Intro macro + measure eco + e in goods market + fiscal policy

Macroeconomists study

• decisions of households and firms.

• the interaction of households and firms.

• economy-wide phenomena

• regulations on firms and unions.

Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study

• Unemployment rate rises from 5 percent to 5.5 percen

• Real GDP grows by 3.1 percent in the third quarter

• Retail sales at stores show large gains.

• The price of oranges rises after an early frost

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

• the effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry

• the price of beef, wage differences between genders, and antitrust laws

• how consumers maximize utility, and how prices are established in markets for agricultural products

• the percentage of the labor force that is out of work, and differences in average income from country to country

Because it is difficult for economists to use experiments to generate data, they generally must

• do without data

• substitute assumptions for data when data are unavailable

• rely upon hypothetical data that were previously concocted by other economists

• use whatever data the world gives them

One thing economists do to help them understand how the real world works is as follows:

• They make assumptions.

• They ignore the past

• They try to capture every aspect of the real world in the models they construct.

• All of the above are correct.

Which of the following statistics is usually regarded as the best single measure of a society’s economic well-being?

• the unemployment rate

• the inflation rate

• gross domestic product

• the trade deficit

For an economy as a whole,

• income is greater than expenditure

• expenditure is greater than income

• income is equal to expenditure.

• GDP measures income more precisely than it measures expenditure.

Gross domestic product serves as a measure of two things

• the total spending of everyone in the economy and the total saving of everyone in the economy

• the total income of everyone in the economy and the total expenditure on the nation's output of goods and services

• the value of the nation's output of goods and services for domestic citizens and the value of the nation's output of goods and services for the rest of the world

• the nation's saving and the nation's investment.

If a nation’s GDP rises, then it must be the case that the nation’

• income and expenditure both rise.

• income and saving both rise

• income rises, but expenditure may rise or fall.

• saving rises, but income may rise or fall.

In a simple circular-flow diagram total income and total expenditure are

• never equal because total income always exceeds total expenditure

• seldom equal because of the ongoing changes in an economy’s unemployment rate.

• equal only when one dollar is spent on goods for every dollar that is spent on services.

• always equal because every transaction has a buyer and a seller.