Macro Ch4 Online Questions

Macro Ch4 Online Questions - uses aggregation the process...

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Chapter 4 Review Questions 1. Discuss the similarities and differences between macroeconomics and microeconomics. 2. What is the basic tool macroeconomists use to deal with the complexity and variety of economic markets and institutions? Give some examples of how they use this tool. 3. List the nation’s macroeconomic goals and explain why each is important. 4. Consider an economy whose real GDP is growing at 4 percent per year. What else would you need to know in order to say whether the average standard of living is improving or deteriorating? 5. Explain the difference between a contraction, a recession, and a depression. ANSWERS TO EVEN-NUMBERED ONLINE REVIEW QUESTIONS 2. To make sense of the economy and to create workable models, macroeconomics
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Unformatted text preview: uses aggregation the process of combining distinct things into a single entity. There are many examples of aggregation in macroeconomics, so answers will vary widely. One example would be the interest rateobtained by combining all the different interest rates in the economy into a single aggregate. Another example is gross domestic product (GDP)obtained by combining all the different types of goods and services in the economy into a single aggregate. 4. In addition to the growth rate of output, we would need to know the growth rate of the population. A rise in the average standard of living requires that output grow faster than the population, so that output per person rises....
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