Intermediate Macroeconomics Study Guide and Workbook Questions

Intermediate Macroeconomics Study Guide and Workbook Questions

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Intermediate Macroeconomics Study Guide and Workbook Questions Mankiw’s Macroeconomics 7 th Edition Chapter 1 Fill in the blank 1. Macroeconomics is the study of the economy as a whole. It focuses on issues such as economic growth, inflation, and unemployment. Microeconomics is the study of the economy in the small. It focuses on the individual firm, industry, or consumer. 2. Real GDP measures the total income of everyone in the economy. A period in which this measure is falling is called a recession if small, and a depression if the decline is severe. 3. During depressions, many people lose their jobs, so unemployment rises substantially. 4. An increase in the general level of prices is called inflation
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Unformatted text preview: . 5. Economists construct models to assist them in understanding the real world. 6. One purpose of an economic model is to show how the exogenous variables affect the endogenous variables, where the former come from outside the model and the latter are determined within the model. 7. With regard to prices, most macroeconomists believe that price flexibility is a reasonable assumption for studying long-run issues but that price stickiness is a better assumption for studying short-run issues. 8. Models that exhibit price flexibility are examples of market-clearing models. Multiple-choice 1. B 2. D 3. D 4. B 5. D 6. C Exercises 1. Percentage Change a. 20% b. 325% c.-20%...
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This note was uploaded on 01/29/2012 for the course ECON 321 taught by Professor Sani during the Spring '08 term at Rutgers.

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