Business Cycles and Economic Growth
Final Exam Questions
Course Introduction
This course explores the fundamental dynamics of business cycles and their relationship to long-term economic growth. Students will examine theoretical frameworks explaining fluctuations in macroeconomic activity, including real business cycle and Keynesian approaches, and analyze the causes and consequences of expansions and recessions. The course also discusses empirical methods for measuring cycles and growth, policy responses to cyclical volatility, and how global and sectoral shocks influence aggregate outcomes. Through case studies and historical examples, students will gain insight into how economies recover from downturns and sustain growth over time.
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
Page 2
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) Describe the differences between the long and the short run.
Answer: The short run is concerned with the causes of economic fluctuations,the business cycle.In the long run,we are concerned with the determinants of economic growth.Thus,the long run is the trend of output,and the short run represents the fluctuations around the trend.
Q2) Which of the following questions should a successful model predict?
i.Why,in general,do Americans have higher incomes than Africans?
ii.How much less unemployment is there during an economic expansion?
iii.Why does the United States have a lower unemployment rate than Europe?
A)i and ii
B)ii only
C)iii only
D)i,ii,and iii
E)i and iii
Answer: D
Q3) An endogenous variable is often called a parameter.
A)True
B)False
Answer: False
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) According to the expenditure approach,if Y is GDP,C is consumption,I is investment,G is government purchases,and NX is net exports,which of the following is the national income identity?
A)Y = C + I + G - NX
B)Y = C + I + G + NX
C)Y + C = I + G + NX
D)Y = (C + I + G)/NX
E)Y = C + I + G
Answer: B
Q2) If NGDP is nominal GDP and P is the price level,which of the following can be used to calculate the growth of the real GDP?
A)percent change in NGDP - percent change in P
B)percent change in NGDP + percent change in P
C)percent change in NGDP \(\times\) percent change in P
D)percent change in P + percent change in NGDP
E)percent change in P - percent change in NGDP
Answer: A
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,instead of labeling the vertical axis in the usual "1,2,3,4,..." fashion,we label it as "1,2,4,8,..." so that equal intervals represent a doubling,we call this:
A)the quadratic scale.
B)the logarithmic scale.
C)the exponential scale.
D)the ratio scale.
E)the geometric scale.
Answer: D
Q2) Developed countries' average incomes rose from about __________ in 1700 to about __________ today.
A)$100;$30,000
B)$2,500;$70,000
C)$500;$70,000
D)$500;$30,000
E)$500;$100,000
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
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) One explanation for the difference between the predicted output per person and the observed per capita GDP in Table 4.1 is:
A)differences in per capita capital.
B)differences in the labor supply.
C)differences in factor productivity.
D)differences in labor's share of GDP.
E)none of the above
Q2) Consider Figure 4.1.The shape of this production function suggests:
A)not enough information is given.
B)a diminishing marginal product of labor.
C)a constant marginal product of capital.
D)an increasing marginal product of capital.
E)a diminishing marginal product of capital.
Q3) What are the three sources of total factor productivity discussed in the text? Can you name other possible sources? Explain your answer.
Q4) After the Black Death in the fourteenth century,wages in Europe were higher than before the Black Death.
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) Among the OECD countries,those that were relatively __________ in 1960 __________ between 1960 and 2000.
A)poor;grew slowly
B)rich;grew quickly
C)poor;grew quickly
D)rich;did not grow
E)poor;did not grow
Q2) If the depreciation and saving rates are constant,the economy eventually will settle in the steady state in the Solow model because of:
A)the lack of productivity.
B)increasing returns to capital in production.
C)constant returns to capital in production.
D)diminishing returns to capital in production.
E)increasing returns to labor in production.
Q3) 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?
Q4) 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) In economics,a rival good is one that:
A)cannot be consumed by more than two persons at a time.
B)can be consumed by more than one person at a time.
C)can be consumed by more than one person at a time but is congested.
D)cannot be consumed by more than one person at a time.
E)none of the above
Q2) According to the combined Solow-Romer model,all countries grow at the same rate in the medium and long runs.
A)True
B)False
Q3) In monopolistic competition,the price is equal to the marginal cost.
A)True
B)False
Q4) In the Romer model,if an economy's research share decreases,there will be:
A)an immediate decrease in output and output growth slows.
B)an immediate increase in output and output growth slows.
C)an immediate increase in output and output growth accelerates.
D)an immediate decrease in output and output growth accelerates.
E)no change in output but output growth slows.
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) Unemployment generally falls during economic booms.
A)True
B)False
Q2) Unemployment is given by __________ and the natural rate of unemployment is __________.
A)Frictional + Structural + Cyclical unemployment;Frictional + Structural unemployment
B)Frictional + Structural - Cyclical unemployment;Frictional + Structural unemployment
C)Frictional + Cyclical unemployment;Frictional + Cyclical unemployment
D)Structural + Cyclical unemployment;Structural unemployment
E)Cyclical unemployment;Frictional + Structural unemployment
Q3) Unemployment benefits in the United States are extended generally about __________,while in Europe they average __________.
A)six months;one year
B)six months;five years
C)three months;two years
D)six weeks;six months
E)five years;six months
To view all questions and flashcards with answers, click on the resource link above.
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) Inflationary surprises transfer wealth from lenders to borrowers.
A)True
B)False
Q2) According to the government's budget constraint,if the government spends more than it generates in taxes,it can raise revenues by:
A)printing money.
B)increasing its debt.
C)lowering interest rates.
D)privatization.
E)a and b
Q3) The Federal Reserve believed that the productivity slowdown in the 1970s was a long-lived recession and therefore increased the supply of money.
A)True
B)False
Q4) Money neutrality is the proposition that changes in money have no real effect on the economy.
A)True
B)False
Q5) Briefly explain the cause of the Great Inflation in the 1970s.
To view all questions and flashcards with answers, click on the resource link above. Page 10
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) The Phillips curve in the text shows the __________ relationship between __________ and __________.
A)positive;inflation;unemployment
B)positive;inflation;short-term economic fluctuations
C)positive;the change in inflation;short-term economic fluctuations
D)negative;inflation;unemployment
E)negative;the change in inflation;unemployment
Q2) According to the Phillips curve,short-term changes in inflation are due to A)changes in interest rates.
B)changes in unemployment.
C)changes in short-term output fluctuations.
D)changes in long-term inflation.
E)changes in long-term output.
Q3) The long-run model determines __________ and __________,while the short-run model determines __________ and __________.
A)potential output;long-run inflation;current output;current inflation
B)potential output;unemployment;current output;long-run inflation
C)current output;long-run inflation;unemployment;current inflation
D)potential output;unemployment;unemployment;current inflation
E)current output;unemployment;potential output;current inflation
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) Loans,investments,and cash are on the asset side of a bank's balance sheet.
A)True
B)False
Q2) During the 1990s and early 2000s,a number of developing countries suffered from financial crises.This led to an increase in investment in these countries.
A)True
B)False
Q3) What is an indicator of the extent of risk in financial systems?
A)the difference between the unemployment rate and the natural rate of unemployment
B)falling commodity prices
C)the spread between the monthly LIBOR rate and U.S.T-bill yield
D)the spread between inflation-indexed and nonindexed U.S.bonds
E)the number of banks applying for federal assistance
Q4) Between 1996 and 2006,housing prices averaged about 10 percent annual growth per year.
A)True
B)False
Q5) Briefly discuss the macroeconomic outcomes of the financial crisis.
To view all questions and flashcards with answers, click on the resource link above. Page 12
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) In the long run,the marginal product of capital is greater than the real interest rate.
A)True
B)False
Q2) When the multiplier is included in the IS curve,
A)a demand shock has a larger impact on short-run fluctuations than with the standard IS curve.
B)a change in the real interest rate has a larger impact on short-run fluctuations than with the standard IS curve.
C)a demand shock has a smaller impact on short-run fluctuations than with the standard IS curve.
D)a change in taxes has no impact on short-run output.
E)a and b are correct.
Q3) 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.
To view all questions and flashcards with answers, click on the resource link above.
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) The main tool used by the Federal Reserve is the federal funds rate.
A)True
B)False
Q2) If the central bank is targeting the money supply,the money supply is __________ and __________ the nominal interest rate.
A)equal to money velocity;is vertical with respect to B)whatever level is dictated by the president;is horizontal with respect to C)whatever level is dictated by the central bank;is horizontal with respect to D)whatever level is dictated by the central bank;is vertical with respect to E)whatever level is dictated by the central bank;slopes downward with respect to
Q3) Starting at any equilibrium in Figure 12.11,if the Fed loosens money,the money market would move from:
A)point A to B.
B)point A to D.
C)point B to D.
D)point C to A.
E)Not enough information is given.
Q4) The Phillips curve assumes inflation expectations are rational.
A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
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) If m = 1/2 in the simple monetary rule and if inflation rises by 2 percent,interest rates should rise by 2 percent.
A)True
B)False
Q2) Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario.Nigerian rebels taking over privately owned oil wells would cause the economy to initially move from point__________ to point __________.
A)c;b
B)b;c
C)c;a
D)b;a
E)Not enough information is given.
Q3) The effects of 9/11 were a leftward shift in the AD curve and inflation;short-run output fell along the AS curve.
A)True
B)False
Q4) An increase in military spending will cause the AD curve to shift to the right.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
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) An explanation for the low federal funds rate in 2003 was:
A)a fear of deflation.
B)falling unemployment.
C)rising inflation.
D)the decline of the dollar vis-à-vis the euro.
E)an attempt to boost house sales.
Q2) When a financial institution is deemed too systematically important to go under,it is __________.This leads to __________.
A)a monopoly;above marginal cost pricing
B)too big to fail;moral hazard
C)an "umbrella" bank;less competition
D)a bank holding company;adverse selection
E)an investment bank;nationalization
Q3) When we add the risk premium to the AD curve it:
A)is represented by a downward movement along the AD curve.
B)is represented by a downward movement along the AS curve.
C)shifts the AD curve down.
D)shifts the AS curve up.
E)has no impact on the AD curve.
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) Household consumption accounts for about one-half of U.S.GDP.
A)True
B)False
Q2) According to one study,consumption expenditure ___________ when an individual retires.
A)is unchanged
B)rises about 2 percent
C)falls about 44 percent
D)falls about 17 percent
E)rises about 13 percent
Q3) Consider the utility functions in Figure 15.1.Which of the following exhibits diminishing marginal utility?
A)a
B)e
C)d
D)b
E)c
Q4) We can treat all households as homogeneous.
A)True
B)False
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) Your parents were pretty enthusiastic about the gains they made in the stock market in late 1990s.The weren't as enthusiastic when it collapsed in 2001,as they expected these gains to last forever.They show you the graph below,which shows the price-earnings ratio from 1981-2010.Explain to them what happened and why it wouldn't have lasted forever.
Q2) If a stock is just as likely to move up or down it __________.
A)is highly correlated.
B)follows a random walk.
C)has a high standard deviation.
D)is stationary.
E)is highly volatile.
Q3) One reason we are interested in investment is its:
A)contribution to higher interest rates.
B)negative impact on current consumption.
C)relationship to exchange rate markets.
D)impact on financial markets.
E)link to long-term economic growth.
To view all questions and flashcards with answers, click on the resource link above.
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) Empirical tests of crowding show strong evidence for crowding out.
A)True
B)False
Q2) Which country has the highest share of medical expenses to GDP?
A)Japan
B)Germany
C)the United States
D)France
E)the United Kingdom
Q3) What are the largest and smallest individual federal government expenditures? Source of revenues?
Q4) Which of the following is not an issue of large deficits and a large debt-to-GDP ratio for the economy?
A)intergenerational equity
B)the importance of economic growth
C)the possibility of high inflation or default
D)the impacts on the overall money supply
E)the extent to which deficits crowd out private investment
Q5) Assume the government does not "print money." Can the government run persistent budget deficits?
To view all questions and flashcards with answers, click on the resource link above. Page 19
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) Intertemporal trade deficits and surpluses reflect:
A)international borrowing.
B)international lending and borrowing.
C)movements in money across borders.
D)differences in interest rates.
E)differences in preferences.
Q2) If the United States is running persistent trade deficits now,
A)it must make loans to the rest of world.
B)it is expected to run trade surpluses at some point in the future.
C)it is expected to run trade surpluses now.
D)it must increase its money supply to buy imports.
E)it must run a government budget deficit.
Q3) Consider Table 18.1.In autarky,the price of fish in terms of chips is __________ in the West,and in the East the price is __________;therefore,the West has a comparative advantage in __________.
A)2;3;fish
B)3;2;chips
C)2;3;chips
D)1/2;1/3;fish
E)Not enough information is given.
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) The euro zone is now the largest economy in the world.If the European central bank raises its interest rates,we expect __________ because __________.
A)the U.S.IS curve to shift right;the dollar would depreciate relative to the euro
B)the U.S.IS curve to shift left;the dollar would appreciate relative to the euro
C)the U.S.IS curve to not move;the dollar would depreciate relative to the euro
D)rightward movement along the U.S.IS curve;the dollar would depreciate relative to the euro
E)leftward movement along the U.S.IS curve;the dollar would appreciate relative to the euro
Q2) In the long run,what value should the real exchange rate have? Explain.In the short run,why is this likely not the case?
Q3) If the law of one price holds for all goods,
A)the real exchange rate equals 0.
B)the real exchange rate equals 1.
C)the nominal exchange rate equals the real exchange rate.
D)the ratio of domestic to foreign price levels equals 1.
E)the nominal exchange rate equals 1.
To view all questions and flashcards with answers, click on the resource link above.
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) In the short run,tight monetary policy can exacerbate inflation.
A)True
B)False
Q2) In the late 1990s,it was likely that:
A)the GDP gap was almost zero.
B)actual GDP grew more slowly than it had in the previous 20 years.
C)the GDP gap was larger than it had been in the previous 20 years.
D)potential GDP grew faster than it had in the previous 20 years.
E)None of the above is correct.
Q3) Which of the following has not contributed to higher standards of living in the long run?
A)productivity
B)investment in physical capital
C)investment in human capital
D)the stock of technology
E)lower interest rates
Q4) In the long run,real GDP is determined by very low rates of unemployment.
A)True
B)False
Q5) What problems is economics still trying to answer?
To view all questions and flashcards with answers, click on the resource link above. Page 22