In the aggregate demand curve, the endogenous variable is ________.

In the aggregate demand curve, the endogenous variable is ________.
 
  A) output
  B) inflation
  C) the real interest rate
  D) real money balances
  E) none of the above

Question 2

Based on the Saving-Investment Diagram, if the domestic real interest rate is indicated by B, then ________.
 
  A) the value of net exports is zero
  B) the diagram represents a closed economy
  C) the world real interest rate is indicated by A
  D) the difference between values F and E measures the net capital inflow
  E) none of the above

Question 3

Which of the following is the most likely explanation for the behavior of private inventories between September 2007 and September 2009, as depicted in Figure 19.1?
 
  A) a substantial decline in the desired level of inventories, due to a slump in aggregate demand
  B) a substantial decline in the desired level of inventories, as improvements in technology have reduced the size of inventories needed to support both production and customer deliveries
  C) an unanticipated draw-down of inventories as the economy was growing much faster than expected
  D) a substantial decline in the desired level of inventories, as changes in the tax code increased the cost of holding inventories

Question 4

Which of the following policies would increase the growth rate of an economy in the endogenous growth model with human capital?
 
  A) mandatory schooling.
  B) minimum wages.
  C) redistributive taxation.
  D) lump-sum taxation.

Question 5

________ highlights the importance of fiscal policy as a determinant of good macroeconomic performance.
 
  A) The real business cycle model
  B) The traditional Keynesian model
  C) The new Keynesian model
  D) Rational expectations

Question 6

A time series is
 
  A) the length of a business cycle.
  B) a macroeconomic aggregate that does not lead or lag the business cycle.
  C) data that is subject to revision.
  D) a sequence of dated measurements.

Question 7

According to purchasing power parity, the relationship among the domestic price (P), the foreign price (P ), and the nominal exchange rate (e), can be written as
 
  A) P = e - P .
  B) P = P - e.
  C) P = eP .
  D) P = e/P .

Question 8

A key objective of a government safety net for the banking system is to ensure ________.
 
  A) that the poor have access to bank services
  B) an efficient allocation of credit
  C) bank profitability
  D) that depositors always believe that their money is safe in the bank

Question 9

The three business cycle models differ mostly in their treatment of ________.
 
  A) aggregate demand
  B) short-run aggregate supply
  C) long-run aggregate supply
  D) productivity shocks

Question 10

Consider the two graphs above. Suppose rising fuel costs makes it more expensive to move goods to and from warehouses. This would ________ the desired level of inventories, as depicted in graph ________.
 
  A) increase; B
  B) increase; A
  C) decrease; B
  D) decrease; A

Question 11

The property that macroeconomic variables fluctuate together in patterns that exhibit strong regularities is called
 
  A) coincidence.
  B) co-movement.
  C) correlation.
  D) coexistence.

Question 12

In an open economy, the law of one price implies that
 
  A) the domestic economy may have a comparative advantage in only half the goods it produces.
  B) perfect competition holds in all domestic markets.
  C) purchasing power parity should hold.
  D) the nominal exchange rate should equal one.

Question 13

An example of an increase in b, the efficiency of human capital accumulation, is
 
  A) more mandatory school years.
  B) better teachers.
  C) better school material.
  D) better total factor productivity.