Question 1

Which of the following macroeconomic variables would you include in an index of leading economic indicators?

Accepted Answer

A) Employment 
B) Inflation 
C) Real interest rates 
D) Residential investment 
A) Employment 
B) Inflation 
C) Real interest rates 
D) Residential investment

Question 2

Diebold and Rudebusch showed that the composite index of leading indicators did not improve forecasts of industrial production because

Accepted Answer

A) the index is not produced in a timely manner. 
B) the government manipulates the index so it never predicts a recession. 
C) the index is not designed for forecasting. 
D) data on the components of the index are revised. 
A) the index is not produced in a timely manner. 
B) the government manipulates the index so it never predicts a recession. 
C) the index is not designed for forecasting. 
D) data on the components of the index are revised.

Question 3

The 1973-1975 recession was caused by

Accepted Answer

A) the Fed's easy monetary policy. 
B) the Fed's tight monetary policy. 
C) business pessimism about investment caused by high tax rates on capital. 
D) the quadrupling of oil prices by OPEC. 
A) the Fed's easy monetary policy. 
B) the Fed's tight monetary policy. 
C) business pessimism about investment caused by high tax rates on capital. 
D) the quadrupling of oil prices by OPEC.

Question 4

Which of the following macroeconomic variables is countercyclical?

Accepted Answer

A) Real interest rates 
B) Unemployment 
C) Money growth 
D) Consumption 
A) Real interest rates 
B) Unemployment 
C) Money growth 
D) Consumption

Question 5

In the long run,an increase in consumer spending would cause output to ________ and the price level to ________.

Accepted Answer

A) rise; rise 
B) rise; stay constant 
C) stay constant; stay constant 
D) stay constant; rise 
A) rise; rise 
B) rise; stay constant 
C) stay constant; stay constant 
D) stay constant; rise

Question 6

What are some of the problems with using the leading indicators to forecast recessions? If you were a policymaker,would you rely on them?

Accepted Answer

Although the leading indicators seem to

Question 7

Suppose labor supply declined.Would this affect the aggregate demand curve or the aggregate supply curve? What would be the effect on output and the price level?

Accepted Answer

The decline in the labor suppl

Question 8

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,which of the following curves slopes downward?

Accepted Answer

A) SRAS 
B) AD 
C) LRAS 
D) None of the above 
A) SRAS 
B) AD 
C) LRAS 
D) None of the above

Question 9

Persistence is

Accepted Answer

A) the tendency for declines in economic activity to be followed by further declines, and for growth in economic activity to be followed by more growth. 
B) the idea that the standard pattern of contraction-trough-expansion-peak occurs again and again in industrial economies. 
C) the tendency of many economic variables to move together in a predictable way over the business cycle. 
D) the idea that peaks and troughs of the business cycle occur at regular intervals. 
A) the tendency for declines in economic activity to be followed by further declines, and for growth in economic activity to be followed by more growth. 
B) the idea that the standard pattern of contraction-trough-expansion-peak occurs again and again in industrial economies. 
C) the tendency of many economic variables to move together in a predictable way over the business cycle. 
D) the idea that peaks and troughs of the business cycle occur at regular intervals.

Question 10

Wars,new inventions,harvest failures,and changes in government policy are examples of

Accepted Answer

A) the business cycle. 
B) economic models. 
C) shocks. 
D) opportunity costs. 
A) the business cycle. 
B) economic models. 
C) shocks. 
D) opportunity costs.

Question 11

After a shift in the aggregate demand curve,which variable adjusts to restore general equilibrium?

Accepted Answer

A) price level 
B) real interest rate 
C) consumption spending 
D) investment spending 
A) price level 
B) real interest rate 
C) consumption spending 
D) investment spending

Question 12

A decrease in government spending on the park system would cause

Accepted Answer

A) the aggregate demand curve to shift to the right. 
B) the aggregate demand curve to shift to the left. 
C) a movement down and to the right along the aggregate demand curve. 
D) a movement up and to the left along the aggregate demand curve. 
A) the aggregate demand curve to shift to the right. 
B) the aggregate demand curve to shift to the left. 
C) a movement down and to the right along the aggregate demand curve. 
D) a movement up and to the left along the aggregate demand curve.

Question 13

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the long-run effects on output and the price level.
(a)Labor supply decreases.
(b)The government shuts down the Bureau of Economic Analysis.
(c)Productivity increases.

Accepted Answer

(a)Output declines and the pri

Question 14

Christina Romer's estimates of the business cycles prior to World War II showed that the business cycle

Accepted Answer

A) had greater fluctuations before World War II than previous estimates had shown. 
B) had smaller fluctuations before World War II than previously estimated. 
C) had smaller fluctuations before World War II than after World War II. 
D) had larger fluctuations after World War II than had been previously measured. 
A) had greater fluctuations before World War II than previous estimates had shown. 
B) had smaller fluctuations before World War II than previously estimated. 
C) had smaller fluctuations before World War II than after World War II. 
D) had larger fluctuations after World War II than had been previously measured.

Question 15

According to research by Stock and Watson,the recent decline in volatility in many macroeconomic variables was a

Accepted Answer

A) sudden drop that occurred around 1984. 
B) gradual decline throughout the 1980s. 
C) sudden drop that occurred around 1990. 
D) gradual decline throughout the 1990s. 
A) sudden drop that occurred around 1984. 
B) gradual decline throughout the 1980s. 
C) sudden drop that occurred around 1990. 
D) gradual decline throughout the 1990s.

Question 16

Which of the following macroeconomic variables would you exclude from an index of leading economic indicators?

Accepted Answer

A) Money supply 
B) Industrial production 
C) Inventory investment 
D) Residential investment 
A) Money supply 
B) Industrial production 
C) Inventory investment 
D) Residential investment

Question 17

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,the long-run aggregate supply curve

Accepted Answer

A) slopes upward. 
B) slopes downward. 
C) is vertical. 
D) is horizontal. 
A) slopes upward. 
B) slopes downward. 
C) is vertical. 
D) is horizontal.

Question 18

The job loss rate

Accepted Answer

A) equals 1 minus the job finding rate. 
B) remains constant over the business cycle. 
C) rises in recessions. 
D) rises in expansions. 
A) equals 1 minus the job finding rate. 
B) remains constant over the business cycle. 
C) rises in recessions. 
D) rises in expansions.

Question 19

One of the first organizations to investigate the business cycle was

Accepted Answer

A) the Federal Reserve System. 
B) the National Bureau of Economic Research. 
C) the Council of Economic Advisors. 
D) the Brookings Institution. 
A) the Federal Reserve System. 
B) the National Bureau of Economic Research. 
C) the Council of Economic Advisors. 
D) the Brookings Institution.

Question 20

If you were a member of the NBER business-cycle dating committee,would you declare that the U.S.economy is now in a recession? Why? Describe the major variables that you would look at to determine whether the economy is in a recession or not,and what features of the data you would look for.

Accepted Answer

Many answers are possible.You

Which of the following macroeconomic variables would you include in an index of leading economic indicators?

Diebold and Rudebusch showed that the composite index of leading indicators did not improve forecasts of industrial production because

The 1973-1975 recession was caused by

Which of the following macroeconomic variables is countercyclical?

In the long run,an increase in consumer spending would cause output to and the price level to .

What are some of the problems with using the leading indicators to forecast recessions? If you were a policymaker,would you rely on them?

Suppose labor supply declined.Would this affect the aggregate demand curve or the aggregate supply curve? What would be the effect on output and the price level?

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,which of the following curves slopes downward?

Persistence is

Wars,new inventions,harvest failures,and changes in government policy are examples of

After a shift in the aggregate demand curve,which variable adjusts to restore general equilibrium?

A decrease in government spending on the park system would cause

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the long-run effects on output and the price level. (a)Labor supply decreases. (b)The government shuts down the Bureau of Economic Analysis. (c)Productivity increases.

Christina Romer's estimates of the business cycles prior to World War II showed that the business cycle

According to research by Stock and Watson,the recent decline in volatility in many macroeconomic variables was a

Which of the following macroeconomic variables would you exclude from an index of leading economic indicators?

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,the long-run aggregate supply curve

The job loss rate

One of the first organizations to investigate the business cycle was

If you were a member of the NBER business-cycle dating committee,would you declare that the U.S.economy is now in a recession? Why? Describe the major variables that you would look at to determine whether the economy is in a recession or not,and what features of the data you would look for.

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 8: Business Cycles

Which of the following macroeconomic variables would you include in an index of leading economic indicators?

Diebold and Rudebusch showed that the composite index of leading indicators did not improve forecasts of industrial production because

The 1973-1975 recession was caused by

Which of the following macroeconomic variables is countercyclical?

In the long run,an increase in consumer spending would cause output to ________ and the price level to ________.

What are some of the problems with using the leading indicators to forecast recessions? If you were a policymaker,would you rely on them?

Suppose labor supply declined.Would this affect the aggregate demand curve or the aggregate supply curve? What would be the effect on output and the price level?

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,which of the following curves slopes downward?

Persistence is

Wars,new inventions,harvest failures,and changes in government policy are examples of

After a shift in the aggregate demand curve,which variable adjusts to restore general equilibrium?

A decrease in government spending on the park system would cause

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the long-run effects on output and the price level. (a)Labor supply decreases. (b)The government shuts down the Bureau of Economic Analysis. (c)Productivity increases.

Christina Romer's estimates of the business cycles prior to World War II showed that the business cycle

According to research by Stock and Watson,the recent decline in volatility in many macroeconomic variables was a

Which of the following macroeconomic variables would you exclude from an index of leading economic indicators?

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis,the long-run aggregate supply curve

The job loss rate

One of the first organizations to investigate the business cycle was

If you were a member of the NBER business-cycle dating committee,would you declare that the U.S.economy is now in a recession? Why? Describe the major variables that you would look at to determine whether the economy is in a recession or not,and what features of the data you would look for.

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

In the long run,an increase in consumer spending would cause output to and the price level to .