Advanced Macroeconomic Theory Exam
Bank
Course Introduction
Advanced Macroeconomic Theory delves into the sophisticated models and analytical tools used to understand aggregate economic phenomena, including output, employment, inflation, and growth. This course explores dynamic macroeconomic modeling, intertemporal choice, and the role of government policy, while incorporating expectations, market frictions, and microfoundations. Students engage with topics such as real business cycle theory, New Keynesian frameworks, monetary and fiscal policy analysis, and consumption and investment dynamics, gaining the expertise to critically evaluate contemporary macroeconomic issues and research.
Recommended Textbook
Macroeconomics 12th Edition by Rudiger Dornbusch Dr
Available Study Resources on Quizplus
24 Chapters
1201 Verified Questions
1201 Flashcards
Source URL: https://quizplus.com/study-set/554
Page 2
Chapter 1: Introduction
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10318
Sample Questions
Q1) Looking at how the rate of inflation and unemployment have behaved over the last three decades we can see that
A)unemployment and inflation have always increased together
B)unemployment has always increased when inflation decreased
C)there is no simple relationship between unemployment and inflation
D)low unemployment always implies high inflation
E)high unemployment always implies high inflation
Answer: C
Q2) Which of the following transactions will have a direct and immediate effect on GDP?
A)an unemployed worker gets unemployment compensation
B)you sell your used car to a friend
C)you buy some IBM stock
D)a German tourist drinks Canadian beer in a New York City restaurant
E)the value of your Google stock holdings drops drastically
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: National income accounting
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10319
Sample Questions
Q1) If private domestic saving exceeds private domestic investment by $220 billion and government spending exceeds tax revenue by $340 billion, then
A)the trade deficit is $560 billion
B)the trade surplus is $560 billion
C)the trade deficit is $120 billion
D)the trade surplus is $120 billion
E)the trade deficit is $340 billion
Answer: C
Q2) As a percentage of GNP, the U.S.federal debt
A)sharply increased in the 1980s, decreased in the 1990s, and increased again after 2000
B)decreased steadily from World War II to the year 2000
C)increased steadily from 1960 to 2013
D)was never lower than 20 percent
E)never exceeded 100 percent
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Growth and accumulation
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10320
Sample Questions
Q1) In the neoclassical growth model, if the capital-labor ratio is below the (optimal) steady-state level, we should expect that
A)economic growth will continue to decline unless technological advances are made
B)income per capita will decrease since gross investment is not sufficient to supply new workers with adequate capital
C)the savings rate will decline due to the lack of economic growth
D)all of the above
E)none of the above
Answer: E
Q2) An economy with a capital-labor ratio that is lower than the steady-state level can achieve a steady-state equilibrium at this lower capital-labor ratio only if
A)the savings rate decreases
B)the rate of depreciation decreases
C)the rate of population growth decreases
D)technological advances are made
E)all of the above
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Growth and policy
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10321
Sample Questions
Q1) Which of the following countries had the LOWEST average annual growth rate of GDP per capita between 1988 and 2010?
A)Egypt
B) Ghana
C)Tanzania
D)Thailand
E)United States
Q2) Countries with higher saving rates may have higher equilibrium growth rates since
A)people who save more also are more industrious
B)higher income allows for more savings
C)a higher saving rate allows for more investment in human capital which ultimately enhances economic growth
D)having more capital equipment is more important than having better capital equipment
E)none of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Aggregate supply and demand
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10322
Sample Questions
Q1) In the Keynesian aggregate supply curve case, a fiscal expansion will
A)have no impact on equilibrium income or prices
B)increase prices but have no impact on equilibrium income
C)increase prices more than income
D)increase income more than prices
E)increase equilibrium income but have no impact on prices
Q2) Supply-side economics involves policy measures designed to
A)encourage technological progress
B)remove unnecessary government regulations
C)give investment tax credits to stimulate specific capital investments
D)all of the above
E)none of the above
Q3) When nominal money supply is held constant and the price level increases, then
A)real money balances increase and real interest rates decrease
B)real money balances decrease and real interest rates increase
C)real money balances decrease and real interest rates remain the same
D)the AS-curve must have shifted to the right
E)both B and D
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Aggregate supply and the phillips curve
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10323
Sample Questions
Q1) The upward-sloping AS-curve will shift eventually to the left if
A)labor productivity increases
B)actual output is lower than the full-employment level
C)actual output is higher than the full-employment level
D)the markup over labor cost falls
E)the level of potential output increases
Q2) In the medium run the aggregate supply curve is upward sloping since A)workers immediately realize that nominal wage increases are really the result of price increases
B)firms encounter costs in resetting prices and are reluctant to change wages following a change in aggregate demand
C)wages and prices always immediately change in proportion to the money stock
D)there is always natural friction in the labor market that prevents unemployment from reaching zero
E)none of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Unemployment
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10324
Sample Questions
Q1) Which of these people could officially be counted as unemployed?
A)a garage attendant who got fired from his old job two months ago but will start a new job in two weeks
B)a busboy who works only four hours a day, five days a week, but would prefer to work full-time as a waiter
C)an accountant who quit her job when she had a baby two months ago
D)a woman who joined the babysitters' union several months ago and averages about five customers a week at her $10/hour rate
E)none of the above
Q2) Assume adult males have a 48% share of the work force and their unemployment rate is 7.0%; adult females' share is 45% and their unemployment rate is 6.8%; teenagers' share of the work force is 7% with an unemployment rate of 18.0%.What is the overall unemployment rate?
A)7)0%
B)7)2%
C)7)7%
D)8)4%
E)9)6%
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Inflation
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/10325
Sample Questions
Q1) People should be concerned about imperfectly anticipated inflation since
A)it results in a redistribution of wealth
B)debtors tend to profit while creditors tend to lose
C)equity holders experience a loss in the real value of fixed dividends
D)they may move into higher tax brackets as nominal wages are adjusted for inflation
E)all of the above
Q2) In which time period was the average real yield on a three-month Treasury bill the highest?
A)1960 to 1969
B)1970 to 1979
C)1980 to 1989
D)1990 to 1999
E)2000 to 2009
Q3) When inflation rises unexpectedly, it is generally the case that
A)nominal interest rates and real interest rates will both rise at the same rate
B)nominal interest rates will rise while real interest rates will decline
C)real interest rates will rise while nominal interest rates will decline
D)all nominal wages will immediately be adjusted upwards
E)real wages will have to be adjusted upwards
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Policy preview
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10326
Sample Questions
Q1) A central bank that wants to stabilize the economy in the short run should try to
A)establish a clear inflation target and stick to it no matter what
B)affect aggregate supply through open market operations
C)affect aggregate demand through open market operations
D)maintain a stable growth rate of money supply
E)concentrate only on long-run goals
Q2) Assume the current inflation rate is 2.4% and output is at the full-employment level.If the central bank has set nominal interest rates at 5.6%, what is the central bank's inflation target if it follows the Taylor rule?
A)0%
B)1%
C)2%
D)3%
E)4%
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Income and spending
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10327
Sample Questions
Q1) The expenditure multiplier measures
A)the number of steps it takes to move from one equilibrium to another
B)the rise in saving resulting from a rise in income
C)the change in investment resulting from a change in income
D)the change in induced consumption caused by a change in income
E)none of the above
Q2) Assume a simple model with no government or foreign sector.If an increase in autonomous investment of 100 leads to an increase in consumption of 300, the size of the expenditure multiplier is
A)0)75
B)1)33
C)3)00
D)4)00
E)5)00
Q3) The size of the expenditure multiplier depends on
A)the marginal propensity to consume
B)the marginal propensity to import
C)the marginal income tax rate
D)all of the above
E)only A and B
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Money, interest, and income
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10328
Sample Questions
Q1) The slope of the AD-curve will become flatter if
A)money demand becomes more income inelastic
B)money demand becomes more interest elastic
C)investment becomes more interest elastic
D)the marginal propensity to save increases
E)both A and C
Q2) Looking at the behavior of interest rates over time, we realize that
A)they tend to fall before a recession
B)they tend to be high before a recession and fall during a recession
C)they tend to rise in a recovery and fall in a recession
D)they tend to be high in a recession
E)both B and C
Q3) In an IS-LM model, any point that is to the left and below the IS-curve indicates a situation where
A)there is excess demand for goods and services in the expenditure sector
B)there is excess supply of goods and services in the expenditure sector
C)the expenditure sector is in equilibrium but the money sector is not
D)there is excess demand for money in the money sector
E)there is excess supply of money in the money sector
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Monetary and fiscal policy
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10329
Sample Questions
Q1) Crowding out occurs when
A)an increase in defense spending causes a decrease in consumption
B)expansionary monetary policy fails to stimulate economic growth
C)expansionary fiscal policy causes interest rates to rise, thereby reducing private spending
D)tax increases result in a drop in consumption
E)a policy designed to increase the budget surplus causes the economy to enter a recession
Q2) The re-unification of Germany required a large increase in government spending, but the Bundesbank refused to accommodate the expansionary fiscal policy due to concerns about rising inflation.What was the outcome?
A)rising real interest rates
B)a deficit in the current account of the balance of payments
C)an increase in the budget deficit
D)a change in the composition of Germany's GDP
E)all of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: International linkages
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10330
Sample Questions
Q1) If a French citizen buys 100 shares of IBM stock on the New York Stock Exchange, the transaction will be recorded as
A)a surplus item in the capital account
B)a deficit item in the capital account
C)a surplus item in the current account
D)a deficit item in the current account
E)a decrease in France's GDP
Q2) What were the side effects of the German government's fiscal expansion which was designed to help the economy of the five new states (former East Germany) after the German re-unification?
A)Germany's trade surplus increased
B)the German mark depreciated relative to the currencies of non-European trade partners
C)there was a massive inflow of foreign funds
D)other European countries were forced to raise their interest rates
E)both C and D
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Consumption and saving
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10331
Sample Questions
Q1) If we compare the life-cycle theory of consumption with the permanent-income theory we can conclude that they both
A)pay careful attention to microeconomic foundations
B)agree that temporary tax cuts can be used to stimulate the economy
C)have similar theoretical bases but disagree widely in their policy implications
D)explain why large changes in current income cause large changes in current consumption
E)none of the above
Q2) The theory of consumption of durable goods
A)is basically a theory of investment applied to households
B)states that durable goods purchases are very insensitive to interest rate changes
C)can be explained very well by the life-cycle theory, since people spread their durable goods purchases equally over their lifetimes
D)suggests that expenditures on durable goods do not increase utility as much as expenditures on other consumption goods
E)none of the above
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Investment spending
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10332
Sample Questions
Q1) In which of the following cases would you expect to observe the highest level of desired capital stock?
A)the rental cost of capital is high and wage rates are low
B)the rental cost of capital is low and the level of output is high
C)the rental cost of capital is low and the level of output is low
D)the level of output is low and wage rates are high
E)the level of output is low and wage rates are low
Q2) Assume a Cobb-Douglas production function in which the share of capital is a = 1/4 and the share of labor is b = 3/4.In this case, the marginal product of capital is
A)Y/3K
B)3Y/4K
C)Y/4K
D)3Y/K
E)1/4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: The demand for money
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10333
Sample Questions
Q1) According to the Baumol-Tobin transaction demand model, the amount of money balances held should increase as
A)the interest rate increases
B)the level of income decreases
C)the cost of money transactions increases
D)the cost of illiquidity increases
E)none of the above
Q2) Advantages of holding money rather than less liquid assets such as bonds or stocks include
A) the ability to engage in day-to-day transactions with ease and convenience
B) the ability to take advantage of unforeseen opportunities to make potentially profitable purchases
C) the lowering of overall portfolio risk
D) protection against loss in the market values of other assets in periods of rising interest rates
E) all of the above
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: The fed, money, and credit
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10334
Sample Questions
Q1) Which are the three channels by which the Federal Reserve can reduce money supply?
A)buy government securities, lower reserve requirements, and lower the discount rate
B)buy government securities, raise reserve requirements, and raise the discount rate
C)buy government securities, lower reserve requirements, and raise the discount rate
D)sell government securities, raise reserve requirements, and raise the discount rate
E)sell government securities, lower reserve requirements, and raise the discount rate
Q2) The assumption that banks hold less excess reserves and consumers hold less currency when market interest rates increase implies that
A)the size of the money multiplier decreases as interest rates rise
B)the Fed has total control over the supply of money
C)changes in money supply occur as economic conditions change
D)monetary policy is totally ineffective
E)none of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Policy
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10335
Sample Questions
Q1) The best policy response to a disturbance may be to do nothing if,
A)there are long and variable outside lags
B)a disturbance is short-lived
C)the inside and outside lags are both short
D)the recognition lag is negative
E)both A)and B
Q2) Even the most successful economic forecasters make mistakes since they
A)try to incorporate unexpected events into their forecasts
B)have to rely on a model of the economy that may not be accurate
C)always assume that people have rational expectations
D)generally make unrealistic assumptions
E)all of the above
Q3) Active stabilization policy may actually destabilize the economy since policy makers
A)do not know the exact length of policy lags
B)often do not know whether a disturbance is permanent or transitory
C)base their decisions on incomplete information about the economy
D)cannot take into account how individuals' expectations are affected by policy changes
E)all of the above
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Financial markets and asset prices
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10336
Sample Questions
Q1) Assume U.S.interest rates decrease but interest rates in other countries remain the same.Which of the following is FALSE?
A)the value of the U.S. dollar will decrease
B)the exchange rate of foreign currency to U.S. dollars will increase
C)the U.S. will experience an outflow of funds
D)U)S. stock values will increase
E)U)S. bond prices will increase
Q2) About how much should a financial investment of $10,000 be worth after six years if it earns a compounded yearly interest of 5%?
A)$10,500
B)$12,500
C)$13,000
D)$13,400
E)$15,000
To view all questions and flashcards with answers, click on the resource link above.
21
Chapter 20: The national debt
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10337
Sample Questions
Q1) Which of the following is FALSE about the Canadian debt-to-GDP ratio?
A)it remained under 50 percent from 1970 to 1983
B)it reached a peak of over 80 percent in 1996
C)it reached a peak of 75 percent in 2010
D)it decreased sharply from 1997 to 2007
E)it increased from 2008 to 2010
Q2) In the period of 2000-2009, the largest source of total federal government revenue in the U.S.was
A)social insurance taxes
B)corporate income taxes
C)individual income taxes
D)sales taxes
E)sales of government assets
Q3) From 2000 to 2009, average federal government outlays on net interest on the national debt totaled
A)0)2 percent of GDP
B)0)9 percent of GDP
C)1)2 percent of GDP
D)1)7 percent of GDP
E)2)5 percent of GDP
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Recession and depression
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10338
Sample Questions
Q1) Which of the following did NOT happen during the Great Depression?
A)U)S. unemployment reached 24 percent
B)many countries imposed high tariffs causing a decline in world trade
C)almost every country in the world suffered from a deep recession
D)U)S. unemployment did not fall below 5 percent until the U.S. entered World War II
E)the U.S. government quickly cut taxes causing federal budget deficits to increase sharply
Q2) If you had $10,000 invested in the stock market at its peak in September 1929, how much would your portfolio have been worth in June 1932?
A)$500
B)$1,500
C)$2,500
D)$3,500
E)$5,000
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Inflation and hyperinflation
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10339
Sample Questions
Q1) Which of the following scenarios will result in the largest reduction in inflation at the lowest cost in terms of a reduction in output?
A)monetary restriction combined with fiscal expansion
B)monetary restriction implemented after an oil price decrease
C)monetary expansion combined with fiscal contraction
D)a spending cut combined with a tax cut of equal magnitude
E)a sharp reduction in monetary growth after an oil price increase
Q2) From 1983-88, which country raised the most in revenue as percentage of GDP through the so-called "inflation tax"?
A)Argentina
B)Bolivia
C)Colombia
D)Mexico
E)Peru
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: International adjustment and interdependence
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10340
Sample Questions
Q1) The J-curve effect explains that after a currency depreciates in value
A)price effects are stronger in the short run; volume effects are stronger in the long run
B)price effects are outweighed by volume effects in both the short and long runs
C)volume effects are outweighed by price effects in the long run but not in the short run
D)net exports do not suffer as the price and volume effects offset each other in the long run
E)net exports suffer in the long run as the price effects become zero
Q2) "If the inflation rate differs between two countries, the exchange rate will change in such a way as to maintain constant terms of trade." This statement describes
A)synchronization
B)sterilization
C)purchasing power parity
D)comparative advantage
E)exchange rate overshooting
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Advanced topics
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/10341
Sample Questions
Q1) The random walk of GDP model asserts that
A)demand-side disturbances are not very important
B)most important fluctuations occur randomly on the demand side
C)there is a high elasticity of labor supply in response to temporary changes in wage rates
D)there are many transitory and random fluctuations over the business cycle, but the economy always returns to its growth trend
E)the performance of the economy is closely connected to stock market performance, which follows a random walk
Q2) The real business cycle theory asserts that
A)markets clear fairly rapidly but fluctuations in output occur because of a variety of real shocks that can hit the economy
B)misguided monetary policy is the main contributor to business cycles
C)markets cannot clear easily since wages and prices are not very flexible
D)business cycles occur because firms have incomplete information about relative and absolute prices
E)firms tend to pay higher than market-clearing wages even at times of high unemployment
To view all questions and flashcards with answers, click on the resource link above.