Question 1

For Japan to recover

Accepted Answer

A)  it needs to run large government surpluses and raise interest rates. 
B)  it needs to run large government deficits and raise interest rates. 
C)  it needs to run large government deficits and lower interest rates. 
D)  it needs to run large government surpluses and lower interest rates. 
A)  it needs to run large government surpluses and raise interest rates. 
B)  it needs to run large government deficits and raise interest rates. 
C)  it needs to run large government deficits and lower interest rates. 
D)  it needs to run large government surpluses and lower interest rates.

Question 2

Before World War II

Accepted Answer

A)  "fiscal policy" consisted of attempting to balance the budget at the full-employment output level. 
B)  "fiscal policy" consisted of attempting to balance the budget at every output level. 
C)  "monetary policy" consisted of attempting to balance the budget at the full-employment output level. 
D)  "monetary policy" consisted of attempting to balance the budget at every output level. 
A)  "fiscal policy" consisted of attempting to balance the budget at the full-employment output level. 
B)  "fiscal policy" consisted of attempting to balance the budget at every output level. 
C)  "monetary policy" consisted of attempting to balance the budget at the full-employment output level. 
D)  "monetary policy" consisted of attempting to balance the budget at every output level.

Question 3

Falling price levels reduce real GDP because

Accepted Answer

A)  real exchange rates increase, reducing exports and increasing imports. 
B)  real income decreases and consumption spending decreases. 
C)  real interest rates increase, reducing investment spending. 
D)  real interest rates decrease, reducing investment spending. 
A)  real exchange rates increase, reducing exports and increasing imports. 
B)  real income decreases and consumption spending decreases. 
C)  real interest rates increase, reducing investment spending. 
D)  real interest rates decrease, reducing investment spending.

Question 4

If liquidity constraints - the inability to borrow - start to increase for households,

Accepted Answer

A)  the multiplier is likely to get larger. 
B)  the exchange rate sensitivity of exports will increase. 
C)  the interest sensitivity of investment will increase. 
D)  the multiplier is likely to get smaller. 
A)  the multiplier is likely to get larger. 
B)  the exchange rate sensitivity of exports will increase. 
C)  the interest sensitivity of investment will increase. 
D)  the multiplier is likely to get smaller.

Question 5

If international trade continues to increase,

Accepted Answer

A)  the marginal propensity to expend will increase. 
B)  the marginal propensity to expend will decrease. 
C)  the marginal propensity to expend will not be affected. 
D)  the marginal propensity to export will decrease. 
A)  the marginal propensity to expend will increase. 
B)  the marginal propensity to expend will decrease. 
C)  the marginal propensity to expend will not be affected. 
D)  the marginal propensity to export will decrease.

Question 6

If liquidity constraints - the inability to borrow - continue to decrease for households,

Accepted Answer

A)  the multiplier is likely to get larger. 
B)  the exchange rate sensitivity of exports will increase. 
C)  the interest sensitivity of investment will increase. 
D)  the multiplier is likely to get smaller. 
A)  the multiplier is likely to get larger. 
B)  the exchange rate sensitivity of exports will increase. 
C)  the interest sensitivity of investment will increase. 
D)  the multiplier is likely to get smaller.

Question 7

Between the year 1100 and the start of the United States Civil War in 1860 the share of the labor force engaged in agriculture

Accepted Answer

A)  increased from about 50 percent to about 80 percent. 
B)  decreased from about 50 percent to about 2 percent. 
C)  decreased from about 80 percent to about 50 percent. 
D)  decreased from about 60 percent to about 25 percent. 
A)  increased from about 50 percent to about 80 percent. 
B)  decreased from about 50 percent to about 2 percent. 
C)  decreased from about 80 percent to about 50 percent. 
D)  decreased from about 60 percent to about 25 percent.

Question 8

Falling price levels reduce real GDP because

Accepted Answer

A)  wealth is redistributed from creditors to debtors. 
B)  income is redistributed from creditors to debtors. 
C)  income is redistributed from debtors to creditors. 
D)  wealth is redistributed from debtors to creditors. 
A)  wealth is redistributed from creditors to debtors. 
B)  income is redistributed from creditors to debtors. 
C)  income is redistributed from debtors to creditors. 
D)  wealth is redistributed from debtors to creditors.

Question 9

Prior to World War I

Accepted Answer

A)  fiscal policy was the major stabilization policy in the United States. 
B)  monetary policy was the major stabilization policy in the United States. 
C)  neither fiscal nor monetary policy were feasible as stabilization policy in the United States. 
D)  fiscal and monetary policy worked together to be effective stabilization policies in the United States. 
A)  fiscal policy was the major stabilization policy in the United States. 
B)  monetary policy was the major stabilization policy in the United States. 
C)  neither fiscal nor monetary policy were feasible as stabilization policy in the United States. 
D)  fiscal and monetary policy worked together to be effective stabilization policies in the United States.

Question 10

Each of the following is a fact about the Great Depression except

Accepted Answer

A)  from full employment in 1929, real GDP fell until it was nearly 40 percent below potential output by 1933. 
B)  investment spending collapsed: by 1932 real investment spending was less than one-ninth of what it had been three years before. 
C)  unemployment had reached a quarter of the labor force by 1933. 
D)  real interest rates decreased. 
A)  from full employment in 1929, real GDP fell until it was nearly 40 percent below potential output by 1933. 
B)  investment spending collapsed: by 1932 real investment spending was less than one-ninth of what it had been three years before. 
C)  unemployment had reached a quarter of the labor force by 1933. 
D)  real interest rates decreased.

Question 11

Investment spending was depressed in Japan in the 1990s because

Accepted Answer

A)  real interest rates were too high. 
B)  the yen was overvalued. 
C)  nominal interest rates were too high. 
D)  no one was exactly sure which institutions were bankrupt, so no one was anxious to lend money to anyone. 
A)  real interest rates were too high. 
B)  the yen was overvalued. 
C)  nominal interest rates were too high. 
D)  no one was exactly sure which institutions were bankrupt, so no one was anxious to lend money to anyone.

Question 12

Changes that will transform the macroeconomy in the future include each of the following except

Accepted Answer

A)  continued increase in financial flexibility that allows consumers to borrow more on less collateral. 
B)  less need for productivity increases in agriculture and manufacturing. 
C)  continued increase in financial flexibility which will make interpretation of financial markets more . difficult and is thus likely to make monetary policy somewhat more difficult to conduct. 
D)  continued expansion in international trade. 
A)  continued increase in financial flexibility that allows consumers to borrow more on less collateral. 
B)  less need for productivity increases in agriculture and manufacturing. 
C)  continued increase in financial flexibility which will make interpretation of financial markets more . difficult and is thus likely to make monetary policy somewhat more difficult to conduct. 
D)  continued expansion in international trade.

Question 13

Investment spending was depressed in Japan in the 1990s because

Accepted Answer

A)  real interest rates were too high. 
B)  of regulatory forbearance: the belief that the best way to solve the problem was to pretend it did not exist. 
C)  nominal interest rates were too high. 
D)  the yen was undervalued. 
A)  real interest rates were too high. 
B)  of regulatory forbearance: the belief that the best way to solve the problem was to pretend it did not exist. 
C)  nominal interest rates were too high. 
D)  the yen was undervalued.

Question 14

U.S. merchandise imports

Accepted Answer

A)  have doubled as a share of total goods production since 1960. 
B)  have quadrupled as a share of total goods production since 1960. 
C)  have doubled as a share of total goods production since 1900. 
D)  have tripled as a share of total goods production since 1900. 
A)  have doubled as a share of total goods production since 1960. 
B)  have quadrupled as a share of total goods production since 1960. 
C)  have doubled as a share of total goods production since 1900. 
D)  have tripled as a share of total goods production since 1900.

Question 15

In the post-World War II era

Accepted Answer

A)  the business cycle has been about 25 to 30 percent smaller than prior to World War I. 
B)  the business cycle has been about 25 to 30 percent larger than prior to World War I. 
C)  inflation has been less of a problem than prior to World War I. 
D)  borrowing by households has decreased from what it was prior to World War I. 
A)  the business cycle has been about 25 to 30 percent smaller than prior to World War I. 
B)  the business cycle has been about 25 to 30 percent larger than prior to World War I. 
C)  inflation has been less of a problem than prior to World War I. 
D)  borrowing by households has decreased from what it was prior to World War I.

For Japan to recover

Before World War II

Falling price levels reduce real GDP because

If liquidity constraints - the inability to borrow - start to increase for households,

If international trade continues to increase,

If liquidity constraints - the inability to borrow - continue to decrease for households,

Between the year 1100 and the start of the United States Civil War in 1860 the share of the labor force engaged in agriculture

Falling price levels reduce real GDP because

Prior to World War I

Each of the following is a fact about the Great Depression except

Investment spending was depressed in Japan in the 1990s because

Changes that will transform the macroeconomy in the future include each of the following except

Investment spending was depressed in Japan in the 1990s because

U.S. merchandise imports

In the post-World War II era

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

The Future of Macroeconomics

Epilogue

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Exam 16: Changes in the Macroeconomy and Changes in Macroeconomic Policy

For Japan to recover

Before World War II

Falling price levels reduce real GDP because

If liquidity constraints - the inability to borrow - start to increase for households,

If international trade continues to increase,

If liquidity constraints - the inability to borrow - continue to decrease for households,

Between the year 1100 and the start of the United States Civil War in 1860 the share of the labor force engaged in agriculture

Falling price levels reduce real GDP because

Prior to World War I

Each of the following is a fact about the Great Depression except

Investment spending was depressed in Japan in the 1990s because

Changes that will transform the macroeconomy in the future include each of the following except

Investment spending was depressed in Japan in the 1990s because

U.S. merchandise imports

In the post-World War II era

Introduction to Macroeconomics

Measuring the Macroeconomy

Thinking Like an Economist

The Theory of Economic Growth

The Reality of Economic Growth: History and Prospect

Building Blocks of the Flexible-Price Model

Equilibrium in the Flexible-Price M Odel

Money, Prices, and Inflation

The Sticky-Price Income-Expenditure Framework: Consumption and the Multiplier

Investment, Net Exports, and Interest Rates: The Is Curve

The Money Market and the LM Curve

The Phillips Curve, Expectations, and Monetary Policy

Stabilization Policy

Budget Balance, National Debt, and Investment

International Economic Policy

The Future of Macroeconomics

Epilogue

Filters