Test Bank for Macroeconomics 6th Canadian Edition
by Mankiw
Page 1
, Indicate the answer choice that best completes the statement or answers the question.
1. Compared with the real GDP during a recession, real GDP during a depression:
a. increases more rapidly.
b. increases at approximately the same rate.
c. decreases at approximately the same rate.
d. decreases more severely.
2. Which of the following is the best example of a flexible price?
a. the price of a cup of coffee in a coffee shop
b. the price of gasoline at a service station
c. the price of a ticket at a movie theatre
d. the price of a book in a bookstore
3. Macroeconomists are like scientists in that they both:
a. design data and conduct controlled experiments to test their theories.
b. rely on data analyzed from experiments they set up in a laboratory.
c. are unlimited in their use of controlled experiments.
d. collect data, develop hypotheses, and analyze the results.
4. Deflation occurs when:
a. the real GDP decreases.
b. the unemployment rate decreases.
c. prices fall.
d. prices increase but at a slower rate.
5. A graph of the rate of inflation in Canada over the twentieth century shows:
a. an overall upward trend interrupted by a large downturn in the 1930s.
b. some periods of deflation mixed with mostly positive rates of inflation before 1955 but only positive
rates of inflation after 1955.
c. a relatively steady, positive level throughout the century except for deflation in the 1930s.
d. a constant rate of inflation in the first half of the century followed by an upward trend in the second
half.
6. Macroeconomic models:
a. assume that all wages and prices are sticky.
b. assume that all wages and prices are flexible.
c. make different assumptions to explain different aspects of the macroeconomy.
d. focus primarily on the optimizing behaviour of households and firms.
7. An assumption of _____ is more plausible for studying the short-run behaviour of the economy, while an
assumption of _____ is more plausible for studying the long-run equilibrium behaviour of the economy.
a. deflation; inflation
Page 2
by Mankiw
Page 1
, Indicate the answer choice that best completes the statement or answers the question.
1. Compared with the real GDP during a recession, real GDP during a depression:
a. increases more rapidly.
b. increases at approximately the same rate.
c. decreases at approximately the same rate.
d. decreases more severely.
2. Which of the following is the best example of a flexible price?
a. the price of a cup of coffee in a coffee shop
b. the price of gasoline at a service station
c. the price of a ticket at a movie theatre
d. the price of a book in a bookstore
3. Macroeconomists are like scientists in that they both:
a. design data and conduct controlled experiments to test their theories.
b. rely on data analyzed from experiments they set up in a laboratory.
c. are unlimited in their use of controlled experiments.
d. collect data, develop hypotheses, and analyze the results.
4. Deflation occurs when:
a. the real GDP decreases.
b. the unemployment rate decreases.
c. prices fall.
d. prices increase but at a slower rate.
5. A graph of the rate of inflation in Canada over the twentieth century shows:
a. an overall upward trend interrupted by a large downturn in the 1930s.
b. some periods of deflation mixed with mostly positive rates of inflation before 1955 but only positive
rates of inflation after 1955.
c. a relatively steady, positive level throughout the century except for deflation in the 1930s.
d. a constant rate of inflation in the first half of the century followed by an upward trend in the second
half.
6. Macroeconomic models:
a. assume that all wages and prices are sticky.
b. assume that all wages and prices are flexible.
c. make different assumptions to explain different aspects of the macroeconomy.
d. focus primarily on the optimizing behaviour of households and firms.
7. An assumption of _____ is more plausible for studying the short-run behaviour of the economy, while an
assumption of _____ is more plausible for studying the long-run equilibrium behaviour of the economy.
a. deflation; inflation
Page 2
