Question 1

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

Question 2

Neo-Fisherism says

Accepted Answer

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

Question 3

Since World War II, deviations from trend real GDP per-capita are

Accepted Answer

A)  at least $\pm 10 \%$. 
B)  typically larger than $\pm 5 \%$. 
C)  at most $\pm 1 \%$. 
D)  typically $< 0$. 
E)  at most $\pm 5 \%$. 
A)  at least $\pm 10 \%$. 
B)  typically larger than $\pm 5 \%$. 
C)  at most $\pm 1 \%$. 
D)  typically $< 0$. 
E)  at most $\pm 5 \%$.

Question 4

The government surplus is the same as

Accepted Answer

A) outlays less income. 
B) private saving. 
C) investment income. 
D) government saving. 
E) government deficit less government saving. 
A) outlays less income. 
B) private saving. 
C) investment income. 
D) government saving. 
E) government deficit less government saving.

Question 5

In a macroeconomic model, equilibrium is when

Accepted Answer

A) everyone in the economy is happy. 
B) the actions of consumers and firms are consistent. 
C) nothing is changing. 
D) the government has achieved an efficient allocation of resources. 
A) everyone in the economy is happy. 
B) the actions of consumers and firms are consistent. 
C) nothing is changing. 
D) the government has achieved an efficient allocation of resources.

Question 6

The 2007-08 recession in Canada

Accepted Answer

A) was worsened by fiscal policy actions. 
B) was the most severe recession in the 1961-2018 period. 
C) was caused by tight monetary policy. 
D) was the result of the failure of the Canadian banking system. 
E) originated in the United States. 
A) was worsened by fiscal policy actions. 
B) was the most severe recession in the 1961-2018 period. 
C) was caused by tight monetary policy. 
D) was the result of the failure of the Canadian banking system. 
E) originated in the United States.

Question 7

According to real business cycle theory, the primary causes of business cycles are

Accepted Answer

A) shocks to aggregate demand. 
B) monetary factors. 
C) technology shocks. 
D) waves of self-fulfilling optimism and pessimism. 
E) fiscal shocks. 
A) shocks to aggregate demand. 
B) monetary factors. 
C) technology shocks. 
D) waves of self-fulfilling optimism and pessimism. 
E) fiscal shocks.

Question 8

The Fisher relation is

Accepted Answer

A) the negative relationship between unemployment and vacancies. 
B) trend growth in real GDP. 
C) the Phillips curve. 
D) of no interest to economists. 
E) a positive relationship between the nominal interest rate and inflation. 
A) the negative relationship between unemployment and vacancies. 
B) trend growth in real GDP. 
C) the Phillips curve. 
D) of no interest to economists. 
E) a positive relationship between the nominal interest rate and inflation.

Question 9

In a competitive equilibrium, we assume that markets are such that

Accepted Answer

A) firms behave strategically in setting their prices. 
B) consumers are price takers while firms set prices. 
C) both consumers and firms are price takers. 
D) firms are price takers while consumers set prices. 
E) consumers behave strategically in setting their prices. 
A) firms behave strategically in setting their prices. 
B) consumers are price takers while firms set prices. 
C) both consumers and firms are price takers. 
D) firms are price takers while consumers set prices. 
E) consumers behave strategically in setting their prices.

Question 10

Improvements in a country's standard of living are brought about in the long run by

Accepted Answer

A) immigration policy. 
B) growth in the population. 
C) constructing more machines and buildings. 
D) taxes. 
E) technological progress. 
A) immigration policy. 
B) growth in the population. 
C) constructing more machines and buildings. 
D) taxes. 
E) technological progress.

Question 11

Macroeconomists tend to agree on

Accepted Answer

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

Question 12

Adam Smith's Wealth of Nations emphasized

Accepted Answer

A) that Scotland produced several key technological innovations. 
B) how free markets produce socially efficient outcomes. 
C) mercantilism. 
D) that the government should intervene to smooth business cycles. 
E) the existence of externalities. 
A) that Scotland produced several key technological innovations. 
B) how free markets produce socially efficient outcomes. 
C) mercantilism. 
D) that the government should intervene to smooth business cycles. 
E) the existence of externalities.

Question 13

Unemployment, at the aggregate level

Accepted Answer

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

Question 14

One consequence of government deficits is

Accepted Answer

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

Question 15

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

Accepted Answer

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

Question 16

The relationship between the level of growth of an economic variable, gt, and its level, yt, is best approximated as

Accepted Answer

A)  $g _ { t } = \frac { y t } { y t - 1 }$. 
B)  $y t = \log g t - \log g t - 1$. 
C)  $g t = \log y t - \log y t - 1$. 
D)  $\log g t = y t - y t - 1$. 
E)  $g t = \log y t + \log y t - 1$. 
A)  $g _ { t } = \frac { y t } { y t - 1 }$. 
B)  $y t = \log g t - \log g t - 1$. 
C)  $g t = \log y t - \log y t - 1$. 
D)  $\log g t = y t - y t - 1$. 
E)  $g t = \log y t + \log y t - 1$.

Question 17

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

Accepted Answer

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

Question 18

Which of the following is a fundamental question of macroeconomics?

Accepted Answer

A) What causes sustained economic growth? 
B) How should a labour contract be structured? 
C) What causes the health care industry to prosper? 
D) What is the effect of penalties on crime? 
E) How should governments be elected? 
A) What causes sustained economic growth? 
B) How should a labour contract be structured? 
C) What causes the health care industry to prosper? 
D) What is the effect of penalties on crime? 
E) How should governments be elected?

Question 19

The idea that government budget deficits do NOT matter under certain circumstances is

Accepted Answer

A) preposterous. 
B) called the Milton Friedman theory. 
C) called the Friedman-Lucas theory. 
D) called the Ricardian equivalence theorem. 
E) attributed to Edward Prescott and Finn Kydland. 
A) preposterous. 
B) called the Milton Friedman theory. 
C) called the Friedman-Lucas theory. 
D) called the Ricardian equivalence theorem. 
E) attributed to Edward Prescott and Finn Kydland.

Question 20

Countries gain from

Accepted Answer

A) taxes. 
B) long-run tradeoffs between aggregate output and inflation. 
C) trading goods and assets with each other. 
D) inflation. 
E) productivity slowdown. 
A) taxes. 
B) long-run tradeoffs between aggregate output and inflation. 
C) trading goods and assets with each other. 
D) inflation. 
E) productivity slowdown.

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 .

Neo-Fisherism says

Since World War II, deviations from trend real GDP per-capita are

The government surplus is the same as

In a macroeconomic model, equilibrium is when

The 2007-08 recession in Canada

According to real business cycle theory, the primary causes of business cycles are

The Fisher relation is

In a competitive equilibrium, we assume that markets are such that

Improvements in a country's standard of living are brought about in the long run by

Macroeconomists tend to agree on

Adam Smith's Wealth of Nations emphasized

Unemployment, at the aggregate level

One consequence of government deficits is

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

The relationship between the level of growth of an economic variable, gt, and its level, yt, is best approximated as

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

Which of the following is a fundamental question of macroeconomics?

The idea that government budget deficits do NOT matter under certain circumstances is

Countries gain from

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure 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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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

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 ________.

Neo-Fisherism says

Since World War II, deviations from trend real GDP per-capita are

The government surplus is the same as

In a macroeconomic model, equilibrium is when

The 2007-08 recession in Canada

According to real business cycle theory, the primary causes of business cycles are

The Fisher relation is

In a competitive equilibrium, we assume that markets are such that

Improvements in a country's standard of living are brought about in the long run by

Macroeconomists tend to agree on

Adam Smith's Wealth of Nations emphasized

Unemployment, at the aggregate level

One consequence of government deficits is

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

The relationship between the level of growth of an economic variable, gt, and its level, yt, is best approximated as

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

Which of the following is a fundamental question of macroeconomics?

The idea that government budget deficits do NOT matter under certain circumstances is

Countries gain from

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure 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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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 .