ii. What will the impact of steel tariffs be on the price of washing machines?
iii. What are potential causes of financial crises?
a. i only d. i, ii, and iii
b. ii only e. ii and iii
c. iii only
ANS: C DIF: Easy REF: 1.1 TOP: II.
MSC: Applying
8. Which of the following does macroeconomics endeavor to answer?
i. What role does the government play in recessions, booms, and determining the rate of inflation?
ii. What caused the currency crises in Mexico in the mid-1990s and in many Asian economies at the end of the 1990s?
iii. How does a dairy farmer react to rising milk prices?
a. iii only d. i, ii, and iii
b. ii only e. i and iii
c. i and ii
ANS: C DIF: Moderate REF: 1.1 TOP: II.
MSC: Applying
9. Which of the following lists the four steps we use to study macroeconomic behavior in the correct order?
a. (1) document the facts; (2) develop a model; (3) compare the predictions of the model to the original facts; (4) use the model to make other predictions that may eventually be tested
b. (1) document the facts; (2) use the model to make other predictions that may eventually be tested; (3) compare the predictions of the model to the original facts; (4) develop a model
c. (1) compare the predictions of the model to the original facts; (2) develop a model; (3) document the facts; (4) use the model to make other predictions that may eventually be tested
d. (1) develop a model; (2) document the facts; (3) compare the predictions of the model to the original facts; (4) use the model to make other predictions that may eventually be tested.
e. None of these answers is correct.
ANS: A DIF: Easy REF: 1.2 TOP: II.
MSC: Remembering
10. ________ are inputs to the model and generally are fixed over time, while ________ are the outcomes of the model.
a. Shocks; parameters
b. Endogenous variables; exogenous variables
c. Endogenous variables; shocks
d. Exogenous variables; endogenous variables
e. Parameters; system variables
ANS: D DIF: Easy REF: 1.2 TOP: II.
MSC: Remembering
11. Which of the following questions should a successful model predict?
i. How do changes in government policies change the labor market?
ii. How does money supply influence inflation?
iii. How does investment affect economic growth?
a. ii only d. i and ii
b. i, ii, and iii e. i and iii
c. iii only
ANS: B DIF: Moderate REF: 1.2 TOP: II.
MSC: Applying
12. Which of the following questions should a successful model predict?
i. How do changes in government policies change the labor market?
ii. How does money supply influence inflation?
iii. How does a change in the inflation rate affect unemployment?
a. iii only d. i and ii
b. ii only e. i and iii
c. i, ii, and iii
ANS: C DIF: Moderate REF: 1.2 TOP: II.
MSC: Applying
13. Which of the following questions should a successful model predict?