TEST BANK FOR PRINCIPLES OF MACROECONOMICS, 10TH EDITION BY N. GREGORY MANKIW | NEWEST UPDATE .

TEST BANK FOR PRINCIPLES OF MACROECONOMICS, 10TH EDITION BY N. GREGORY MANKIW | NEWEST UPDATE . Chapter 1. The Science of Macroeconomics 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. 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. Macroeconomics is the study of the: activities of individual units of the economy. decisionmaking by households and firms. economy as a whole. interaction of firms and households in the marketplace. The study of the economy as a whole is called: household economics. business economics. microeconomics. macroeconomics. 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. All of the following except are important macroeconomic variables. real GDP the unemployment rate the marginal rate of substitution the inflation rate Page 1 The total income of everyone in the economy adjusted for the level of base year prices is called: a recession. an inflation. real GDP. a business fluctuation. A measure of how fast the general level of prices is rising is called the: growth rate of real GDP. inflation rate. unemployment rate. market-clearing rate. 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. Real GDP over time, and the growth rate of real GDP . grows; fluctuates is steady; is steady grows; is steady is steady; fluctuates Two striking features of a graph of U.S. real 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. In the U.S. economy today, real 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. Recessions are periods when real GDP: increases slowly. increases rapidly. decreases mildly. decreases severely. Compared with real 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. Page 2 A severe recession is called a(n): depression. deflation. exogenous event. marketclearing assumption. 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. Deflation occurs when: real GDP decreases. the unemployment rate decreases. prices fall. prices increase but at a slower rate. A period of falling prices is called: deflation. inflation. a depression. a recession. A graph of the rate of inflation in the United States over the twentieth century shows: an overall upward trend interrupted by a large downturn in the 1930s. some periods of deflation mixed with mostly positive rates of inflation before 1955 but only positive rates of inflation after 1955. a relatively steady, positive level throughout the century except for deflation in the 1930s. a constant rate of inflation in the first half of the century followed by an upward trend in the second half. A graph of the U.S. unemployment rate over the twentieth century shows: an overall upward trend in the unemployment rate interrupted by a large upturn in the 1930s. an overall downward trend in the unemployment rate interrupted by a large upturn in the 1930s. rates of unemployment always greater than zero with substantial variations from year to year. alternating periods of positive and negative rates of unemployment. Which of the combinations listed is not a U.S. president and an important economic issue of his administration? President Carter, inflation President Reagan, budget deficits President G. H. W. Bush, budget deficits President Clinton, inflation All of the following are types of macroeconomics data except the: Page 3 price of a computer. growth rate of real GDP. inflation rate. unemployment rate. During the period between 1900 and 2000, the unemployment rate in the United States was highest in the: 1920s. 1930s. 1970s. 1980s. The unemployment rate: was zero during the 1990s in the United States. was zero on average between 1900 and 1950 in the United States. has never been zero in the United States. is usually zero when the economy is not in a recession or depression. Exogenous variables are: determined outside the model. determined within the model. the outputs of the model. explained by the model. Endogenous variables are: fixed at the moment they enter the model. determined within the model. the inputs of the model. from outside the model. In an economic model: exogenous variables and endogenous variables are both determined outside the model. endogenous variables and exogenous variables are both determined within the model. endogenous variables affect exogenous variables. exogenous variables affect endogenous variables. Variables that a model tries to explain are called: endogenous. exogenous. market clearing. fixed. Important characteristics of macroeconomic models include all of the following except: Page 4 simplifying assumptions. functional relationships based on randomized control trials. endogenous and exogenous variables. implicit or explicit consistency with microeconomic foundations. In a simple model of the supply and demand for pizza, the endogenous variables are: the price of pizza and the price of cheese. aggregate income and the quantity of pizza sold. aggregate income and the price of cheese. the price of pizza and the quantity of pizza sold.