International Macroeconomics
Question Bank
Course Introduction
International Macroeconomics explores the economic relationships between countries, focusing on the interactions among national economies in a globalized world. The course covers topics such as exchange rates, balance of payments, international monetary systems, cross-border capital flows, and the impact of fiscal and monetary policies in open economies. Students will analyze how global economic events, financial crises, and policy decisions affect trade, investment, and overall economic stability worldwide, equipping them with the tools to understand and evaluate international economic phenomena.
Recommended Textbook
Macroeconomics 8th Edition by Andrew Abel
Available Study Resources on Quizplus
15 Chapters
1417 Verified Questions
1417 Flashcards
Source URL: https://quizplus.com/study-set/437
Page 2
Chapter 1: Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/7693
Sample Questions
Q1) During the Great Depression,the unemployment rate for the United States peaked at approximately A)10%.
B)70%.
C)45%.
D)25%.
Answer: D
Q2) A closed economy is a national economy that
A)doesn't interact economically with the rest of the world.
B)has a stock market that is not open to traders from outside the country.
C)has extensive trading and financial relationships with other national economies.
D)has not established diplomatic relations with other national economies.
Answer: A
Q3) Following World War I and World War II,the United States had a A)small trade surplus.
B)small trade deficit.
C)large trade deficit.
D)large trade surplus.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: The Measurement and Structure of the National Economy
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/7700
Sample Questions
Q1) The value of a producer's output minus the value of the inputs it purchases from other producers is called the producer's A)surplus.
B)profit.
C)value added.
D)gross product.
Answer: C
Q2) The measurement of GDP includes
A)nonmarket goods such as homemaking and child-rearing.
B)the benefits of clean air and water.
C)estimated values of activity in the underground economy.
D)purchases and sales of goods produced in previous periods.
Answer: C
Q3) In the mid-to-late 1980s,the United States had "twin deficits" because both ________ and ________ were negative.
A)government saving; private saving
B)saving; investment
C)the current account; investment
D)government saving; the current account
Answer: D
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Productivity, Output, and Employment
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/7701
Sample Questions
Q1) An invention that speeds up the Internet is an example of A)an income effect.
B)an increase in labor.
C)a substitution effect.
D)a supply shock.
Answer: D
Q2) An adverse supply shock,such as a reduced supply of raw materials,would
A)increase the marginal product of labor.
B)decrease the marginal product of labor.
C)decrease the marginal product of capital,but have no effect on the marginal product of labor.
D)not affect the marginal product of labor.
Answer: B
Q3) The fact that the production function relating output to labor becomes flatter as we move from left to right means that
A)the marginal product of labor is positive.
B)the marginal product of capital is positive.
C)there is diminishing marginal productivity of labor.
D)there is diminishing marginal productivity of capital.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Consumption, Saving, and Investment
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/7702
Sample Questions
Q1) You have just purchased a home that cost $250,000.The nominal mortgage interest rate is 8% per annum,mortgage interest payments are tax deductible,and you are in a 30% tax bracket.The expected inflation rate is 4%.Maintenance and other expenses are 8% of the initial value of the house.What is the real user cost of your house?
A)$20,000
B)$24,000
C)$27,000
D)$30,000
Q2) Calculate the user cost of capital of a machine that costs $5,000 and depreciates at a rate of 25%,when the expected real interest rate is 5%.
A)$150
B)$500
C)$1500
D)$5000
Q3) What is the q theory of investment? Who developed it? What is q,and what do different values of q imply? How is q related to the stock market value of a firm and its capital stock?
Q4) What is the marginal propensity to consume,and why is it always less than one?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Saving and Investment in the Open Economy
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/7703
Sample Questions
Q1) When future labor income falls in a small open economy,it causes the current account to ________ and investment to ________.
A)fall; rise
B)rise; remain unchanged
C)fall; remain unchanged
D)rise; rise
Q2) Consider a small open economy with desired national saving of Sd = 200 + 10,000rw and desired investment of Id = 1,000 - 5,000rw.If rw = 0.05,and output = 5,000,then absorption equals
A)5,100.
B)5,050.
C)4,950.
D)4,900.
Q3) Consider a small open economy in equilibrium with a current account deficit.
(a)Draw a diagram showing this situation.
(b)What happens to national saving,investment,and the current account balance in equilibrium if government expenditures rise temporarily? Show this result in your diagram.
Q4) What determines the interest rate in a small open economy?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Long-Run Economic Growth
Available Study Resources on Quizplus for this Chatper
81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/7704
Sample Questions
Q1) In the very long run,the level of consumption per worker can grow continually if
A)the saving rate continually falls.
B)the population growth rate continually rises.
C)productivity continually improves.
D)the depreciation rate continually rises.
Q2) Which of the following changes would lead,according to the Solow model,to a higher level of long-run output per worker?
A)A lower level of capital per worker
B)An increase in the saving rate
C)A rise in the rate of population growth
D)A decrease in productivity
Q3) The per-worker production function in the Solow model assumes
A)constant returns to scale and increasing marginal productivity of capital.
B)constant returns to scale and diminishing marginal productivity of capital.
C)increasing returns to scale and diminishing marginal productivity of capital.
D)decreasing returns to scale and diminishing marginal productivity of capital.
Q4) Use the growth accounting equation to calculate productivity growth,given output growth of 3.5%,capital stock growth of 5%,labor employment growth of 2%,the output elasticity of capital of 0.3,and the output elasticity of labor of 0.7.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Asset Market, Money, and Prices
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/7705
Sample Questions
Q1) People in other countries want to hold U.S.dollars as a A)medium of exchange.
B)store of value.
C)unit of account.
D)standard of deferred payment.
Q2) Which of the following is most likely to lead to an increase of 1% in the nominal demand for money?
A)An increase in real income of 0.5%
B)A decrease in real income of 0.5%
C)A decline of 1% in the price level
D)An increase of 1% in the price level
Q3) If the nominal money supply grows 6%,real income rises 2%,and the inflation rate is 5%,then the income elasticity of money demand is
A)0)5.
B)0)75.
C)1)0.
D)1)5.
Q4) Give five examples of factors that could reduce the demand for money.
Q5) Define asset market equilibrium and state the asset market equilibrium condition.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Business Cycles
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/7706
Sample Questions
Q1) Which of the following macroeconomic variables could not be used as a leading economic indicator?
A)Residential investment
B)Employment
C)The money supply
D)Stock prices
Q2) According to Keynesian macroeconomists,prices adjust ________ to shocks,so the government should ________.
A)slowly; do little
B)rapidly; do little
C)rapidly; fight recessions
D)slowly; fight recessions
Q3) A decrease in government spending on the park system would cause
A)the aggregate demand curve to shift to the right.
B)the aggregate demand curve to shift to the left.
C)a movement down and to the right along the aggregate demand curve.
D)a movement up and to the left along the aggregate demand curve.
Q4) Suppose labor supply declined.Would this affect the aggregate demand curve or the aggregate supply curve? What would be the effect on output and the price level?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: The IS-LM/AD-AS Model
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/7707
Sample Questions
Q1) An increase in labor supply would cause the IS curve to
A)shift up and to the right.
B)shift down and to the left.
C)remain unchanged.
D)shift up and to the right only if people face borrowing constraints.
Q2) The IS-LM model predicts that a temporary beneficial supply shock
A)increases output,national saving,and investment,but not the real interest rate.
B)increases output,national saving,and the real interest rate,but not investment.
C)increases the real interest rate,investment,and output,but not national saving.
D)increases output,national saving,investment,and the real interest rate.
Q3) The aggregate supply curve shows the relation between
A)the real interest rate and the aggregate amount of output that firms supply.
B)the price level and the aggregate amount of output that firms supply.
C)the supply of goods by firms and the price of goods relative to the price of nonmonetary assets.
D)the inflation rate and the unemployment rate.
Q4) Describe what happens to the FE line if government purchases increase.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Classical Business Cycle Analysis
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/7694
Sample Questions
Q1) Which of the following is not a primary cause of business cycle fluctuations,according to real business cycle theory?
A)A change in the production function
B)A change in the size of the labor force
C)A change in the money supply
D)A change in the real quantity of government purchases
Q2) How do RBC economists face the business cycle fact that inflation is procyclical?
A)They argue that even though inflation doesn't fit their theory,everything else does,and inflation is not important.
B)They note that inflation would not be procyclical if monetary policy were conducted properly.
C)They argue that inflation is procyclical only because monetary policy shocks are the main cause of business cycles.
D)They use alternative statistical methods that suggest that inflation is countercyclical.
Q3) Describe,in general terms,how an economist calibrates a macroeconomic model.What statistics can be usefully examined to see how well the model corresponds to the data?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Keynesianism: The Macroeconomics of Wage and Price Rigidity
Available Study Resources on Quizplus for this Chatper
90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/7695
Sample Questions
Q1) Recent research by Keynesians and classicals has led to
A)a reconciliation of the types of models they use.
B)the recognition by classical economists that prices adjust very slowly.
C)convincing evidence that TFP shocks are the dominant force affecting the business cycle.
D)the refutation of the efficiency wage model.
Q2) Describe the situation of the Japanese economy in the 1990s.What should the Japanese government have done differently,according to critics,to improve the economy?
Q3) Suppose the economy's production function is Y = A(300N - N2).The marginal product of labor is MPN = A(300 - 2N).Suppose that A = 10.The supply of labor is NS = 0.05w + 0.005G.
(a)If G is 26,000,what are the real wage,employment,and output?
(b)If G rises to 26,400,what are the real wage,employment,and output?
(c)If G falls to 25,600,what are the real wage,employment,and output?
(d)In cases (b)and (c),what is the government purchases multiplier; that is,what is the change in output divided by the change in government purchases?
Q4) Why might firms pay an efficiency wage rather than a market-clearing wage?
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/7696
Sample Questions
Q1) Based on the expectations-augmented Phillips curve,if the natural rate of unemployment is 0.06,and if the actual inflation rate exceeds the expected inflation rate,then the unemployment rate is
A)less than 0.06
B)0)06.
C)more than 0.06.
D)0)06 plus 0.5 times the difference between actual and expected inflation.
Q2) Phillips's research looked at British data on A)unemployment and inflation.
B)unemployment and nominal wage growth.
C)inflation and nominal wage growth.
D)unemployment and output.
Q3) When the economy goes into a recession,there's an increase in A)frictional unemployment.
B)structural unemployment.
C)cyclical unemployment.
D)voluntary unemployment.
Q4) Why did the government use expansionary monetary policies in the late 1970s,and what was the principal negative macroeconomic effect of these policies?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Exchange Rates,Business Cycles,and
Macroeconomic Policy in the Open Economy
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/7697
Sample Questions
Q1) Describe the effects of contractionary fiscal policy by the domestic government on output,the real interest rate,and net exports in both the domestic and foreign country,using a Keynesian model.
Q2) Empirical evidence shows that in the short run,purchasing power parity ________,and in the long run,purchasing power parity ________.
A)holds; does not hold
B)holds; holds
C)does not hold; holds
D)does not hold; does not hold
Q3) Compared to a system of fixed exchange rates,currency unions are beneficial because they
A)allow exchange rates to float.
B)allow every country to have an independent monetary policy.
C)reduce the costs of trading goods and assets.
D)restrict what countries can do with fiscal policy.
Q4) Identify changes in two variables that would shift the supply curve of dollars to the right.Identify changes in two variables that would shift the demand curve for dollars to the right.
Q5) What is purchasing power parity? Why might it not hold?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Monetary Policy and the Federal Reserve System
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/7698
Sample Questions
Q1) Vault cash is equal to $8 million,deposits by depository institutions at the central bank are $2 million,the monetary base is $30 million,and bank deposits are $100 million.The money multiplier is equal to
A)2)5.
B)3)0.
C)4)0.
D)5)0.
Q2) Changes in reserve requirements directly and immediately affect
A)the monetary base.
B)banks' holdings of securities.
C)the Fed's holdings of foreign exchange.
D)the money multiplier.
Q3) When U.S.banks borrow from one another,they must pay the A)discount rate.
B)prime rate.
C)Fed funds rate.
D)Interbank Offer Rate.
Q4) Describe how the real interest rate changes in a Keynesian model if a shock shifts the IS curve down and to the right and the Fed changes its policy to keep output unchanged.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Government Spending and Its Financing
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/7699
Sample Questions
Q1) The political process by which fiscal policy is made
A)is relatively rapid,contributing to the effectiveness of fiscal policy.
B)requires only that the president approve changes to the budget,a decision that takes several months.
C)is efficient in reaching a decision within a year.
D)is slow and results in a long time lag for fiscal policy.
Q2) Suppose that all workers place a value on their leisure of 40 goods per day.The production function relating output per day Y to the number of people working per day N is
Y = 200N - N2
And the marginal product of labor is MPN = 200 - 2N.
A 20% tax is levied on wages.Output per day would be
A)5,625.
B)7,250.
C)9,375. D)11,250.
Q3) How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level,to still higher levels?
To view all questions and flashcards with answers, click on the resource link above. Page 17