Macroeconomics Ch, 1, 2 & 3

Macroeconomic models are used to explain how __________ variables influence

__________ variables.

1. 

• endogenous; exogenous

• exogenous; endogenous

• 1. microeconomic; macroeconomic

• 1. macroeconomic; microeconomic

When studying the short-run behavior of the economy, an assumption of ______________ is more plausible, whereas when studying the long-run equilibrium behavior of an economy, an assumption of _____________ is more plausible.

• inflation; unemployment

• 1. unemployment; inflation

• 1. flexible prices; sticky prices

• 1. sticky prices; flexible prices

All of these are flow variables EXCEPT:

• the number of new automobile purchases

• the number of people losing their jobs

• business expenditures on plant and equipment

• the government debt.

GNP equals GDP__________ income earned domestically by foreigners ____________ income that nationals earn abroad.

• plus; plus

• 1. minus; minus

• 1. minus; plus

• plus; minus

6. The investment function slopes ___________ because there are ___________

investment projects that are profitable as the interest rate decreases.

• 1. upward; fewer

• 1. upward; more

• 1. downward; fewer

• 1. downward; more

1. Recessions are periods of

• 1. rising incomes.

• 1. falling incomes.

• 1. rising prices.

• 1. falling prices.

1. The unemployment rate measures the fraction of the

• 1. adult population that has stopped looking for work.

• 1. adult population that is not working.

• 1. labour force that has stopped looking for work.

• 1. labour force that is not working.

1. In Canadian history, deflation

• 1. is the norm.

• 1. is about as common as inflation.

• 1. is rare now but has occurred at times in the past

• 1. has never occurred.

1. Economists use models because they

• 1. clarify our thinking.

• 1. show how exogenous variables influence endogenous variables.

• 1. are fun.

• 1. all of the above

1. Market-clearing models assume that prices ______________ are and are best applied to understand the economy in the _____________ run.

• 1. flexible, long

• 1. flexible, short

• 1. sticky, long

• 1. sticky, short