test macro
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Mankiw Macroeconomics 6e Ch08
1. In the Solow growth model with population growth (n) and technological progress (g), the steady-state growth rate of output per efficiency unit is A. 0. 2. In the Solow growth model with population growth (n) and technological progress (g), the steady-state growth rate of output per worker is C. g.
3. In the Solow growth model with population growth (n) and technological Progress (g), the steady-state growth rate of total output is D. n + g. 4. A permanent change in the growth rate of total output can arise from a change in the A. rate of technological progress.
5. In the Solow model with technological progress, an increase in the rate of technological change will C. leave the investment curve unchanged. 6. In a Solow model with population growth and technological progress, the steady state level of consumption is maximized when the steady state marginal product of capital equals the rate of depreciation plus A. the rate of population growth plus the rate of technological change. 7. The steady state level of income B. the current level of income in the country. 8. Using the framework of the Solow growth model, the U.S. level of capital is presently C. below the Golden Rule level.
9. All of the following are possible explanations for the worldwide slowdown in economic growth during the 70's and 80's EXCEPT D. scarcity of non-petroleum raw materials.
10. In the basic endogenous growth model, the production function exhibits B. constant returns.
11. In the basic endogenous growth model, usually called the Y=AK model, as long as the savings rate times the constant A is greater the rate of depreciation, income will grow D. forever.
12. In the Solow model, savings leads to _______ growth, but in the Y=AK model, savings can lead to _______ growth. B. temporary; persistent
13. Advocates of the Y=AK model interpret capital as C. including knowledge. 14. In the two sector model presented in Section 8-4, where the sectors consist of manufacturing firms and research universities, A. only firms use capital as inputs. 15. In the two sector model, the proportion of labor devoted to research universities determines the D. steady-state growth rate of income.
16. In most endogenous growth theories, externalities from firms' research play a crucial role. Economists agree that research B. can exhibit externalities of ambiguous value.
17. The marginal product of capital (MPK) is 1/3; the marginal product of labor (MPL) is 3. Capital is increased by 30; the labor force is increased by 10. How much does output increase? D. 40
18. Suppose that the production function is Y = AF(K,L). The (unchanging) share of capital in output is 0.5. Suppose that output increases by 4 percent, the labor force increases by 3 percent, and the capital stock increases by 2 percent. What is the Solow residual in this case? C. 1.5 percent
Mankiw Macroeconomics 6e Ch09
1. The model of aggregate supply and aggregate demand in the short run differs from our long-run model of the economy because, in the short run C. prices are fixed.
2. Suppose that the price level is 1 and output is 100. Then the Fed suddenly increases the money supply by 10 percent. According to the AD/AS model, what would be the most probable paths for output and prices? A. Y: 100, 105, 100; P: 1, 1, 1.1
3. The model of aggregate supply and aggregate demand that assumes sticky prices B. shows that output depends on demand as well as supply. 4. The assumption of sticky prices is NOT valid for the case of the A. pork-belly market.
5. One explanation for the stickiness of magazine newsstand prices is D. customers would be annoyed if the price of their favorite magazine changed every month. 6. The quantity equation MV = PY implies that the AD curve is D. downward sloping.
7. For a fixed money supply, a higher level of real balances implies B. a lower price level. 8. If the Fed reduces the supply of money, the D. AD curve shifts inward. 9. The LRAS curve of the classical model is A. vertical.
10. In the short run, if prices are fixed, the aggregate supply curve is C. horizontal. 11. The effect of a change in aggregate demand on income and prices depends crucially on A. the time horizon. 12. An increase in aggregate demand, such as that due to an increase in government purchases increases D. output in the short run and prices in the long run. 13. The AS/AD model with sticky prices predicts that, in the long run, a reduction of the money supply results in B. lower prices and no change in output. 14. If the money supply is held constant, an increase in the velocity of money would cause the AD curve to B. shift outward.
15. The occurrence of falling output combined with rising prices is called D. stagflation. 16. Stagflation--a period of rising unemployment coupled with rising inflation--could most easily result from a(n) C. increase in the price of oil. 17. Faced with an adverse supply shock, if the central bank wants to stabilize output, it should B. increase the money supply. 18. All of the following represent supply/price shocks EXCEPT C. the introduction of a debit card, increasing the velocity of money.
19. Consider the following data on inflation and unemployment
|
Year |
Inflation |
Unemployment |
|
1 |
10% |
5% |
|
2 |
8% |
6% |
|
3 |
4% |
9% |
The part of the business cycle characterizing this economy from year 1 to year 3 is a A. recession. 20. Suppose the economy is faced with an adverse supply shock. The Fed decides to immediately accommodate the shock. What path of income and prices would be observed in the economy? D. Y: 100, 100, 100; P: 1, 1.2, 1.2
Mankiw Macroeconomics 6e Ch10 1. In "The General Theory of Employment, Interest, and Money," John Maynard Keynes proposed that the Great Depression was caused by B. low aggregate demand.
2. Which of the following is NOT exogenous in the IS-LM model? A. The interest rate
3. In the Keynesian cross model of Chapter 10, if the interest rate is constant and the MPC is 0.7, then the government purchases multiplier is D. 3.3.
4. In the Keynesian cross model of Chapter 10, if the interest rate is constant, the MPC is 0.6, and taxes are increased by $100, by how much does income change? B. It decreases by $150.
5. The relationship between interest rates and the level of income that arises in the market for goods and services is called the B. IS curve.
6. The investment function and the IS curve slope D. downward because higher interest rates induce less investment.
7. The slope of the IS curve depends on A. the sensitivity of investment to the interest rate.
8. The IS curve is drawn for a given A. fiscal policy.
9. Exogenous increases in the supply of loanable funds shift the D. IS curve inward.
10. If investment becomes less sensitive to the interest rate, then the C. IS curve becomes steeper.
11. If the marginal propensity to consume is large, then the D. IS curve is relatively flat.
12. The LM curve is drawn for a given C. money supply.
13. The quantity of real money balances demanded depends on the A. nominal interest rate.
14. The quantity of real money balances demanded depends on B. real income.
15. The relationship between the interest rate and the level of income that arises in the market for money balances is called the A. LM curve.
16. The theory of liquidity preference assumes that the supply of real money balances, plotted against the interest rate, is D. vertical. 17. The theory of liquidity preference postulates that the demand for real money balances, plotted against the interest rate, is B. downward sloping.
18. In the early 1980's the Federal Reserve, under Paul Volcker, began a period of tight money aimed at reducing inflation. Under this policy, nominal interest rates were: B. higher in the short run and lower in the long run. 19. In the quantity theory interpretation of the LM curve, the LM curve slopes up because B. velocity depends on the interest rate.
20. If the central bank increased the supply of real money balances, then the LM curve would D. shift outward.
21. If money demand became more sensitive to the level of income, the LM curve would A. become steeper. Конец формы
Mankiw Macroeconomics 6e Ch11 1. According to the IS-LM model, an increase in government purchases causes a(n) C. increase in income and an increase in the interest rate.
2. Suppose that the LM curve is vertical. An increase in taxes will D. decrease the interest rate and leave income unchanged. 3. According to the IS-LM model, if the central bank increases the money supply, then the interest rate B. falls and income rises.
4. The IS-LM model predicts that an increase in the price level will B. increase the interest rate and decrease income.
5. Suppose that the government raises taxes. According to the IS-LM model, what does the Fed have to do to keep income constant and what is the subsequent effect on interest rates? B. The Fed needs to increase the money supply; interest rates go down.
6. Suppose that the government gets serious about saving the whales and increases spending considerably. What does the Fed have to do to keep interest rates constant, and what happens to the level of income? D. The Fed needs to increase the money supply; income goes up. 7. If the government raises taxes and the central bank maintains a policy of keeping the interest rate constant, then the combined effect of these two policies would cause income to A. fall.
8. If the government raises taxes and the central bank increases the money supply, then the combined effect of these two policies would cause income to D. it cannot be determined from the information given.
9. If in response to an increase in government spending, the Fed decides to keep interest rates constant, the government purchases multiplier is A. larger than in the case where the Fed keeps the money supply constant.
10. The slowdown in the U.S. economy in 2001 can be explained by A. negative shocks to the IS curve resulting in a fall in aggregate demand.
11. Suppose that income is temporarily above the natural rate level. In the IS-LM model, long-run equilibrium is achieved when the price level B. rises and the LM curve shifts inward.
12. Because of the relationship between prices and the real money supply, the aggregate demand curve is D. downward sloping.
13. If the government increases government spending, then the aggregate demand curve will A. shift to the right.
14. If the central bank decreases the supply of money, then the aggregate demand curve will B. shift to the left.
15. On the same graph as we draw the downward-sloping aggregate demand curve, we draw an aggregate supply curve that is B. horizontal in the short run and vertical in the long run.
16. Suppose that a money demand shock hits the economy. According to the classical model, the variable that will adjust to move the economy back to equilibrium is D. the price level.
17. The "money hypothesis" explaining the Great Depression stipulates that the Depression was caused by a contractionary shift in the LM curve. Which of the following facts supports this hypothesis? C. The nominal money supply contracted and the price level fell dramatically.
18. The "spending hypothesis" explaining the Great Depression stipulates that the main cause of the Great Depression was a decline in spending. Which of the following does not support this hypothesis? C. The government budget deficit rose during 1929-1932.
19. The Pigou effect stipulates A. falling prices expand income.
20. Debt-deflation leads to lower income because B. falling prices redistribute income from debtors to creditors, which leads to a decline in the APC.
21. Most economists believe that the Great Depression is unlikely to be repeated in the future. Which of the following is NOT a legitimate reason to believe this? B. More effort is made today to balance the government budget.
Mankiw Macroeconomics 6e Ch12
1. The key difference between the IS-LM model and the Mundell-Fleming Model is that the B. Mundell-Fleming model assumes a small open economy.
2. According to the Mundell-Fleming model, an appreciation of the exchange rate would B. increase import demand and decrease export demand.
3. If the IS* curve in the Mundell-Fleming model is expressed by the equation Y = C(Y - T) + I(r*) + G + NX(e) then NX(e) should be interpreted as meaning that D. net exports depend negatively on the exchange rate. 4. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the IS* curve to D. remain unchanged.
5. The Mundell-Fleming model predicts that, in Y - e space, an appreciation of the exchange rate will cause the LM* curve to D. remain unchanged.
6. Suppose that the Mundell-Fleming model is depicted in a Y - e graph. The equilibrium would then occur at the point where the A. IS* and LM* curves intersect.
7. In a small open economy with a floating exchange rate, a fiscal expansion C. leaves income unchanged.
8. According to the Mundell-Fleming model, in a small country with a floating exchange rate, a tax cut will cause the exchange rate to A. rise.
9. In a small open economy with a floating exchange rate, a monetary expansion A. increases income.
10. Under a system of floating exchange rates, a monetary contraction by the central bank would cause the exchange rate to A. rise.
11. Suppose the United States were a small open economy under floating exchange rates. If the U.S. government imposes a quota on German cars in an effort to reduce the trade deficit, then B. the exchange rate goes up and the trade deficit remains unchanged.
12. In an open economy with a fixed exchange rate, a fiscal contraction D. decreases both the money supply and income.
13. In an open economy with a fixed exchange rate, expansionary monetary policy D. is impossible.
14. Under a system of fixed exchange rates, an import restriction on foreign goods would cause net exports and the level of income to A. rise.
15. Under a system of fixed exchange rates B. only fiscal policy can affect income.
16. Under a system of floating exchange rates A. only monetary policy can affect income.
17. Suppose country A has a higher risk premium than country B. One can then infer that country A C. is less politically stable than country B.
18. Many economists favor A. allows the government to use monetary policy as an output stabilizer.
19. Choose the pair of words that best completes this sentence: In a large open economy monetary policy is ____ potent and fiscal policy is ____ potent than in a closed economy. D. more; less
Mankiw Macroeconomics 6e Ch13
1. Consider the following aggregate supply equation:
Y = Y + a*(P - Pe) Based on this equation, the slope of the AS curve is D. 1/a.
2. The positive relationship between the price level and the amount of output means that the aggregate supply curve is B. upward sloping.
3. When the nominal wage is stuck, a higher price level will cause the real wage to A. fall. 4. In the sticky-wage model, output deviates from the natural rate through C. unexpected changes in the price level. 5. In the sticky-wage model, employment is assumed to be determined by the C. demand for labor. 6. The sticky wage model predicts that B. employment rises as the real wage falls. 7. According to the data B. the real wage is somewhat procyclical.
8. In the imperfect-information model, it is assumed that firms B. can observe the price of their output but cannot observe the overall price level.
9. In the sticky-price model, if the fraction of firms in the economy that set prices in advance rises, then it would be expected that the aggregate supply curve D. becomes flatter.
10. All three models of aggregate supply presented in Chapter 13 share the feature that, if the price level is above the expected price level, then D. output will be above its natural rate. 11. The Phillips curve represents the trade-off between C. inflation and unemployment.
12. The modern Phillips curve posits that the inflation rate depends on three forces. On which of the following does it NOT depend? A. The money supply
13. If expected inflation rises, the Phillips curve A. shifts upward.
14. The inflation that tends to occur when unemployment is below the natural rate is called C. demand-pull inflation.
15. The inflation caused by supply shocks is called D. cost-push inflation. 16. In the country of Stabilia, the monetary authorities particularly dislike inflation. The current inflation of 5 percent is considered rampant. If the sacrifice ratio in Stabilia is five, the percentage of a year's GDP that has to be forgone to bring inflation down to 1 percent is C. 20 percent.
17. The approach that assumes that people optimally use all the available information to forecast the future is called D. rational expectations.
18. The idea that, in the long run, the economy returns to the levels of output and unemployment described by the classical model is called A. the natural-rate hypothesis.
19. Hysteresis is the effect of history on D. the natural rate of unemployment.