Test Bank for Macroeconomics, 4e by Charles Jones

Test Bank for Macroeconomics, 4e by Charles Jones (All Chapters)

CHAPTER 1: Introduction to Macroeconomics

MULTIPLE CHOICE

• A central topic of study in macroeconomics is ________, while a central topic of study in

microeconomics is ________.

• the cosmos; particle physics
• the overall performance of an economy; an individual market
• an individual market; the overall performance of an economy
• the overall performance of a single economy; the individual firm
• consumer behavior; firm behavior

ANS: B DIF: Easy REF: 1.1 TOP: I.

MSC: Remembering

2. The three main variables we discuss in the short run are:

• economic fluctuations, interest rates, and unemployment.
• economic fluctuations, inflation, and money.
• economic fluctuations, inflation, and unemployment.
• interest rates, money supply, and taxes.
• economic fluctuations, interest rates, and money.

ANS: C DIF: Easy REF: 1.1 TOP: I.

MSC: Remembering

• Macroeconomics is to microeconomics what ________ is to ________.
• cosmology; particle physics d. chemistry; organic chemistry
• particle physics; cosmology e. biology; zoology
• physics; biology

ANS: A DIF: Easy REF: 1.1 TOP: I.

MSC: Applying

• Which of the following does macroeconomics endeavor to answer?
• Why is the typical person in the United States today more than 10 times richer than the typical

person a century ago?ii. Why has the unemployment rate been nearly twice as high in Europe as in the United States in recent years?iii. What determines the rate of inflation? What determines how rapidly the overall price level in an economy increases?

• i only d. i and ii
• i, ii, and iii e. ii and iii
• ii only

ANS: B DIF: Moderate REF: 1.1 TOP: I.

MSC: Applying

• Which of the following does macroeconomics NOT endeavor to answer? 1 / 4

• Why is the typical person in the United States today more than 10 times richer than the typical

person a century ago?ii. Why has the unemployment rate been nearly twice as high in Europe as in the United States in recent years?iii. Why has the price of orange juice risen sharply?

• ii and iii d. i, ii, and iii
• i only e. iii only
• ii only

ANS: E DIF: Moderate REF: 1.1 TOP: I.

MSC: Applying

• Which of the following does macroeconomics endeavor to answer?
• What role does the government play in recessions, booms, and determining the rate of

inflation?ii. What causes an increase in the price of Exxon stock?iii. How does a dairy farmer react to rising milk prices?

• i only d. i, ii, and iii
• ii only e. ii and iii
• iii only

ANS: A DIF: Moderate REF: 1.2 TOP: II.

MSC: Applying

• Which of the following does macroeconomics endeavor to answer?
• How does a dairy farmer react to rising wheat prices?

ii. What causes an increase in the price of Apple stock?iii. What are potential causes of financial crises?

• i only d. i, ii, and iii
• ii only e. ii and iii
• iii only

ANS: C DIF: Moderate REF: 1.1 TOP: II.

MSC: Applying

• Which of the following does macroeconomics endeavor to answer?
• What role does the government play in recessions, booms, and determining the rate of

inflation?ii. What caused the currency crises in Mexico in the mid-1990s and in many Asian economies at the end of the 1990s?iii. How does a dairy farmer react to rising milk prices?

• iii only d. i, ii, and iii
• ii only e. i and iii
• i and ii

ANS: C DIF: Moderate REF: 1.1 TOP: II.

MSC: Applying

• Which of the following lists the four steps we use to study macroeconomic behavior in the correct

order?

• (1) document the facts; (2) develop a model; (3) compare the predictions of the model to

the original facts; and (4) use the model to make other predictions that may eventually be tested 2 / 4

• (1) document the facts; (2) use the model to make other predictions that may eventually be

tested; (3) compare the predictions of the model to the original facts; and (4) develop a model

• (1) compare the predictions of the model to the original facts; (2) develop a model; (3)

document the facts; and (4) use the model to make other predictions that may eventually be tested

• (1) develop a model; (2) document the facts; (3) compare the predictions of the model to

the original facts; and (4) use the model to make other predictions that may eventually be tested

• None of these answers is correct.

ANS: A DIF: Easy REF: 1.2 TOP: II.

MSC: Remembering

• ________ are parameters to the model and generally are fixed over time, while ________ are the

outcomes of the model.

• Shocks; parameters
• Endogenous variables; exogenous variables
• Endogenous variables; shocks
• Exogenous variables; endogenous variables
• Parameters; system variables

ANS: D DIF: Easy REF: 1.2 TOP: II.

MSC: Remembering

• Which of the following questions should a successful model predict?
• How do changes in government policies change the labor market?

ii. How does money supply influence inflation?iii. How does investment affect economic growth?

• ii only d. i and ii
• i, ii, and iii e. i and iii
• iii only

ANS: B DIF: Moderate REF: 1.2 TOP: II.

MSC: Applying

• Which of the following questions should a successful model predict?
• How do changes in government policies change the labor market?

ii. How does money supply influence inflation?iii. What is the relationship between inflation and unemployment?

• iii only d. i and ii
• ii only e. i and iii
• i, ii, and iii

ANS: C DIF: Moderate REF: 1.2 TOP: II.

MSC: Applying

• Which of the following questions should a successful model predict?
• Why, in general, do Americans have higher incomes than Africans?

ii. How much less unemployment is there during an economic expansion?iii. Why does the United States have a lower unemployment rate than Europe?

• i and ii d. i, ii, and iii
• ii only e. i and iii
• iii only
• / 4

ANS: D DIF: Moderate REF: 1.2 TOP: II.

MSC: Applying

14. Consider the following model of the labor market:

Labor supply:

Labor demand:

The endogenous variables are:

a.and .

• and the equilibrium wage, w.

c.and the equilibrium wage, w.

• the equilibrium quantity of labor, L*, and wage, w*.

e.and the equilibrium quantity of labor, L.

ANS: D DIF: Difficult REF: 1.2 TOP: II.

MSC: Applying

15. Consider the following model of the labor market:

Labor supply:

Labor demand:

The values of the equilibrium quantity of labor, L, and wage, w, are:

a..b..c..d..e..

ANS: A DIF: Difficult REF: 1.2 TOP: II.

MSC: Applying

16. Consider the following model of the labor market:

Labor supply:

Labor demand:

The value of the equilibrium quantity of labor, L, and wage, w, are:

• = 4

4/5 ; = 1/5. d. = 6; = 6.

• = 5; = 6. e. Not enough information is given.
• = 6; = 5.

ANS: C DIF: Difficult REF: 1.2 TOP: II.

MSC: Applying

• Income per person began at ________ in 1870 and ________ over a factor of 15 to ________ in

2012.

• $2,500; rose; $35,000 d. $44,000; fell; $3,500
• $2,800; rose; $58,000 e. $40,000; fell; $2,500
• $2,800; rose; $100,000

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