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Test Bank For Macro Economics 11th Edition
By Andrew Abel, Ben Bernake, And Dean Croushore
All Chapters | Expert Verified Answers | Grade A+
1|Page
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TABLE OF CONTENTS
Part 1: Introduction
1. Introduction to Macroeconomics
2. The Measurement and Structure of the National Economy
Part 2: Long-Run Economic Performance
3. Productivity, Output, and Employment
4. Consumption, Saving, and Investment
5. Saving and Investment in the Open Economy
6. Long-Run Economic Growth
7. The Asset Market, Money, and Prices
Part 3: Business Cycles and Macroeconomic Policy
8. Business Cycles
9. The IS–LM/AD–AS Model: A General Framework for Macroeconomic Analysis
10. Classical Business Cycle Analysis: Market-Clearing Macroeconomics
11. Keynesianism: The Macroeconomics of Wage and Price Rigidity
Part 4: Macroeconomic Policy: Its Environment and Institutions
12. Unemployment and Inflation
13. Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
14. Monetary Policy and the Federal Reserve System
15. Government Spending and Its Financing
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CHAPTER 1: INTRODUCTION TO MACROECONOMICS
1. Which of the following best describes the scope of macroeconomics?
A) It studies individual consumers and firms.
B) It focuses on the behavior of large corporations only.
C) It examines national economic aggregates and overall economic performance.
D) It only deals with the study of inflation.
Answer: C
Explanation: Microeconomics studies individual agents, whereas macroeconomics looks at aggregates (GDP, inflation,
unemployment, etc.) at the national or global level.
2. A primary concern of macroeconomics is:
A) Determination of a firm’s profit-maximizing output.
B) Understanding how individual preferences affect consumption of specific goods.
C) Analysis of the overall price level and national output.
D) Market structure and firm behavior in oligopolies.
Answer: C
Explanation: While microeconomics focuses on individual markets, macroeconomics deals with broad indicators such as
aggregate price levels (inflation) and national output (GDP).
3. Which of the following is a key macroeconomic goal?
A) Minimizing the costs of production for individual firms.
B) Achieving high and stable rates of economic growth.
C) Maximizing the utility of individual consumers.
D) Managing the internal organization of firms.
Answer: B
Explanation: Major macroeconomic policy goals typically include stable growth, low unemployment, and stable prices.
4. The difference between ―positive‖ and ―normative‖ economics is best described as:
A) Positive economics deals with value judgments; normative economics deals with facts.
B) Positive economics deals with ―what is‖; normative economics deals with ―what ought to be.‖
C) They are the same thing in macroeconomics.
D) Normative economics is always wrong.
Answer: B
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Explanation: Positive economics analyzes facts and cause-effect relationships; normative economics incorporates value
judgments and policy recommendations.
5. Macroeconomists rely on models primarily to:
A) Predict precise future economic events without error.
B) Simplify complex real-world phenomena into core relationships.
C) Eliminate the role of assumptions in economics.
D) Ensure that economic policies never fail.
Answer: B
Explanation: Economic models are abstractions designed to highlight the most important relationships and simplify the
complex real-world economy.
6. An exogenous variable in a macroeconomic model is:
A) Determined within the model.
B) Determined by forces outside the model.
C) Always constant over time.
D) Unrelated to any real-world data.
Answer: B
Explanation: Exogenous variables come from outside the model and are taken as given, whereas endogenous variables
are determined by the model itself.
7. In the short run, macroeconomists tend to be more concerned with:
A) The classical dichotomy.
B) Business cycle fluctuations in output and employment.
C) Only the long-term growth rate of the economy.
D) Rapid technological change.
Answer: B
Explanation: The short-run approach emphasizes business cycles and short-term changes in output and employment,
whereas long-run analysis focuses on growth trends.
8. Business cycles refer to:
A) Seasonal fluctuations in agricultural output.
B) Recurring periods of expansions and recessions in the economy.
C) The daily fluctuations of stock prices.
D) One-time downturns in an economy due to specific events.
4|Page
Test Bank For Macro Economics 11th Edition
By Andrew Abel, Ben Bernake, And Dean Croushore
All Chapters | Expert Verified Answers | Grade A+
1|Page
, TESTBANKS BY TESTBANKSNERD
TABLE OF CONTENTS
Part 1: Introduction
1. Introduction to Macroeconomics
2. The Measurement and Structure of the National Economy
Part 2: Long-Run Economic Performance
3. Productivity, Output, and Employment
4. Consumption, Saving, and Investment
5. Saving and Investment in the Open Economy
6. Long-Run Economic Growth
7. The Asset Market, Money, and Prices
Part 3: Business Cycles and Macroeconomic Policy
8. Business Cycles
9. The IS–LM/AD–AS Model: A General Framework for Macroeconomic Analysis
10. Classical Business Cycle Analysis: Market-Clearing Macroeconomics
11. Keynesianism: The Macroeconomics of Wage and Price Rigidity
Part 4: Macroeconomic Policy: Its Environment and Institutions
12. Unemployment and Inflation
13. Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
14. Monetary Policy and the Federal Reserve System
15. Government Spending and Its Financing
2|Page
, TESTBANKS BY TESTBANKSNERD
CHAPTER 1: INTRODUCTION TO MACROECONOMICS
1. Which of the following best describes the scope of macroeconomics?
A) It studies individual consumers and firms.
B) It focuses on the behavior of large corporations only.
C) It examines national economic aggregates and overall economic performance.
D) It only deals with the study of inflation.
Answer: C
Explanation: Microeconomics studies individual agents, whereas macroeconomics looks at aggregates (GDP, inflation,
unemployment, etc.) at the national or global level.
2. A primary concern of macroeconomics is:
A) Determination of a firm’s profit-maximizing output.
B) Understanding how individual preferences affect consumption of specific goods.
C) Analysis of the overall price level and national output.
D) Market structure and firm behavior in oligopolies.
Answer: C
Explanation: While microeconomics focuses on individual markets, macroeconomics deals with broad indicators such as
aggregate price levels (inflation) and national output (GDP).
3. Which of the following is a key macroeconomic goal?
A) Minimizing the costs of production for individual firms.
B) Achieving high and stable rates of economic growth.
C) Maximizing the utility of individual consumers.
D) Managing the internal organization of firms.
Answer: B
Explanation: Major macroeconomic policy goals typically include stable growth, low unemployment, and stable prices.
4. The difference between ―positive‖ and ―normative‖ economics is best described as:
A) Positive economics deals with value judgments; normative economics deals with facts.
B) Positive economics deals with ―what is‖; normative economics deals with ―what ought to be.‖
C) They are the same thing in macroeconomics.
D) Normative economics is always wrong.
Answer: B
3|Page
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Explanation: Positive economics analyzes facts and cause-effect relationships; normative economics incorporates value
judgments and policy recommendations.
5. Macroeconomists rely on models primarily to:
A) Predict precise future economic events without error.
B) Simplify complex real-world phenomena into core relationships.
C) Eliminate the role of assumptions in economics.
D) Ensure that economic policies never fail.
Answer: B
Explanation: Economic models are abstractions designed to highlight the most important relationships and simplify the
complex real-world economy.
6. An exogenous variable in a macroeconomic model is:
A) Determined within the model.
B) Determined by forces outside the model.
C) Always constant over time.
D) Unrelated to any real-world data.
Answer: B
Explanation: Exogenous variables come from outside the model and are taken as given, whereas endogenous variables
are determined by the model itself.
7. In the short run, macroeconomists tend to be more concerned with:
A) The classical dichotomy.
B) Business cycle fluctuations in output and employment.
C) Only the long-term growth rate of the economy.
D) Rapid technological change.
Answer: B
Explanation: The short-run approach emphasizes business cycles and short-term changes in output and employment,
whereas long-run analysis focuses on growth trends.
8. Business cycles refer to:
A) Seasonal fluctuations in agricultural output.
B) Recurring periods of expansions and recessions in the economy.
C) The daily fluctuations of stock prices.
D) One-time downturns in an economy due to specific events.
4|Page
