23 October 2014
1 The business cycle component of the log of real per-capita GNP is equal to A) log of actual
log of trend GNP. B) log of trend GNP
log of actual real GNP. C) log of trend
log of actual real GNP. D) log of actual real GNP
log of trend GNP.
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.
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.
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
6 Improvements in a country’s standard of living are brought about in the long run by A)
B) growth in the population.
C) constructing more machines and
buildings. D) immigration policy.
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”