problem-set-with-answer.pdf - Macroeconomics 1 Yi-Chan Tsai...

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Macroeconomics Yi-Chan Tsai 23 October 2014 1 Multiple Choices 1 The business cycle component of the log of real per-capita GNP is equal to A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP. ANSWER. A 2 When we say the U.S. economy has grown on average at 2.1%, we mean A) the inflation rate. B) the growth rate of nominal GDP. C) the growth rate of per-capita nominal GDP. D) the growth rate of per-capita real GDP. ANSWER. D
3 What do we assume about households and firms? A) They act irrationally. B) They do what the government tells them to do. C) They look after each other. D) They optimize. ANSWER. D 4 According to the Lucas critique, changes in economic policy are likely to have important
5 Business cycles are A) each unique, but all have a single cause. B) each unique and they can have many causes. C) similar, and they all have a single cause. D) similar, but they can have many causes.
6 Improvements in a country’s standard of living are brought about in the long run by A) technological progress. B) growth in the population. C) constructing more machines and buildings. D) immigration policy. ANSWER. A
2 True/False/Uncertain Please state whether each of the following claims are true, false or uncertain, and provide a brief justification for your answer. 1 ”An increase in the price of a good that is imported into the US - holding all other prices and quantities fixed - will tend to increase the GDP deflator in the US”

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