Advanced Macroeconomics Final Test Solutions https://quizplus.com/study-set/3666 20 Chapters 1883 Verified Questions
Advanced Macroeconomics Final Test Solutions Course Introduction Advanced Macroeconomics delves into the complex mechanisms driving aggregate economic phenomena, providing students with a rigorous exploration of models and theories that explain economic growth, business cycles, monetary and fiscal policy, and intertemporal dynamics. Emphasis is placed on formal analytical models such as the overlapping generations model, stochastic growth models, and advanced approaches to consumption and investment. The course also examines the roles of expectations, market imperfections, and policy interventions in shaping macroeconomic outcomes, equipping students with the analytical tools needed to evaluate contemporary macroeconomic research and real-world policy challenges.
Recommended Textbook Macroeconomics 2nd Edition by Charles I. Jones
Available Study Resources on Quizplus 20 Chapters 1883 Verified Questions 1883 Flashcards Source URL: https://quizplus.com/study-set/3666
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Chapter 1: Introduction to Macroeconomics Available Study Resources on Quizplus for this Chatper 34 Verified Questions 34 Flashcards Source URL: https://quizplus.com/quiz/72958
Sample Questions Q1) When we look at the __________ we are concerned with the __________. A)short run;causes of economic fluctuations B)long run;causes of economic fluctuations C)short run;determinants of economic growth D)long run;causes of inflation E)long run;money supply Answer: A Q2) Which of the following does macroeconomics not endeavor to answer? i.Why is the typical person in the United States today more than ten times richer than the typical person a century ago? ii.Why has the unemployment rate been nearly twice as high in Europe as in the United States in recent years? iii.Why has the price of orange juice risen sharply? A)ii and iii B)i only C)ii only D)i,ii,and iii E)iii only Answer: E To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Measuring the Macroeconomy Available Study Resources on Quizplus for this Chatper 98 Verified Questions 98 Flashcards Source URL: https://quizplus.com/quiz/72959
Sample Questions Q1) If the percent change in the price level is __________ than the percent change in __________,__________. A)smaller;nominal GDP;real GDP shrinks B)greater;nominal GDP;real GDP shrinks C)greater;real GDP;nominal GDP shrinks D)greater;real GDP;nominal GDP stays the same E)Not enough information is given. Answer: B Q2) Consider Table 2.3.Using the Paasche index,real GDP in 2004 is: A)$8,475. B)$8,500. C)$8,600. D)$9,150. E)$8,875. Answer: E Q3) According to the income approach to GDP,the largest portion of GDP is compensation to employees. A)True B)False Answer: True To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: An Overview of Long- Run Economic Growth Available Study Resources on Quizplus for this Chatper 102 Verified Questions 102 Flashcards Source URL: https://quizplus.com/quiz/72960
Sample Questions Q1) If x grows at 3 percent and y grows at -2 percent and w = x/y,then w grows at 1 percent. A)True B)False Answer: False Q2) Since approximately 1950,__________ has been one of the fastest growing economies. A)Germany B)the United Kingdom C)China D)the United States E)Mexico Answer: C Q3) The benefits of economic growth are which of the following? A)increases in life expectancy B)reductions in infant mortality C)higher incomes D)the gradual release of individuals from physical labor E)all of the above Answer: E To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: A Model of Production Available Study Resources on Quizplus for this Chatper 113 Verified Questions 113 Flashcards Source URL: https://quizplus.com/quiz/72961
Sample Questions Q1) A production function exhibits decreasing returns to scale if, A)when you double each input,you double the output. B)when you double each input,you more than double the output. C)when you double each input,you less than double the output. D)when you double one input,you double the output. E)when you hold inputs constant,you double the output. Q2) Which of the following are we likely going to want to explain with an economic model? i.Why people in the United States are fifty times richer than Ethiopians. ii.What causes economic growth. iii.What we think politicians should do with taxes. A)i only. B)ii only. C)iii only. D)i and ii. E)all of the above Q3) The two main inputs we consider in our production function model are labor and land. A)True B)False To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Solow Growth Model Available Study Resources on Quizplus for this Chatper 116 Verified Questions 116 Flashcards Source URL: https://quizplus.com/quiz/72962
Sample Questions Q1) The principle of transition dynamics can be summarized as: A)the further below its steady state an economy is,the faster the economy will grow. B)the closer to its steady state an economy is,the faster the economy will grow. C)the further below its steady state an economy is,the slower the economy will grow. D)regardless of how close to its steady state an economy is,the economy grows at the same rate. E)if the economy is very close to the steady state,it stops growing. Q2) Consider the data in Figure 5.7 which shows the growth rates for three countries which were involved in World War II.How does the basic Solow model explain the trends in growth rates for each of these countries? Q3) In the steady state,output per person is growing. A)True B)False Q4) In the corn farm example,corn can be used as either saving or depreciation. A)True B)False Q5) What are the key assumptions of the Solow growth model? To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Growth and Ideas Available Study Resources on Quizplus for this Chatper 102 Verified Questions 102 Flashcards Source URL: https://quizplus.com/quiz/72963
Sample Questions Q1) The number of ideas is finite. A)True B)False Q2) If Canada and Taiwan have the same fraction of researchers and the same knowledge efficiency parameter,but Canada's population is larger,then: A)Taiwan has a higher per capita output growth rate. B)Canada has a higher per capita output growth rate. C)each country's per capita output grows at the same rate. D)Canada has higher per capita income than Taiwan. E)Canada's level of income is greater than Taiwan's. Q3) Labor composition is used in "growth accounting" because: A)it includes total number of hours worked. B)it can include changes in the age distribution of the labor force. C)it can include the educational attainment in the labor force. D)it measures how effective capital is per worker. E)a and b Q4) There is no difference between the stock of ideas and total factor productivity. A)True B)False Q5) How does the Romer model of economic growth exploit the concept of nonrivalry? Page 8 To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: The Labor Market,wages,and Unemployment Available Study Resources on Quizplus for this Chatper 100 Verified Questions 100 Flashcards Source URL: https://quizplus.com/quiz/72964
Sample Questions Q1) Consider Figure 7.6,which shows the unemployment rate from 1948-2010. (a)What does the smooth line represent? How can it be represented? (b)Based solely on this data,was the period from approximately 1963-1971 an expansion or recession? Explain.What about the period 1981-1986? (c)Based on the data presented,what is your prediction for future rates of unemployment? Q2) One explanation for the college wage premium is that demand for skill-based knowledge is rising. A)True B)False Q3) A key reason that unemployment in the United States is so low compared to most of Europe is because of: A)no cyclical unemployment. B)low frictional unemployment. C)high structural unemployment. D)low structural unemployment. E)no structural unemployment. To view all questions and flashcards with answers, click on the resource link above.
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Chapter 8: Inflation Available Study Resources on Quizplus for this Chatper 99 Verified Questions 99 Flashcards Source URL: https://quizplus.com/quiz/72965
Sample Questions Q1) The real interest rate is: A)the interest rate not adjusted for inflation. B)the "advertised" interest rate. C)a description of the return in units of currency. D)all of the above E)none of the above Q2) The high rate of inflation in the United States in the late 1970s and early 1980s was due to high inflation taxes. A)True B)False Q3) According to the quantity theory of money,the price level is: A)exogenous. B)determined by the money supply only. C)determined by the ratio of the effective quantity of money to the volume of goods. D)indeterminate in the long run. E)determined by the volume of goods produced. Q4) Briefly discuss what makes up the monetary base,M1,and M2. Q5) Briefly explain the cause of the Great Inflation in the 1970s. Q6) Explain how increases in government expenditures can lead to inflation. Page 10 To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: An Introduction to the Short Run Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/72966
Sample Questions Q1) Output fluctuations are defined as __________. A)the amount of output where inflation is about 2 percent B)what an economy produces when it is at capacity C)the percentage difference between current output and potential output D)the amount of total output if all inputs were utilized at their long-run sustainable levels E)the amount of output where unemployment is zero Q2) The relationship between actual output in an economy,the long-run component,and the short-run component is given as: Long-run trend = Current output + Shortrun fluctuations. A)True B)False Q3) What is the best definition of the short term in the short-term model? A)about two years B)There is no such thing as the short term. C)the length of time for short-term deviations to return to their long-run values D)the length of a recession E)the amount of time the economy spends at its potential output Q4) What three premises does the short-run model operate under? To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Great Recession: a First Look Available Study Resources on Quizplus for this Chatper 95 Verified Questions 95 Flashcards Source URL: https://quizplus.com/quiz/72967
Sample Questions Q1) Given the information in Table 10.2,if reserve requirements are 3 percent and capital requirements are 10 percent the bank meets: A)reserve requirements,but not capital requirements. B)neither reserve requirements nor capital requirements. C)both reserve and capital requirements. D)capital requirements,but not reserve requirements E)not enough information Q2) Bank leverage is equal to a bank's assets minus its liabilities. A)True B)False Q3) Unemployment in the Great Recession peaked at 10.1 percent. A)True B)False Q4) According to the data in Table 10.1,during which years was the economy in an expansion? A)2001 B)2004 C)2002 D)2003 E)a and b Page 12 To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: The Is Curve Available Study Resources on Quizplus for this Chatper 101 Verified Questions 101 Flashcards Source URL: https://quizplus.com/quiz/72968
Sample Questions Q1) Agency problems occur when both parties have identical information. A)True B)False Q2) Agency problems occur when: A)there is no information. B)both parties have identical information. C)both parties have limited information. D)one party in a transaction has information that the other party does not possess. E)None of the above is correct. Q3) Consider Figure 11.6 of the Life Cycle hypothesis.Area(s)__________ are periods of __________,and area(s)__________ are periods of __________. A)A;dissaving;C;saving B)C;dissaving;B;saving C)B;dissaving;A and C;saving D)A and C;dissaving;B;saving E)Not enough information is given. Q4) An increase in income taxes is a negative aggregate demand shock. A)True B)False To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Monetary Policy and the Phillips Curve Available Study Resources on Quizplus for this Chatper 100 Verified Questions 100 Flashcards Source URL: https://quizplus.com/quiz/72969
Sample Questions Q1) Economists who study monetary policy believe that it takes anywhere from __________ for monetary policy to have a substantial effect on economic activity. A)three to six weeks B)6 to 18 days C)6 to 18 months D)three to six months E)6 to 18 weeks Q2) Consider Figure 12.7.You are chairman of the Federal Reserve in 1995.You believe potential output follows the dotted line after 1993,but in actuality,it follows the line denoted "True potential output." The current state of the economy is given by the curve "Actual output." Given the information in the figure,you __________,because you believe the economy is in a __________;but your advice instead __________. A)lower interest rates;recession;accelerates inflation B)raise interest rates;boom;accelerates a recession C)keep interest rates the same;boom;accelerates inflation D)lower interest rates;boom;increases unemployment E)Not enough information is given. Q3) Discuss the differences between the ex ante and ex post real interest rate. To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Stabilization Policy and the Asad Framework Available Study Resources on Quizplus for this Chatper 97 Verified Questions 97 Flashcards Source URL: https://quizplus.com/quiz/72970
Sample Questions Q1) Which of the following best describes movement along the AD curve? A)A change in the inflation rate causes the central bank to change interest rates,thereby causing a corresponding proportional change in investment. B)A sudden increase in the tax rate. C)A change in monetary policy. D)A change in the inflation rate causes the federal government to reduce discretionary spending. E)A change in unemployment causes the federal government to reduce discretionary spending. Q2) Between the third and fourth quarter of 2006 the housing bubble burst in the United States.Using the AS/AD framework to discuss the impact of this macroeconomic event,begin and end in the long run. Q3) Combining the IS and monetary policy curves gives us the aggregate supply curve. A)True B)False Q4) The U.S.Federal Reserve currently announces its inflation target. A)True B)False Q5) Define the steady state in the AS/AD framework. 15 click on the resource link above. To view all questions and flashcards withPage answers,
Chapter 14: The Great Recession and the Short-Run Model Available Study Resources on Quizplus for this Chatper 99 Verified Questions 99 Flashcards Source URL: https://quizplus.com/quiz/72971
Sample Questions Q1) The Squam Lake Group's reform suggestions included: enhancing bank capital requirements and tying executive bonuses to long-term bank performance. A)True B)False Q2) Banks which are deemed too big to fail leads to adverse selection. A)True B)False Q3) Throughout the first three-fourths or so of 2009, A)real interest rate on ten-year bonds was higher than the nominal interest rate. B)the ten-year bonds nominal interest rate was higher than the real interest rate. C)real interest rate was zero. D)real interest rate was negative. E)a and d Q4) Briefly discuss the Fed's balance sheet before and after the financial crisis of 2008. Q5) The risk premium raises the borrowing rate above the nominal federal funds rate. A)True B)False To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Consumption Available Study Resources on Quizplus for this Chatper 98 Verified Questions 98 Flashcards Source URL: https://quizplus.com/quiz/72972
Sample Questions Q1) In the intertemporal budget constraint wealth is equal to: A)financial wealth. B)savings held in stocks and bonds. C)lifetime income. D)the overall stock of assets held by future generations. E)financial plus "human wealth." Q2) Consider Figure 15.3.A possible cause for the fall in the saving rate between 1980 and 2005 is: A)precautionary saving. B)consumption smoothing. C)the changing composition of households' savings portfolios. D)increasing competition among commercial banks. E)less access to credit markets. Q3) Using the neoclassical model of consumption,an implication of the permanent income hypothesis is ___________ because of __________. A)consumption smoothing;diminishing marginal utility B)permanent income follows a random walk;aggregate demand shocks C)wealth is constant;real interest rates are,more or less,constant D)a low discount factor;the borrowing constraint E)no borrowing;income in the future is higher To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Investment Available Study Resources on Quizplus for this Chatper 101 Verified Questions 101 Flashcards Source URL: https://quizplus.com/quiz/72973
Sample Questions Q1) According to data in the text,which of these is the country with the lowest corporate tax rate? A)South Korea B)Germany C)the United States D)Japan E)Ireland Q2) In the mid- to late 2000s,several housing markets in the United States had a bubble in residential investment.One cause was likely to be: A)consistently rising real interest rates. B)growth in residential capital gains. C)rising residential depreciation. D)more lax down-payment requirements. E)controls which held rents down. Q3) The user cost of capital is: A)the cost of using one more unit of capital. B)zero if taxes are zero. C)equal to the real interest rate. D)equal to negative capital gain. E)higher as corporate taxes fall. To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: The Government and the Macroeconomy Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/72974
Sample Questions Q1) What are the largest and smallest individual federal government expenditures? Source of revenues? Q2) An implication of the intertemporal budget constraint is that: A)the government can borrow only as much as it can credibly pay back. B)the government can borrow as much as it wants. C)the government must always have a balanced budget. D)the government must balance its budget over the business cycle. E)all generations pay the same amount of taxes. Q3) The current U.S.debt-to-GDP ratio is about: A)20 percent. B)120 percent. C)65 percent. D)50 percent. E)none of the above Q4) If the economy grows faster than the debt,the government can continue to accumulate debt. A)True B)False Q5) Assume the government does not "print money." Can the government run persistent budget deficits?
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Chapter 18: International Trade Available Study Resources on Quizplus for this Chatper 96 Verified Questions 96 Flashcards Source URL: https://quizplus.com/quiz/72975
Sample Questions Q1) Explanations of why trade has increased worldwide,particularly since the early 1970s,include: A)the reduction in shipping and production costs. B)the decline in trade barriers. C)growing global incomes. D)all of the above E)a and b Q2) Prior to 1975,the United States had: A)balanced trade. B)a trade deficit. C)a trade surplus. D)a balanced budget. E)zero rates of inflation. Q3) Which of the following country(ies)has (have)export and import shares that exceed 20 percent of their respective GDP? A)China B)Canada C)France D)Germany E)all of the above To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Exchange Rates and International Finance Available Study Resources on Quizplus for this Chatper 109 Verified Questions 109 Flashcards Source URL: https://quizplus.com/quiz/72976
Sample Questions Q1) With the foreign interest rate in the IS model,an increase in the foreign interest rate causes the IS curve to shift right because it leads to a depreciation of the domestic real exchange rate. A)True B)False Q2) Why might a country choose to maintain a fixed exchange rate? A)to allow it to print money B)to reduce tariffs on its exports C)to discourage direct foreign investment D)to help it maintain low and stable inflation E)None of the above is correct. Q3) You open up the Wall Street Journal and notice the federal funds rate in the United States is 5.25 percent,while in the United Kingdom,the current bank rate is 5.75 percent.From this,you conclude: A)the dollar will depreciate against the pound. B)the pound will appreciate against the dollar. C)the dollar will appreciate against the pound. D)there will be no movement in the exchange rate. E)a and b To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Parting Thoughts Available Study Resources on Quizplus for this Chatper 31 Verified Questions 31 Flashcards Source URL: https://quizplus.com/quiz/72977
Sample Questions Q1) If we cannot accurately measure potential GDP,we might overestimate the severity of a recession. A)True B)False Q2) In the short run, A)inflation has inertia. B)the classical dichotomy does not hold. C)inflation adjusts instantly. D)inflation is governed only by money. E)a and b are correct. Q3) The Asian and Argentinean crises have led China: A)to rely on inflation taxes. B)to allow its currency to float. C)to decrease its domestic investment. D)to maintain strict capital controls. E)to keep interest rates close to zero. Q4) Name three contributing factors to standards of living in the long run. Q5) In the short run,tight monetary policy can exacerbate inflation. A)True B)False
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