Question 1

Limit commitment occurs when

Accepted Answer

A)  collateral is required to get a loan. 
B)  one cannot borrow as much as necessary to conduct business. 
C)  one cannot be forced to repay a loan. 
D)  the bank can sell your loan to another bank. 
A)  collateral is required to get a loan. 
B)  one cannot borrow as much as necessary to conduct business. 
C)  one cannot be forced to repay a loan. 
D)  the bank can sell your loan to another bank.

Question 2

The structure of a macroeconomic model involves all of the following except

Accepted Answer

A)  the available technology. 
B)  the behavior of consumers and firms. 
C)  the preferences of consumers. 
D)  the available resources. 
A)  the available technology. 
B)  the behavior of consumers and firms. 
C)  the preferences of consumers. 
D)  the available resources.

Question 3

The two most important American business cycle events of the twentieth century were

Accepted Answer

A)  the Great Depression and stagflation. 
B)  World War II and the Great Depression. 
C)  the productivity slowdown and the Great Depression. 
D)  government budget deficits and World War II. 
A)  the Great Depression and stagflation. 
B)  World War II and the Great Depression. 
C)  the productivity slowdown and the Great Depression. 
D)  government budget deficits and World War II.

Question 4

The quantity of money in circulation in the United States is managed by

Accepted Answer

A)  The Securities Exchange Commission. 
B)  The United States Treasury. 
C)  The Federal Reserve System. 
D)  Wall Street. 
A)  The Securities Exchange Commission. 
B)  The United States Treasury. 
C)  The Federal Reserve System. 
D)  Wall Street.

Question 5

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

Accepted Answer

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

Question 6

Which is a question of interest in this book?

Accepted Answer

A)  What causes growth in the long term? 
B)  How should a labor contract be structured? 
C)  How should a government be elected? 
D)  What is the impact of government provided health care? 
A)  What causes growth in the long term? 
B)  How should a labor contract be structured? 
C)  How should a government be elected? 
D)  What is the impact of government provided health care?

Question 7

The real interest rate is

Accepted Answer

A)  always equal to the pure rate of time preference. 
B)  equal to the rate of inflation minus the nominal rate of interest. 
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. 
A)  always equal to the pure rate of time preference. 
B)  equal to the rate of inflation minus the nominal rate of interest. 
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.

Question 8

What do we assume about households and firms?

Accepted Answer

A)  They act irrationally. 
B)  They do what the government tells them to do. 
C)  They look after each other. 
D)  They optimize. 
A)  They act irrationally. 
B)  They do what the government tells them to do. 
C)  They look after each other. 
D)  They optimize.

Question 9

Credit markets are

Accepted Answer

A)  bad, as they cause people to accumulate debt. 
B)  not important for the financial crisis. 
C)  important, but given too little attention in the past by macroeconomists. 
D)  markets that work perfectly. 
A)  bad, as they cause people to accumulate debt. 
B)  not important for the financial crisis. 
C)  important, but given too little attention in the past by macroeconomists. 
D)  markets that work perfectly.

Question 10

The relationship between the growth rate of an economic variable,gt,and its level,yt,can be approximated by

Accepted Answer

A)  gt = yt - yt - 1. 
B)  gt = logt - log yt - 1. 
C)  yt = log gt - log gt - 1. 
D)  log gt = yt - yt - 1. 
A)  gt = yt - yt - 1. 
B)  gt = logt - log yt - 1. 
C)  yt = log gt - log gt - 1. 
D)  log gt = yt - yt - 1.

Question 11

Over the course of the twentieth century,the typical American

Accepted Answer

A)  remained equally as rich. 
B)  became twice as rich. 
C)  became five times as rich 
D)  became eight times as rich. 
A)  remained equally as rich. 
B)  became twice as rich. 
C)  became five times as rich 
D)  became eight times as rich.

Question 12

What characterizes a competitive equilibrium?

Accepted Answer

A)  Markets are rationed. 
B)  Governments stay out of the market. 
C)  Economic agents are price-takers. 
D)  It is costly to experiment with policies. 
A)  Markets are rationed. 
B)  Governments stay out of the market. 
C)  Economic agents are price-takers. 
D)  It is costly to experiment with policies.

Question 13

In the 2008-09 recession,the government deficit

Accepted Answer

A)  stayed roughly constant. 
B)  decreased. 
C)  increased. 
D)  would have increased if the government had intervened. 
A)  stayed roughly constant. 
B)  decreased. 
C)  increased. 
D)  would have increased if the government had intervened.

Limit commitment occurs when

The structure of a macroeconomic model involves all of the following except

The two most important American business cycle events of the twentieth century were

The quantity of money in circulation in the United States is managed by

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

Which is a question of interest in this book?

The real interest rate is

What do we assume about households and firms?

Credit markets are

The relationship between the growth rate of an economic variable,gt,and its level,yt,can be approximated by

Over the course of the twentieth century,the typical American

What characterizes a competitive equilibrium?

In the 2008-09 recession,the government deficit

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

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 1: Introduction

Limit commitment occurs when

The structure of a macroeconomic model involves all of the following except

The two most important American business cycle events of the twentieth century were

The quantity of money in circulation in the United States is managed by

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

Which is a question of interest in this book?

The real interest rate is

What do we assume about households and firms?

Credit markets are

The relationship between the growth rate of an economic variable,gt,and its level,yt,can be approximated by

Over the course of the twentieth century,the typical American

What characterizes a competitive equilibrium?

In the 2008-09 recession,the government deficit

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

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters