Question 1

The unemployment rate in 2015

Accepted Answer

A)  was at its peak for the period 2008-2015. 
B)  was higher than the unemployment rate in the United States. 
C)  was lower than the unemployment rate in the United States. 
D)  was higher than in 2009. 
E)  was at about the average peak in the previous three recessions. 
A)  was at its peak for the period 2008-2015. 
B)  was higher than the unemployment rate in the United States. 
C)  was lower than the unemployment rate in the United States. 
D)  was higher than in 2009. 
E)  was at about the average peak in the previous three recessions.

Question 2

What do we assume about households and firms?

Accepted Answer

A)  Their interests are rarely aligned. 
B)  They look after each other. 
C)  They act irrationally. 
D)  They optimize. 
E)  They do what the government tells them to do. 
A)  Their interests are rarely aligned. 
B)  They look after each other. 
C)  They act irrationally. 
D)  They optimize. 
E)  They do what the government tells them to do.

Question 3

Which of the following topics is a primary concern of macro economists?

Accepted Answer

A)  standards of living of individuals 
B)  choices of individual consumers and firms 
C)  short-run growth models 
D)  relative wages of skilled and unskilled workers 
E)  fluctuations in the level of aggregate economic activity 
A)  standards of living of individuals 
B)  choices of individual consumers and firms 
C)  short-run growth models 
D)  relative wages of skilled and unskilled workers 
E)  fluctuations in the level of aggregate economic activity

Question 4

Gross Domestic Product is

Accepted Answer

A)  the quantity of goods and services produced within a country's borders during some specified period of time. 
B)  the quantity of goods produced by Canadian residents domestically and abroad during some specific period of time. 
C)  the quantity of goods produced within a country's borders during some specific period of time. 
D)  the aggregate quantity of income earned by consumers who have jobs during some specified period of time. 
E)  the quantity of goods and services produced by Canadian residents domestically and abroad during some specific period of time. 
A)  the quantity of goods and services produced within a country's borders during some specified period of time. 
B)  the quantity of goods produced by Canadian residents domestically and abroad during some specific period of time. 
C)  the quantity of goods produced within a country's borders during some specific period of time. 
D)  the aggregate quantity of income earned by consumers who have jobs during some specified period of time. 
E)  the quantity of goods and services produced by Canadian residents domestically and abroad during some specific period of time.

Question 5

One possible explanation of the higher unemployment rate in Canada relative to the United States before the 2008-2009 recession is

Accepted Answer

A)  less generous unemployment benefits in Canada. 
B)  more generous unemployment benefits in Canada. 
C)  U.S. government policy was more effective in managing business cycles. 
D)  a larger population in the United States. 
E)  more job training programs in Canada. 
A)  less generous unemployment benefits in Canada. 
B)  more generous unemployment benefits in Canada. 
C)  U.S. government policy was more effective in managing business cycles. 
D)  a larger population in the United States. 
E)  more job training programs in Canada.

Question 6

In the long run, inflation is caused by

Accepted Answer

A)  global warning. 
B)  greedy monopolists. 
C)  the tradeoff between aggregate output and inflation. 
D)  aggressive labour unions. 
E)  growth in the money supply. 
A)  global warning. 
B)  greedy monopolists. 
C)  the tradeoff between aggregate output and inflation. 
D)  aggressive labour unions. 
E)  growth in the money supply.

Question 7

For the study of economic growth, it is most helpful to examine movements in ________; for the study of business cycles, it is most helpful to examine movements in ________.

Accepted Answer

A)  trend GDP; deviations from trend in GDP 
B)  deviations from trend in GDP; deviations from trend in GDP 
C)  trend GDP; trend GDP 
D)  trend income; deviation from trend in income 
E)  deviations from trend in GDP; trend GDP 
A)  trend GDP; deviations from trend in GDP 
B)  deviations from trend in GDP; deviations from trend in GDP 
C)  trend GDP; trend GDP 
D)  trend income; deviation from trend in income 
E)  deviations from trend in GDP; trend GDP

Question 8

Macroeconomists tend to agree on

Accepted Answer

A)  the usefulness of Keynesian models. 
B)  approaches to constructing models of economic growth. 
C)  the implications of real business cycle theory for government policy. 
D)  that all business cycles are due to self-fulfilling optimism and pessimism. 
E)  nothing. 
A)  the usefulness of Keynesian models. 
B)  approaches to constructing models of economic growth. 
C)  the implications of real business cycle theory for government policy. 
D)  that all business cycles are due to self-fulfilling optimism and pessimism. 
E)  nothing.

Question 9

Since 1870, the typical Canadian

Accepted Answer

A)  became ten-times as rich. 
B)  remained equally as rich. 
C)  remained as rich as the typical American. 
D)  became twice as rich. 
E)  became almost fourteen-times as rich. 
A)  became ten-times as rich. 
B)  remained equally as rich. 
C)  remained as rich as the typical American. 
D)  became twice as rich. 
E)  became almost fourteen-times as rich.

Question 10

Money is differentiated from other assets due to

Accepted Answer

A)  its value as a medium of exchange. 
B)  its value of facilitating government spending. 
C)  its value as a unit of account. 
D)  its invulnerability to inflation. 
E)  its value as smoothing out business cycles. 
A)  its value as a medium of exchange. 
B)  its value of facilitating government spending. 
C)  its value as a unit of account. 
D)  its invulnerability to inflation. 
E)  its value as smoothing out business cycles.

Question 11

When a country has a current account balance deficit, the country

Accepted Answer

A)  always has a large government budget deficit. 
B)  is always borrowing from abroad. 
C)  is always lending abroad. 
D)  always has a large government budget surplus. 
E)  is always borrowing from domestic residents. 
A)  always has a large government budget deficit. 
B)  is always borrowing from abroad. 
C)  is always lending abroad. 
D)  always has a large government budget surplus. 
E)  is always borrowing from domestic residents.

Question 12

The response of monetary and fiscal policy to the 2008-2009 recession was motivated by

Accepted Answer

A)  a desire to minimize the size of government. 
B)  the ideas of Prescott and Kydland. 
C)  Keynesian ideas. 
D)  fiscal austerity. 
E)  supply side economics. 
A)  a desire to minimize the size of government. 
B)  the ideas of Prescott and Kydland. 
C)  Keynesian ideas. 
D)  fiscal austerity. 
E)  supply side economics.

Question 13

One consequence of government deficits is

Accepted Answer

A)  lower interest rates. 
B)  lower taxes. 
C)  reduced government borrowing. 
D)  reduced consumer spending. 
E)  redistribution of the tax burden from one group to another. 
A)  lower interest rates. 
B)  lower taxes. 
C)  reduced government borrowing. 
D)  reduced consumer spending. 
E)  redistribution of the tax burden from one group to another.

Question 14

The recovery from the 2008-2009 recession

Accepted Answer

A)  was stronger in Canada than in the United States. 
B)  did not occur in Canada, but did in the United States. 
C)  was stronger in the United States than in Canada. 
D)  was not an issue in Canada, as the 2008-2009 recession was confined to the United States. 
E)  was slowed down because Bank of Canada policy was historically tight. 
A)  was stronger in Canada than in the United States. 
B)  did not occur in Canada, but did in the United States. 
C)  was stronger in the United States than in Canada. 
D)  was not an issue in Canada, as the 2008-2009 recession was confined to the United States. 
E)  was slowed down because Bank of Canada policy was historically tight.

Question 15

Neo-Fisherism says

Accepted Answer

A)  the central bank should increase inflation by lowering nominal interest rates. 
B)  the central bank should increase inflation by lowering the money supply. 
C)  the central bank should increase inflation by raising the nominal interest rate. 
D)  the central bank should increase inflation by lowering the real interest rate. 
E)  that Fisherism is wrong. 
A)  the central bank should increase inflation by lowering nominal interest rates. 
B)  the central bank should increase inflation by lowering the money supply. 
C)  the central bank should increase inflation by raising the nominal interest rate. 
D)  the central bank should increase inflation by lowering the real interest rate. 
E)  that Fisherism is wrong.

Question 16

New Keynesian Theory

Accepted Answer

A)  specifies financial markets as the primary cause of business cycles. 
B)  includes microeconomic foundations and does not rely on sticky wages or prices. 
C)  relies on sticky wages and prices but does not include microeconomic foundations. 
D)  uses the same microeconomic foundations as other macro models. 
E)  specifies shocks to technology cause business cycles. 
A)  specifies financial markets as the primary cause of business cycles. 
B)  includes microeconomic foundations and does not rely on sticky wages or prices. 
C)  relies on sticky wages and prices but does not include microeconomic foundations. 
D)  uses the same microeconomic foundations as other macro models. 
E)  specifies shocks to technology cause business cycles.

Question 17

Unemployment, at the aggregate level

Accepted Answer

A)  is zero in a perfect world. 
B)  is a sign of market failures. 
C)  is avoidable. 
D)  can be prevented with sound government policy. 
E)  is consistent with a well-functioning economy. 
A)  is zero in a perfect world. 
B)  is a sign of market failures. 
C)  is avoidable. 
D)  can be prevented with sound government policy. 
E)  is consistent with a well-functioning economy.

Question 18

The basic structure of a macroeconomic model includes the description of this feature:

Accepted Answer

A)  isotherms. 
B)  average annual rainfall. 
C)  consumers' preferences over goods. 
D)  a herd of cows. 
E)  the density of cities. 
A)  isotherms. 
B)  average annual rainfall. 
C)  consumers' preferences over goods. 
D)  a herd of cows. 
E)  the density of cities.

Question 19

The real interest rate is

Accepted Answer

A)  equal to the rate of inflation minus the nominal rate of interest. 
B)  always equal to the pure rate of time preference. 
C)  equal to the nominal rate of interest minus the rate of inflation. 
D)  less important for decision making than the nominal rate of interest. 
E)  the market interest rate. 
A)  equal to the rate of inflation minus the nominal rate of interest. 
B)  always equal to the pure rate of time preference. 
C)  equal to the nominal rate of interest minus the rate of inflation. 
D)  less important for decision making than the nominal rate of interest. 
E)  the market interest rate.

Question 20

More government spending

Accepted Answer

A)  can compete with private spending and cause crowding out. 
B)  is always beneficial. 
C)  lowers the government deficit. 
D)  increases the government surplus. 
E)  reduces the current account deficit. 
A)  can compete with private spending and cause crowding out. 
B)  is always beneficial. 
C)  lowers the government deficit. 
D)  increases the government surplus. 
E)  reduces the current account deficit.

The unemployment rate in 2015

What do we assume about households and firms?

Which of the following topics is a primary concern of macro economists?

Gross Domestic Product is

One possible explanation of the higher unemployment rate in Canada relative to the United States before the 2008-2009 recession is

In the long run, inflation is caused by

For the study of economic growth, it is most helpful to examine movements in ; for the study of business cycles, it is most helpful to examine movements in .

Macroeconomists tend to agree on

Since 1870, the typical Canadian

Money is differentiated from other assets due to

When a country has a current account balance deficit, the country

The response of monetary and fiscal policy to the 2008-2009 recession was motivated by

One consequence of government deficits is

The recovery from the 2008-2009 recession

Neo-Fisherism says

New Keynesian Theory

Unemployment, at the aggregate level

The basic structure of a macroeconomic model includes the description of this feature:

The real interest rate is

More government spending

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 1: Introduction

The unemployment rate in 2015

What do we assume about households and firms?

Which of the following topics is a primary concern of macro economists?

Gross Domestic Product is

One possible explanation of the higher unemployment rate in Canada relative to the United States before the 2008-2009 recession is

In the long run, inflation is caused by

For the study of economic growth, it is most helpful to examine movements in ________; for the study of business cycles, it is most helpful to examine movements in ________.

Macroeconomists tend to agree on

Since 1870, the typical Canadian

Money is differentiated from other assets due to

When a country has a current account balance deficit, the country

The response of monetary and fiscal policy to the 2008-2009 recession was motivated by

One consequence of government deficits is

The recovery from the 2008-2009 recession

Neo-Fisherism says

New Keynesian Theory

Unemployment, at the aggregate level

The basic structure of a macroeconomic model includes the description of this feature:

The real interest rate is

More government spending

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

For the study of economic growth, it is most helpful to examine movements in ; for the study of business cycles, it is most helpful to examine movements in .