Macroeconomics

Question 1

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

a) development of the Keynesian coordination failure model.
b) popularization of supply-side economics.
c) work of John Maynard Keynes.
d) rational expectations revolution.

Answer 1

d) rational expectations revolution.

Question 2

In 2011, the per-capita GDP in the United States, in 2005 dollars, was about?

Answer 2

$43,000.

Question 3

Suppose that GDP is equal to 1000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal?

Answer 3

250

Question 4

The components of investment expenditures include all of the following except

a) financial investment.
b) non-residential investment.
c) residential investment.
d) inventory investment.

Answer 4

d) inventory investment.

Question 5

Suppose we know the following about a lawn repair business: wages $15,000, profits $4,000, tax $ 3,000, parts $ 9,000. What is the contribution to GDP of this business using the product approach?

Answer 5

$22,000.

Question 6

A positive relationship between the rate of change in money prices and real GDP is?

Answer 6

a Phillips curve.

Question 7

Which of the following is not a correct characterization of the U.S. business cycle?

Answer 7

Consumption is highly variable.

Question 8

Before 2000, the three most recent U.S. recessions occurred in

Answer 8

1973-1975, 1981-1982, and 1990-1991.

Question 9

If the correlation between GDP and y is -0.75, we say y is

Answer 9

countercyclical.

Question 10

If the correlation between GDP and y is 0.55, we say y is

Answer 10

procyclical.

Question 11

If the correlation between GDP and y is 0, we say y is

Answer 11

acyclical.

Question 12

One example of a Phillips Curve would be a

Answer 12

positive relationship between deviations from trend in the level of prices and the level of aggregate economic activity.

Question 13

In the second half of the twentieth century, the U.S. inflation rate was at its highest in the period from?

Answer 13

the mid-1970s to the early 1980s.

Question 14

In the period 1950-2011, the inflation rate in the U.S. CPI has

Answer 14

been more variable than the inflation rate in the GDP price deflator.

Question 15

We learn the following about a ski resort: ticket sales $100M, snow making expenses $70M, wages $20M, interest on business loans $5M, and profits $5M. What is the contribution to GDP using the product approach?

Answer 15

$70M

Question 16

Additions to inventory are

Answer 16

counted as a component of investment spending and counted as an expenditure in GDP accounting.

Question 17

A scatterplot allows us

Answer 17

to see the comovement between two time series.

Question 18

A business cycle trough is a

Answer 18

relatively large negative deviation from trend in real GDP.

Question 19

For the period 1947-2012 in the United States, the price level was

Answer 19

countercyclical.

Question 20

Difficulties in determining the cyclical pattern in real wage rates from aggregate data are primarily caused by biases due to

Answer 20

variations in the composition of the labor force over the business cycle.