Test Bank for Macroeconomics, 11e Gregory Mankiw

Test Bank for Macroeconomics, 11e Gregory Mankiw (All Chapters Download the link at the end of Chapters)

Chapter 1

1. Macroeconomics does NOT try to answer the question of:

• why some countries experience rapid growth.
• what is the rate of return on education.
• why some countries have high rates of inflation.
• what causes recessions and depressions.

ANSWER: b

2. A typical trend during a recession is that:

• the unemployment rate falls.
• the popularity of the incumbent president rises.
• incomes fall.
• the inflation rate rises.

ANSWER: c

3. Macroeconomics is the study of the:

• activities of individual units of the economy.
• decision making by households and firms.
• economy as a whole.
• interaction of firms and households in the marketplace.

ANSWER: c

4. The study of the economy as a whole is called:

• household economics.
• business economics.
• microeconomics.
• macroeconomics.

ANSWER: d

• The ability of macroeconomists to predict the future course of economic events:
• is no better than a meteorologist's ability to predict the next month's weather.
• is much better than a meteorologist's ability to predict the next month's weather.
• has gotten worse over time.
• is less precise than it was in the 1920s.

ANSWER: a

• Which of these combinations is NOT a U.S. president and an important economic issue of his administration?
• President Carter; inflation
• President Reagan; budget deficits 1 / 3

• President G. H. W. Bush; budget deficits
• President Clinton; inflation

ANSWER: d

7. All of these are types of macroeconomics data EXCEPT the:

• price of a computer.
• growth rate of real gross domestic product (GDP).
• inflation rate.
• unemployment rate.

ANSWER: a

• All of these EXCEPT _____ are important macroeconomic variables.
• real gross domestic product (GDP)
• the unemployment rate
• the marginal rate of substitution
• the inflation rate

ANSWER: c

• The total income of everyone in the economy adjusted for the level of base year prices is called:
• a recession.
• an inflation.
• real gross domestic product (GDP).
• a business fluctuation.

ANSWER: c

10. A measure of how fast the general level of prices is rising is called the:

• growth rate of real gross domestic product (GDP).
• inflation rate.
• unemployment rate.
• market-clearing rate.

ANSWER: b

11. The inflation rate is a measure of how fast:

• the total income of the economy is growing.
• unemployment in the economy is increasing.
• the general level of prices in the economy is rising.
• the number of jobs in the economy is expanding.

ANSWER: c

• Real gross domestic product (GDP) _____ over time, and the growth rate of real GDP _____.
• grows; fluctuates
• is steady; is steady
• grows; is steady
• is steady; fluctuates 2 / 3

ANSWER: a

• Two striking features of a graph of U.S. real gross domestic product (GDP) per capita over the twentieth

century are the:

• overall upward trend interrupted by a large downturn due to the economic depression in the 1930s.
• nearly constant level with a large downturn in the 1930s.
• downward trend in the first half of the century followed by the upward trend in the second half.
• constant level in the first half of the century followed by the upward trend in the second half.

ANSWER: a

• In the U.S. economy today, real gross domestic product (GDP) per person, compared with its level in 1900,

is about:

• 50 percent higher.
• twice as high.
• three times as high.
• eight times as high.

ANSWER: d

15. Recessions are periods when real gross domestic product (GDP):

• increases slowly.
• increases rapidly.
• decreases mildly.
• decreases severely.

ANSWER: c

• Compared with real gross domestic product (GDP) during a recession, real GDP during a depression:
• increases more rapidly.
• increases at approximately the same rate.
• decreases at approximately the same rate.
• decreases more severely.

ANSWER: d

17. A severe recession is called a(n):

• depression.
• deflation.
• exogenous event.
• market-clearing assumption.

ANSWER: a

18. The annual inflation rate in the United States averaged:

• nearly zero between 1900 and 1950.
• nearly zero between 1950 and 2000.
• about 10 percent between 1900 and 1950.
• about 10 percent between 1950 and 2000.

ANSWER: a

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