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Test Bank For Macroeconomics 11th Edition by N. Gregory Mankiw Chapter 1-20
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Test Bank For Macroeconomics 11th Edition by N. Gregory Mankiw Chapter 1-20
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Name: Class: Date:Test Bank For
Macroeconomics 11th Edition by N. Gregory Mankiw
Chapter 1-20
Chapter 1
Indicate the answer choice that best completes the statement or answers the question.
1. Which of these combinations is NOT a U.S. president and an important economic issue of his
administration?
a. President Carter; inflation
b. President Reagan; budget deficits
c. President G. H. W. Bush; budget
deficits
d. President Clinton; inflation
2. Macroeconomics is the study of the:
a. activities of individual units of the economy.
b. decision making by households and firms.
c. economy as a whole.
d. interaction of firms and households in the
marketplace.
3. In the U.S. economy today, real gross domestic product (GDP) per person, compared with its level
in 1900, is about:
a. 50 percent
higher.
b. twice as high.
c. three times as
high.
d. eight times as
high.
4. Real gross domestic product (GDP) _____ over time, and the growth rate of real GDP _____.
a. grows; fluctuates
b. is steady; is
steady
c. grows; is steady
d. is steady;
fluctuates
5. In a simple model of the supply and demand for pizza, when buyers' income increases, the price of
pizza _____ and the quantity purchased _____.
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a. increases;
decreases
b. increases;
increases
c. decreases;
increases
d. decreases;
decreases
6. Macroeconomic models are used to explain how _____ variables influence _____ variables.
a. endogenous; exogenous
b. exogenous; endogenous
c. microeconomic;
macroeconomic
d. macroeconomic;microeconomic
7. A typical trend during a recession is that:
a. the unemployment rate falls.
b. the popularity of the incumbent president
rises.
c. incomes fall.
d. the inflation rate rises.
8. An assumption of _____ is more plausible for studying the short-run behavior of the economy,
while an assumption of _____ is more plausible for studying the long-run, equilibrium behavior of the
economy.
a. deflation; inflation
b. inflation; deflation
c. flexible prices; sticky
prices
d. sticky prices; flexible
prices
9. The unemployment rate:
a. was zero during the 1990s in the United States.
b. was zero on average between 1900 and 1950 in the United
States.
c. has never been zero in the United States.
d. is usually zero when the economy is not in a recession or
depression.
10. Which statement about economic models is TRUE?
a. There is only one correct economic model.
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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 economic phenomena.
11. The assumption of continuous market clearing means that:
a. sellers can sell all that they want at the going price.
b. buyers can buy all that they want at the going price.
c. in any given month, buyers can buy all that they want and sellers can sell all that they want
at the going price.
d. at any given instant, buyers can buy all that they want and sellers can sell all that they want
at the going price.
12. 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.
13. Macroeconomists are like scientists in that they both:
a. design data and conduct controlled experiments to test their
theories.
b. rely on data analyzed from experiments they set up in a
laboratory.
c. are unlimited in their use of controlled experiments.
d. collect data, develop hypotheses, and analyze the results.
14. The total income of everyone in the economy adjusted for the level of base year prices is called:
a. a recession.
b. an inflation.
c. real gross domestic product (GDP).
d. a business fluctuation.
15. A graph of the U.S. unemployment rate over the twentieth century shows:
a. an overall upward trend in the unemployment rate interrupted by a large upturn in the
1930s.
b. an overall downward trend in the unemployment rate interrupted by a large upturn in
the 1930s.
c. rates of unemployment always greater than zero with substantial variations from year
to year.
d. alternating periods of positive and negative rates of unemployment.
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16. Two striking features of a graph of U.S. real gross domestic product (GDP) per capita over the
twentieth century are the:
a. overall upward trend interrupted by a large downturn due to the economic depression in
the 1930s.
b. nearly constant level with a large downturn in the 1930s.
c. downward trend in the first half of the century followed by the upward trend in the second
half.
d. constant level in the first half of the century followed by the upward trend in the second
half.
17. Exogenous variables are:
a. determined outside the
model.
b. determined within the
model.
c. the outputs of the model.
d. explained by the model.
18. In a simple model of the supply and demand for pizza, the endogenous variables are:
a. the price of pizza and the price of cheese.
b. aggregate income and the quantity of pizza
sold.
c. aggregate income and the price of cheese.
d. the price of pizza and the quantity of pizza
sold.
19. Important characteristics of macroeconomic models include all of these EXCEPT:
a. simplifying assumptions.
b. functional relationships based on randomized control trials.
c. endogenous and exogenous variables.
d. implicit or explicit consistency with microeconomic
foundations.
20. The annual inflation rate in the United States averaged:
a. nearly zero between 1900 and 1950.
b. nearly zero between 1950 and 2000.
c. about 10 percent between 1900 and
1950.
d. about 10 percent between 1950 and
2000.
21. Variables that a model takes as given are called:
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