EC_3220_HW_1_Chs1-2

# EC_3220_HW_1_Chs1-2 - ECONOMICS 3220 INTERMEDIATE...

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Page 1 ECONOMICS 3220 INTERMEDIATE MACROECONOMICS Homework 1: Chs 1-2 1. Deflation occurs when: A) real GDP decreases. B) the unemployment rate decreases. C) prices fall. D) prices increase, but at a slower rate. 2. Macroeconomic models are used to explain how ______ variables influence ______ variables. A) endogenous; exogenous B) exogenous; endogenous C) microeconomic; macroeconomic D) macroeconomic; microeconomic 3. In a simple model of the supply and demand for pizza, the endogenous variables are: A) the price of pizza and the price of cheese. B) aggregate income and the quantity of pizza sold. C) aggregate income and the price of cheese. D) the price of pizza and the quantity of pizza sold. 4. The assumption of continuous market clearing means that: A) sellers can sell all that they want at the going price. B) buyers can buy all that they want at the going price. C) in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price. D) at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price. 5. All of the following statements about sticky prices are true except : A) in the short run, some wages and prices are sticky. B) the sticky-price model describes the equilibrium toward which the economy slowly gravitates. C) for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility. D) magazine publishers tend to change their newsstand prices only every three or four years.

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Page 2 6. An assumption of _______ is more plausible for studying the short-run behavior of the economy, while an assumption of ______ is more plausible for studying the long-run, equilibrium behavior of the economy. A) deflation; inflation B) inflation; deflation C) flexible prices; sticky prices D) sticky prices; flexible prices 7. Macroeconomics is based on microeconomics for all of the following reasons except : A) when we study the economy as a whole, we must consider the decisions of individual economic actors. B) aggregate variables are simply the sum of variables describing many individual decisions. C) macroeconomic decisionmakers, when they make their choices, are required to maximize utility functions. D) to understand the determinants of aggregate investment, we must think about a firm's deciding whether to build a new factory. 8. Two equivalent ways to view GDP are as the: A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. C)
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EC_3220_HW_1_Chs1-2 - ECONOMICS 3220 INTERMEDIATE...

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