically test alternative macroeconomic models against one another macroeconomic models differ in ways that are hard to standardize.

Too much data is available to test macroeconomic models.