Macroeconomics Question Paper

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Question 1 .
Using a market-clearing model to analyze the demand for haircuts is ______ because the price of a haircut usually changes ______. Answer
Selected Answer:
unrealistic; infrequently
Correct Answer:
unrealistic; infrequently

. Question 2 .
Which of the following is not the correct combination for a U.S. president and an important economic issue of his administration? Answer
Selected Answer:
President Clinton, inflation
Correct Answer:
President Clinton, inflation

. Question 3 .
Macroeconomic models are used to explain how ______ variables influence ______ variables. Answer
Selected Answer:
exogenous; endogenous
Correct Answer:
exogenous; endogenous

. Question 4 .
The total income of everyone in the economy adjusted for the level of prices is called: Answer
Selected Answer:
real GDP.
Correct Answer:
real GDP.

. Question 5 .
A period of falling prices is called:
Answer
Selected Answer:
a recession.
Correct Answer:
deflation.

. Question 6 .
The inflation rate is a measure of how fast:
Answer
Selected Answer:
prices in the economy are rising.
Correct Answer:
prices in the economy are rising.

. Question 7 .
Exogenous variables are:
Answer
Selected Answer:
fixed at the moment they enter the model.
Correct Answer:
fixed at the moment they enter the model.

. Question 8 .
In the relationship expressed in functional form, Y = G(K, L), Y stands for real GDP, K stands for the amount of capital in the economy, and L stands for the amount of labor in the economy. In this case G( ): Answer

Selected Answer:
is the function telling how the variables in the parenthesis determine real GDP. Correct Answer:
is the function telling how the variables in the parenthesis determine real GDP.
. Question 9 .
The inflation rate in the United States averaged about:
Answer
Selected Answer:
zero between 1900 and 1950.
Correct Answer:
zero between 1900 and 1950.

. Question 10 .
Endogenous variables are:
Answer
Selected Answer:
determined within the model.
Correct Answer:
determined within the model.

. Question 11 .
The best measure of the economic satisfaction of the members of a society is: Answer
Selected Answer:
real GDP.
Correct Answer:
real GDP.

. Question 12 .
In 2010 in the United States, the approximate percentage of GDP that was spent on consumption was: Answer
Selected Answer:
67 percent.
Correct Answer:
67 percent.

. Question 13 .
The national income accounts identity, for an open economy, is: Answer
Selected Answer:
Y = C + I + G + NX.
Correct Answer:
Y = C + I + G + NX.

. Question 14 .
If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately ______ percent. Answer
Selected Answer:
2
Correct Answer:
2

. Question 15 .
If the number employed increases while the number unemployed does not change, the unemployment rate: Answer
Selected Answer:
will not change.
Correct Answer:
will decrease.

. Question 16 .
As a percentage of GNP, depreciation (also called the consumption of fixed capital) amounts to approximately: Answer
Selected Answer:
10 percent.
Correct Answer:
10 percent.

. Question 17 .
Prices of items included in the CPI are:
Answer
Selected Answer:
weighted according to quantity of the item purchased by the typical household. Correct Answer:
weighted according to quantity of the item purchased by the typical household.
. Question 18 .
Real GDP means the value of goods and services is measured in ______ prices. Answer
Selected Answer:
constant
Correct Answer:
constant

. Question 19 .
If nominal GDP increased by 5 percent and the GDP deflator increased...
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