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Macroeconomics, 3e (Williamson)
Chapter 1 Introduction
1) In 2005, the per-capita GDP in the United States was about
A) $17,500.
B) $27,500.
C) $37,500.
D) $47,500.
Answer: C
Question Status: New

2) Which of the following topics is NOT a primary concern of macroeconomists?
A) fluctuations in the level of economic activity
B) differences in standards of living across countries
C) relative wages of skilled and unskilled workers
D) unemployment
Answer: C
Question Status: Previous Edition

3) Which of the following questions is of most interest for MACROECONOMISTS?
A) Why is there inflation?
B) Why does the steel industry want tariffs?
C) What is the appropriate stance of antitrust policy?
D) Why do foreigners immigrate to the United States?
Answer: A
Question Status: Previous Edition

4) Primarily, macroeconomists use microeconomic principles to study
A) business cycles and trends in the stock market.
B) long-run economic growth and antitrust policies.
C) trends in the stock market and long-term economic growth.
D) long-run economic growth and business cycles.
Answer: D
Question Status: Previous Edition

5) The two most important American business cycle events of the twentieth century were
A) the Great Depression and stagflation.
B) World War II and the Great Depression.
C) the productivity slowdown and the Great Depression.
D) government budget deficits and World War II.
Answer: B
Question Status: Previous Edition

6) Over the course of the twentieth century, the typical American
A) remained equally as rich.
B) became twice as rich.
C) became five times as rich
D) became eight times as rich.
Answer: D
Question Status: Previous Edition

, 7) Which of the following assertions is false?
A) The Great Depression was a typical business cycle.
B) Very rapid growth occurred during World War II.
C) Real GDP per capita dipped about 30% during the Great Depression.
D) On average, the U.S. economy grows at a rate of 2.1%.
Answer: A
Question Status: New

8) The relationship between the level of growth of an economic variable, gt, and its level, yt, is
best approximated as
A) y
gt = t .
yt 1
B) gt = log yt – log yt-1.
C) yt = log gt - log gt-1.
D) log gt = yt – yt-1.
Answer: B
Question Status: Previous Edition

9) The business cycle component of the log of real per-capita GNP is equal to
A) log of actual real GNP - log of trend GNP.
B) log of trend GNP ÷ log of actual real GNP.
C) log of trend GNP - log of actual real GNP.
D) log of actual real GNP ÷ log of trend GNP.
Answer: A
Question Status: Previous Edition

10) For the study of economic growth, it is most helpful to examine movements in ________; for
the study of business cycles, it is most helpful to examine movements in ________.
A) trend GNP; trend GNP
B) trend GNP; deviations from trend in GNP
C) deviations from trend in GNP; trend GNP
D) deviations from trend in GNP; deviations from trend in GNP
Answer: B
Question Status: Previous Edition

11) Over the twentieth century, growth in per-capita GNP was highest
A) immediately prior to the Great Depression.
B) during World War II.
C) during the 1960s.
D) during the 1980s.
Answer: B
Question Status: Previous Edition

12) When we say the U.S. economy has grown on average at 2.1%, we mean
A) the inflation rate.
B) the growth rate of nominal GDP.
C) the growth rate of per-capita nominal GDP.
D) the growth rate of per-capita real GDP.
Answer: D
Question Status: New

,13) A useful macroeconomic model
A) is extremely realistic.
B) is simple.
C) never generates testable hypotheses.
D) provides a lot of intricate details.
Answer: B
Question Status: Previous Edition

14) The structure of a macroeconomic model involves all of the following except
A) the available technology.
B) the behavior of consumers and firms.
C) the preferences of consumers.
D) the available resources.
Answer: B
Question Status: Previous Edition

15) What characterizes a competitive equilibrium?
A) Markets are rationed.
B) Governments stay out of the market.
C) Economic agents are price-takers.
D) It is costly to experiment with policies.
Answer: C
Question Status: New

16) The development most responsible for the wide-spread introduction of macroeconomic
models built upon solid microeconomic foundations was the
A) work of John Maynard Keynes.
B) rational expectation revolution.
C) popularization of supply-side economics.
D) development of the Keynesian coordination failure model.
Answer: B
Question Status: Previous Edition

17) According to the Lucas critique, changes in economic policy are likely to have important
effects on
A) the available amounts of natural resources.
B) the behavior of consumers and firms.
C) the preferences of consumers.
D) none of the above
Answer: B
Question Status: Previous Edition

18) Current macroeconomic models use microeconomic principles because
A) they use the same language for all economists.
B) they highlight the sociological aspects of production.
C) the behavior of economic agents changes with policy.
D) we live in a democratic society and everybody has a say.
Answer: C
Question Status: New

, 19) What do macroeconomists not agree on?
A) that microeconomic principles should be used
B) what generates business cycles
C) how to build models of growth
D) that economic agents optimize
Answer: B
Question Status: New

20) According to money surprise theory, the primary causes of business cycles are
A) shocks to aggregate demand.
B) monetary factors.
C) technology shocks.
D) waves of self-fulfilling optimism and pessimism.
Answer: B
Question Status: Previous Edition

21) According to real business cycle theory, the primary causes of business cycles are
A) shocks to aggregate demand.
B) monetary factors.
C) technology shocks.
D) waves of self-fulfilling optimism and pessimism.
Answer: C
Question Status: Previous Edition

22) According to Keynesian coordination failure theory, the primary causes of business cycles
are
A) shocks to aggregate demand.
B) monetary factors.
C) technology shocks.
D) waves of self-fulfilling optimism and pessimism.
Answer: D
Question Status: Previous Edition

23) The macroeconomic model that is most supportive of the role of government policy aimed at
smoothing business cycles is the
A) real business cycle model.
B) money surprise model.
C) Keynesian coordination failure model.
D) Solow growth model.
Answer: C
Question Status: Previous Edition

24) Two important theories of unemployment are
A) game theory and search theory.
B) search theory and the efficiency wage theory.
C) the efficiency wage theory and the quantity theory.
D) the quantity theory and game theory.
Answer: B
Question Status: Previous Edition