SECTION 1(A): Intro to Macro Analysis

Question 1

List two exogenous variables on the macroeconomy.

Answer 1

(1) Weather; (2) Rest of the World (RoW).

Question 2

List the three macroeconomic policy activities.

Answer 2

(1) Monetary Policy; (2) Fiscal Policy; (3) Exchange Rate Policy.

Question 3

Monetary Policy: regulation of the (1) _____ by (2) _____.

Answer 3

(1) nation’s money supply; (2) central bank.

Question 4

Fiscal Policy: regulation of (1) _____ and/or (2) _____, by the (3) _____ and (4) _____.

Answer 4

(1) government spending; (2) taxation; (3) executive; (4) legislative.

Question 5

Exchange Rate Policy: regulation of the (1) _____ by (2) _____.

Answer 5

(1) nominal exchange rate; (2) the central bank.

Question 6

Define nominal exchange rate.

Answer 6

The price of foreign currency in the economy.

Question 7

List three inputs into the macro economy.

Answer 7

(1) Exogenous variables; (2) Microeconomic policy; (3) Macroeconomic policy.

Question 8

The output of the economy is measured in what four ways?

Answer 8

(1) Rate of Economic Growth; (2) Unemployment Rate; (3) Rate of Inflation; (4) International Economic Position.

Question 9

Define economic growth.

Answer 9

The percentage change in real GDP per year.

Question 10

Define unemployment rate.

Answer 10

The percent of labor force that is unable to find a job.

Question 11

Define rate of inflation.

Answer 11

The percentage change in price level per year.

Question 12

The country’s international economic position can be summarized by what three factors?

Answer 12

(1) Net Exports (X-M); (2) Current Account; (3) External debt.