Solution Manual for
Macroeconomics 11th
Edition by Dornbusch
(All 21 Chapters)
1-1
,Chapter 01: Introduction
Multiple Choice Questions
1. Which of the following is NOT a central issue in macroeconomics?
a. How should the central bank of a country fight inflation?
b. What is responsible for high and persistent unemployment?
C. How do tax changes influence consumers' choices of what to buy?
d. What factors determine economic growth?
e. What can or should the government do to stabilize the economy?
Difficulty: Easy
2. Macroeconomics does NOT focus on
a. Policies that affect consumption and saving
B. Policies that affect the performance of the health care sector
c. The determination of changes in wages and prices
d. The determination of interest rates
e. None of the above, all of them are macroeconomic issues
Difficulty: Easy
3. Which of the following is NOT dealt with in microeconomics?
a. The effect of agricultural subsidies on the price of milk
b. Differences between the market for skilled labor versus the market for unskilled labor
c. Issues related to the structure and performance of the health care sector
D. Policies that affect the level of aggregate consumption
e. Issues related to the deregulation of the telecommunications industry
Difficulty: Easy
1-2
,4. Which of the economists below most likely advocated activist government policies?
a. Milton Friedman
B. John Maynard Keynes
c. Robert Lucas
d. Thomas Sargent
e. Adam Smith
Difficulty: Easy
5. In studying growth theory, we
A. Assume that labor, capital, and raw materials are all used efficiently
b. Assume that increased use of inputs cannot lead to a higher living standard
c. Assume that technological advances cannot affect living standards
d. Try to explain the reasons for recessions and booms
e. All of the above
Difficulty: Easy
6. Which of the following factors does NOT contribute to economic growth?
a. The availability of resources such as labor and capital
b. Increases in the size of the population
c. The availability of new and better technology
d. Increased knowledge gained through education or work experience
E. All of the above can increase economic growth
Difficulty: Easy
7. Which of the following is a FALSE statement?
a. The very long run focuses on the growth of productive capacity
b. In the very long run, the productive capacity is assumed to be given
c. In the very short run, shifts in aggregate demand determine how much output is produced
D. Fluctuations in inflation and unemployment are important long-run issues
e. At the full-employment level of output, capital is not used 100 percent
Difficulty: Easy
1-3
, 8. Government intervention into economic activity will NOT lead to a change in the price
level
A. In the very short-run model
b. In the medium-run model
c. In the very long-run model
d. In the classical model
e. Assuming a macro-model that focuses on the growth of productive capacity
Difficulty: Easy
9. In the very short run, the level of
a. Output is determined by both aggregate demand and aggregate supply
B. Output is determined by aggregate demand alone
c. Prices will change if aggregate demand shifts
d. Prices is determined by aggregate demand alone
e. Both A and C
Difficulty: Easy
10. In the simple macro model of this chapter, the long-run AS-curve is
a. Horizontal
B. Vertical
c. Upward-sloping
d. Assumed to be completely price elastic
e. Either B or C, depending on how fast prices adjust
Difficulty: Easy
11. In the very long-run AD-AS model, if the AD-curve shifts to the left, then
a. Prices and output will both decrease
b. Prices and output will both increase
C. Prices will decrease but output will remain the same
d. Output will decrease but prices will remain the same
e. Output will increase but prices will decrease
Difficulty: Easy
1-4
Macroeconomics 11th
Edition by Dornbusch
(All 21 Chapters)
1-1
,Chapter 01: Introduction
Multiple Choice Questions
1. Which of the following is NOT a central issue in macroeconomics?
a. How should the central bank of a country fight inflation?
b. What is responsible for high and persistent unemployment?
C. How do tax changes influence consumers' choices of what to buy?
d. What factors determine economic growth?
e. What can or should the government do to stabilize the economy?
Difficulty: Easy
2. Macroeconomics does NOT focus on
a. Policies that affect consumption and saving
B. Policies that affect the performance of the health care sector
c. The determination of changes in wages and prices
d. The determination of interest rates
e. None of the above, all of them are macroeconomic issues
Difficulty: Easy
3. Which of the following is NOT dealt with in microeconomics?
a. The effect of agricultural subsidies on the price of milk
b. Differences between the market for skilled labor versus the market for unskilled labor
c. Issues related to the structure and performance of the health care sector
D. Policies that affect the level of aggregate consumption
e. Issues related to the deregulation of the telecommunications industry
Difficulty: Easy
1-2
,4. Which of the economists below most likely advocated activist government policies?
a. Milton Friedman
B. John Maynard Keynes
c. Robert Lucas
d. Thomas Sargent
e. Adam Smith
Difficulty: Easy
5. In studying growth theory, we
A. Assume that labor, capital, and raw materials are all used efficiently
b. Assume that increased use of inputs cannot lead to a higher living standard
c. Assume that technological advances cannot affect living standards
d. Try to explain the reasons for recessions and booms
e. All of the above
Difficulty: Easy
6. Which of the following factors does NOT contribute to economic growth?
a. The availability of resources such as labor and capital
b. Increases in the size of the population
c. The availability of new and better technology
d. Increased knowledge gained through education or work experience
E. All of the above can increase economic growth
Difficulty: Easy
7. Which of the following is a FALSE statement?
a. The very long run focuses on the growth of productive capacity
b. In the very long run, the productive capacity is assumed to be given
c. In the very short run, shifts in aggregate demand determine how much output is produced
D. Fluctuations in inflation and unemployment are important long-run issues
e. At the full-employment level of output, capital is not used 100 percent
Difficulty: Easy
1-3
, 8. Government intervention into economic activity will NOT lead to a change in the price
level
A. In the very short-run model
b. In the medium-run model
c. In the very long-run model
d. In the classical model
e. Assuming a macro-model that focuses on the growth of productive capacity
Difficulty: Easy
9. In the very short run, the level of
a. Output is determined by both aggregate demand and aggregate supply
B. Output is determined by aggregate demand alone
c. Prices will change if aggregate demand shifts
d. Prices is determined by aggregate demand alone
e. Both A and C
Difficulty: Easy
10. In the simple macro model of this chapter, the long-run AS-curve is
a. Horizontal
B. Vertical
c. Upward-sloping
d. Assumed to be completely price elastic
e. Either B or C, depending on how fast prices adjust
Difficulty: Easy
11. In the very long-run AD-AS model, if the AD-curve shifts to the left, then
a. Prices and output will both decrease
b. Prices and output will both increase
C. Prices will decrease but output will remain the same
d. Output will decrease but prices will remain the same
e. Output will increase but prices will decrease
Difficulty: Easy
1-4
