Question 1

One possible explanation of the higher unemployment rate in Canada relative to the U.S.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 U.S. 
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 U.S. 
E)  more job training programs in Canada.

Question 2

What is the difference between nominal and real interest rates,and why do economists deem them both to be important economic indicators?

Accepted Answer

Nominal interest rates are the market or

Question 3

In economic models,the economy must

Accepted Answer

A)  be in competitive equilibrium. 
B)  be in a situation where all resources are used. 
C)  have low inflation. 
D)  have government surpluses. 
E)  be where prices that consumers pay are lower than what sellers are offering. 
A)  be in competitive equilibrium. 
B)  be in a situation where all resources are used. 
C)  have low inflation. 
D)  have government surpluses. 
E)  be where prices that consumers pay are lower than what sellers are offering.

Question 4

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

Accepted Answer

A)  development of the Keynesian coordination failure model. 
B)  the work of Milton Friedman. 
C)  work of John Maynard Keynes. 
D)  popularization of the Solow growth model. 
E)  rational expectation revolution. 
A)  development of the Keynesian coordination failure model. 
B)  the work of Milton Friedman. 
C)  work of John Maynard Keynes. 
D)  popularization of the Solow growth model. 
E)  rational expectation revolution.

Question 5

Which of the following is a fundamental question of macroeconomics?

Accepted Answer

A)  What is the impact of government provided health care? 
B)  How should governments be elected? 
C)  What mechanism could force people to pollute less? 
D)  Where is the stock market heading? 
E)  Should governments act to smooth business cycles? 
A)  What is the impact of government provided health care? 
B)  How should governments be elected? 
C)  What mechanism could force people to pollute less? 
D)  Where is the stock market heading? 
E)  Should governments act to smooth business cycles?

Question 6

The worldwide recession of the late 2000s

Accepted Answer

A)  happened despite strict government regulation. 
B)  was caused by excessively high interest rates. 
C)  can be characterized as a moral hazard problem. 
D)  caused the collapse of the U.S. housing market. 
E)  began with the collapse of the Asian currencies. 
A)  happened despite strict government regulation. 
B)  was caused by excessively high interest rates. 
C)  can be characterized as a moral hazard problem. 
D)  caused the collapse of the U.S. housing market. 
E)  began with the collapse of the Asian currencies.

Question 7

According to the Lucas critique,changes in economic policy are likely to have important effects on

Accepted Answer

A)  the preferences of consumers. 
B)  international trade. 
C)  microeconomic behaviour. 
D)  government. 
E)  the available amounts of natural resources. 
A)  the preferences of consumers. 
B)  international trade. 
C)  microeconomic behaviour. 
D)  government. 
E)  the available amounts of natural resources.

Question 8

Persistent current account deficits make sense if

Accepted Answer

A)  the capital account surplus is reduced. 
B)  government interest rates go down accordingly. 
C)  if the associated foreign borrowing is used to finance increased productive capacity. 
D)  if personal income taxes are reduced. 
E)  if the government budgetary debt is not growing. 
A)  the capital account surplus is reduced. 
B)  government interest rates go down accordingly. 
C)  if the associated foreign borrowing is used to finance increased productive capacity. 
D)  if personal income taxes are reduced. 
E)  if the government budgetary debt is not growing.

Question 9

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

Accepted Answer

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

Question 10

The Canadian government budget was

Accepted Answer

A)  continuously in surplus from 1961 to 2002. 
B)  continuously is surplus from 1961 to the mid 1970s, but was in deficit from 1975 until the late 1990s. 
C)  continuously in deficit from 1961 to the mid 1980s and has been in surplus ever since. 
D)  continuously in deficit from 1961 to the mid 1970s and in surplus from 1975 to 2002. 
E)  was in deficit for most of the period from 1959 to 1970, but was in surplus for most of the period from 1970 to the late 1990s. 
A)  continuously in surplus from 1961 to 2002. 
B)  continuously is surplus from 1961 to the mid 1970s, but was in deficit from 1975 until the late 1990s. 
C)  continuously in deficit from 1961 to the mid 1980s and has been in surplus ever since. 
D)  continuously in deficit from 1961 to the mid 1970s and in surplus from 1975 to 2002. 
E)  was in deficit for most of the period from 1959 to 1970, but was in surplus for most of the period from 1970 to the late 1990s.

Question 11

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 12

Business cycles are

Accepted Answer

A)  similar, but they can have many causes. 
B)  each unique, but all have a single cause. 
C)  similar, and all are created from external forces. 
D)  each unique, and they can have many causes. 
E)  similar, and they all have a single cause. 
A)  similar, but they can have many causes. 
B)  each unique, but all have a single cause. 
C)  similar, and all are created from external forces. 
D)  each unique, and they can have many causes. 
E)  similar, and they all have a single cause.

Question 13

Since 2010 in Canada,the real interest rate

Accepted Answer

A)  has been below zero. 
B)  has been increasing. 
C)  has been positive but decreasing. 
D)  has been below the nomimal interest rate. 
E)  has been roughly constant. 
A)  has been below zero. 
B)  has been increasing. 
C)  has been positive but decreasing. 
D)  has been below the nomimal interest rate. 
E)  has been roughly constant.

Question 14

Government surplus is the same as

Accepted Answer

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

Question 15

The business cycle component of the log of real per capita GDP is equal to

Accepted Answer

A)  log of trend GDP divided by log of actual real GDP. 
B)  log of trend per capita GDP - log of actual real per capita GDP. 
C)  log of actual real GDP divided by log of trend GDP. 
D)  log of trend GDP - log of actual real GDP. 
E)  log of actual real per capita GDP - log of trend per capita GDP. 
A)  log of trend GDP divided by log of actual real GDP. 
B)  log of trend per capita GDP - log of actual real per capita GDP. 
C)  log of actual real GDP divided by log of trend GDP. 
D)  log of trend GDP - log of actual real GDP. 
E)  log of actual real per capita GDP - log of trend per capita GDP.

Question 16

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

Accepted Answer

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

Question 17

Since 1870 in Canada,there has been

Accepted Answer

A)  sustained economic growth until the Great Depression followed by little growth since. 
B)  sustained economic growth. 
C)  too many business cycles to sustain economic growth. 
D)  GDP measured in 2002 dollars is largely unchanged. 
E)  only small growth in average incomes. 
A)  sustained economic growth until the Great Depression followed by little growth since. 
B)  sustained economic growth. 
C)  too many business cycles to sustain economic growth. 
D)  GDP measured in 2002 dollars is largely unchanged. 
E)  only small growth in average incomes.

Question 18

The largest deviation in real per capita GDP from trend GDP occurred

Accepted Answer

A)  during World War II. 
B)  during the post World War II period. 
C)  in the 1990s. 
D)  during the Great Depression and World War II. 
E)  in the 1980s. 
A)  during World War II. 
B)  during the post World War II period. 
C)  in the 1990s. 
D)  during the Great Depression and World War II. 
E)  in the 1980s.

Question 19

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

Accepted Answer

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

Question 20

The Phillips curve represents a

Accepted Answer

A)  short-run relationship but not a long-run one. 
B)  trade-off policy makers can exploit in the long-run. 
C)  a long-run relationship but not a short-run one. 
D)  stable long-run trade-off, exploitable by government policy. 
E)  both a long-run and a short-run relationship. 
A)  short-run relationship but not a long-run one. 
B)  trade-off policy makers can exploit in the long-run. 
C)  a long-run relationship but not a short-run one. 
D)  stable long-run trade-off, exploitable by government policy. 
E)  both a long-run and a short-run relationship.

One possible explanation of the higher unemployment rate in Canada relative to the U.S.before the 2008-2009 recession is

What is the difference between nominal and real interest rates,and why do economists deem them both to be important economic indicators?

In economic models,the economy must

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

Which of the following is a fundamental question of macroeconomics?

The worldwide recession of the late 2000s

According to the Lucas critique,changes in economic policy are likely to have important effects on

Persistent current account deficits make sense if

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

The Canadian government budget was

Since 1870,the typical Canadian

Business cycles are

Since 2010 in Canada,the real interest rate

Government surplus is the same as

The business cycle component of the log of real per capita GDP is equal to

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

Since 1870 in Canada,there has been

The largest deviation in real per capita GDP from trend GDP occurred

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

The Phillips curve represents a

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: 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

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

One possible explanation of the higher unemployment rate in Canada relative to the U.S.before the 2008-2009 recession is

What is the difference between nominal and real interest rates,and why do economists deem them both to be important economic indicators?

In economic models,the economy must

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

Which of the following is a fundamental question of macroeconomics?

The worldwide recession of the late 2000s

According to the Lucas critique,changes in economic policy are likely to have important effects on

Persistent current account deficits make sense if

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

The Canadian government budget was

Since 1870,the typical Canadian

Business cycles are

Since 2010 in Canada,the real interest rate

Government surplus is the same as

The business cycle component of the log of real per capita GDP is equal to

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

Since 1870 in Canada,there has been

The largest deviation in real per capita GDP from trend GDP occurred

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

The Phillips curve represents a

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: 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

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