1.

Macroeconomics is the study of the:

A.

activities of individual units of the economy.

B.

decisionmaking by households and firms.

C.

economy as a whole.

D.

interaction of firms and households in the marketplace.



2.

All of the following are types of macroeconomics data except the:

A.

price of an IBM computer.

B.

growth rate of real GDP.

C.

inflation rate.

D.

unemployment rate.



3.

The total income of everyone in the economy adjusted for the level of prices is called:

A.

a recession.

B.

an inflation.

C.

real GDP.

D.

a business fluctuation.



4.

A measure of how fast prices are rising is called the:

A.

growth rate of real GDP.

B.

inflation rate.

C.

unemployment rate.

D.

market-clearing rate.



5.

Recessions are periods when real GDP:

A.

increases slowly.

B.

increases rapidly.

C.

decreases mildly.

D.

decreases severely.



6.

Compared with 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.



7.

Deflation occurs when:

A.

real GDP decreases.

B.

the unemployment rate decreases.

C.

prices fall.

D.

prices increase, but at a slower rate.



8.

Endogenous variables are:

A.

fixed at the moment they enter the model.

B.

determined within the model.

C.

the inputs of the model.

D.

from outside the model.



9.

In an economic model:

A.

exogenous variables and endogenous variables are both fixed when they enter the model.

B.

endogenous variables and exogenous variables are both determined within the model.

C.

endogenous variables affect exogenous variables.

D.

exogenous variables affect endogenous variables.



10.

In a simple graphical model of the supply and demand for pizza with the price of pizza measured vertically and the quantity of pizza measured horizontally:

A.

the supply curve slopes upward and to the right.

B.

the demand curve slopes upward and to the right.

C.

the supply curve slopes downward and to the right.

D.

at the equilibrium price, the supply of pizza exceeds the demand for pizza.



11.

Which of the following statements about economic models is true?

A.

There is only one correct economic model.

B.

All economic models are based on the same assumptions.

C.

The purpose of economic models is to show how endogenous variables affect exogenous variables.

D.

Economists use different models to address different questions.



12.

All of the following statements about sticky prices are true except:

A.

in the short run, some wages and prices are sticky.

B.

the sticky-price model describes the equilibrium toward which the economy slowly gravitates.

C.

for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility.

D.

magazine publishers tend to change their newsstand prices only every three or four years.




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