fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
Macroeconomics, 6e (Blanchard/Johnson)
Appendix 1: An Introduction to National Income and Product Accounts
26.1 Multiple Choice Questions
1) If GDP exceeds GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) receipts of factor income from the rest of the world exceed payments of factor income to the
rest of the world.
Answer: D
Diff: 1
2) If GDP is less than GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) none of the above
Answer: D
Diff: 2
3) Net national product (NNP) is equal to
A) personal income minus taxes.
B) GNP minus consumption of fixed capital.
C) GDP plus consumption of fixed capital.
D) national income plus consumption of fixed capital.
Answer: B
Diff: 2
4) Which of the following is NOT a component of consumption?
A) nondurable goods
B) purchase of a new condominium
C) education expenses
D) none of the above
Answer: B
Diff: 1
5) Changes in business inventories will be positive when
A) production exceeds sales.
B) production is less than sales.
C) a trade surplus exists.
,D) a budget surplus exists.
Answer: A
Diff: 2
Suppose exports are greater than imports. Given this information, we know with certainty that
E) a trade surplus exists.
F) GNP > GDP.
G) GNP < GDP.
H) the change in business inventories is positive.
Answer: A
Diff: 1
6) Which of the following is NOT included in National Income?
A) indirect taxes
B) wages and salaries
C) net interest
D) rental income of persons
Answer: A
Diff: 2
7) Which of the following is included in National Income?
A) indirect taxes
B) consumption of fixed capital
C) proprietors' income
D) all of the above
Answer: C
Diff: 2
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act or
the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of these
laws is often inadequate, and the legal system may not always provide sufficient redress for communities that
suffer from environmental harm. This raises questions about the effectiveness of current legal structures in
promoting environmental justice.#### 7.2 **Climate Change and Global Responsibility**Climate change
presents a particularly difficult ethical and legal challenge. While the causes of climate change are now
widely accepted (mainly human activities such as burning fossil fuels and
8) Which of the following is not included in investment?
A) the purchase of new equipment by firms
B) nondurable goods
C) the purchase of a new home
D) none of the above
Answer: B
Diff: 1
9) If GDP is more than GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) none of the above
Answer: D
Diff: 2
,10) Changes in business inventories will be negative when
A) production exceeds sales.
B) production is less than sales.
C) a trade surplus exists.
D) a budget surplus exists.
Answer: B
Diff: 2
11) Suppose exports are less than imports. Given this information, we know with certainty that
A) a trade deficit exists.
B) GNP > GDP.
C) GNP < GDP.
D) the change in business inventories is positive.
Answer: A
Diff: 1
Macroeconomics, 6e (Blanchard/Johnson) Appendix 3: An Introduction to Econometrics
27.1 Multiple Choice Questions
1) "Ordinary least squares" is a technique that can be used to
A) identify the best model.
B) determine which variables in a model are endogenous and which are exogenous.
C) obtain a bar graph showing successive quarterly increases in output.
D) obtain a line describing consumption behavior in the real world.
E) determine the direction of causation between consumption and income.
Answer: D
Diff: 1
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
2) When we estimate a regression to determine the relationship between changes in consumption
and changes in current income, we find that
A) there are no residuals.
B) the R2 is zero.
C) the MPC is larger than one.
D) all of the above
E) none of the above
Answer: E
Diff: 1
3) When we use ordinary least squares to determine the relationship between changes in
consumption and changes in both current and lagged income, we find that
A) only current income influences current consumption.
B) current income has no impact on current consumption.
C) consumption is not affected by income in any quarter.
, D) current income, last quarter's income, and income two quarter's ago all have the same impact
on current consumption.
E) current income has a greater impact on consumption than income lagged one quarter.
Answer: E
Diff: 1
4) When estimating a regression line, a high R2‚ tells us we have
A) a good fit.
B) large residuals.
C) correctly determined the direction of causation.
D) all of the above
E) none of the above
Answer: A
Diff: 1
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
5) A large "T-statistic" tell us that
A) a tiny change in the independent variable will cause a relatively large change in the dependent
variable.
B) we do not have enough data to obtain an accurate regression line.
C) we can be confident that our estimated coefficient is not zero.
D) we should have included more "lags" in our model.
E) we have incorrectly switched the dependent and independent variables in our model.
Answer: C
Diff: 1
6) Which of the following problems would lead an economist to use instrument variable
methods?
A) the dependent variable has an impact on the independent variable.
B) there are too few quarters of data.
C) there are too many independent variables.
D) the R2 is too high.
E) the residuals are too small.
Answer: A
Diff: 1
7) A key step in using instrument variable methods is to
A) find one or more exogenous variables that influence your dependent variable.
B) decrease the number of lags in the regression equation.
C) conduct interviews to determine how accurate your data really is.
D) run the regression on two different computers to see if the results differ.
E) eliminate the dependent variable.
Answer: A
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
Macroeconomics, 6e (Blanchard/Johnson)
Appendix 1: An Introduction to National Income and Product Accounts
26.1 Multiple Choice Questions
1) If GDP exceeds GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) receipts of factor income from the rest of the world exceed payments of factor income to the
rest of the world.
Answer: D
Diff: 1
2) If GDP is less than GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) none of the above
Answer: D
Diff: 2
3) Net national product (NNP) is equal to
A) personal income minus taxes.
B) GNP minus consumption of fixed capital.
C) GDP plus consumption of fixed capital.
D) national income plus consumption of fixed capital.
Answer: B
Diff: 2
4) Which of the following is NOT a component of consumption?
A) nondurable goods
B) purchase of a new condominium
C) education expenses
D) none of the above
Answer: B
Diff: 1
5) Changes in business inventories will be positive when
A) production exceeds sales.
B) production is less than sales.
C) a trade surplus exists.
,D) a budget surplus exists.
Answer: A
Diff: 2
Suppose exports are greater than imports. Given this information, we know with certainty that
E) a trade surplus exists.
F) GNP > GDP.
G) GNP < GDP.
H) the change in business inventories is positive.
Answer: A
Diff: 1
6) Which of the following is NOT included in National Income?
A) indirect taxes
B) wages and salaries
C) net interest
D) rental income of persons
Answer: A
Diff: 2
7) Which of the following is included in National Income?
A) indirect taxes
B) consumption of fixed capital
C) proprietors' income
D) all of the above
Answer: C
Diff: 2
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act or
the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of these
laws is often inadequate, and the legal system may not always provide sufficient redress for communities that
suffer from environmental harm. This raises questions about the effectiveness of current legal structures in
promoting environmental justice.#### 7.2 **Climate Change and Global Responsibility**Climate change
presents a particularly difficult ethical and legal challenge. While the causes of climate change are now
widely accepted (mainly human activities such as burning fossil fuels and
8) Which of the following is not included in investment?
A) the purchase of new equipment by firms
B) nondurable goods
C) the purchase of a new home
D) none of the above
Answer: B
Diff: 1
9) If GDP is more than GNP, we know with certainty that
A) a budget deficit exists.
B) a trade surplus exists.
C) a trade deficit exists.
D) none of the above
Answer: D
Diff: 2
,10) Changes in business inventories will be negative when
A) production exceeds sales.
B) production is less than sales.
C) a trade surplus exists.
D) a budget surplus exists.
Answer: B
Diff: 2
11) Suppose exports are less than imports. Given this information, we know with certainty that
A) a trade deficit exists.
B) GNP > GDP.
C) GNP < GDP.
D) the change in business inventories is positive.
Answer: A
Diff: 1
Macroeconomics, 6e (Blanchard/Johnson) Appendix 3: An Introduction to Econometrics
27.1 Multiple Choice Questions
1) "Ordinary least squares" is a technique that can be used to
A) identify the best model.
B) determine which variables in a model are endogenous and which are exogenous.
C) obtain a bar graph showing successive quarterly increases in output.
D) obtain a line describing consumption behavior in the real world.
E) determine the direction of causation between consumption and income.
Answer: D
Diff: 1
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
2) When we estimate a regression to determine the relationship between changes in consumption
and changes in current income, we find that
A) there are no residuals.
B) the R2 is zero.
C) the MPC is larger than one.
D) all of the above
E) none of the above
Answer: E
Diff: 1
3) When we use ordinary least squares to determine the relationship between changes in
consumption and changes in both current and lagged income, we find that
A) only current income influences current consumption.
B) current income has no impact on current consumption.
C) consumption is not affected by income in any quarter.
, D) current income, last quarter's income, and income two quarter's ago all have the same impact
on current consumption.
E) current income has a greater impact on consumption than income lagged one quarter.
Answer: E
Diff: 1
4) When estimating a regression line, a high R2‚ tells us we have
A) a good fit.
B) large residuals.
C) correctly determined the direction of causation.
D) all of the above
E) none of the above
Answer: A
Diff: 1
fairness—whether it is just for these communities to bear a larger share of the negative impacts of industrial
development and environmental degradation.Legally, environmental regulations such as the Clean Air Act
or the Clean Water Act are designed to curb pollution and protect public health. However, enforcement of
these laws is often inadequate, and the legal system may not always provide sufficient redress for
communities that suffer from environmental harm. This raises questions about the effectiveness of current
legal structures in promoting environmental justice.#### 7.2 **Climate Change and Global
Responsibility**Climate change presents a particularly difficult ethical and legal challenge. While the
causes of climate change are now widely accepted (mainly human activities such as burning fossil fuels and
5) A large "T-statistic" tell us that
A) a tiny change in the independent variable will cause a relatively large change in the dependent
variable.
B) we do not have enough data to obtain an accurate regression line.
C) we can be confident that our estimated coefficient is not zero.
D) we should have included more "lags" in our model.
E) we have incorrectly switched the dependent and independent variables in our model.
Answer: C
Diff: 1
6) Which of the following problems would lead an economist to use instrument variable
methods?
A) the dependent variable has an impact on the independent variable.
B) there are too few quarters of data.
C) there are too many independent variables.
D) the R2 is too high.
E) the residuals are too small.
Answer: A
Diff: 1
7) A key step in using instrument variable methods is to
A) find one or more exogenous variables that influence your dependent variable.
B) decrease the number of lags in the regression equation.
C) conduct interviews to determine how accurate your data really is.
D) run the regression on two different computers to see if the results differ.
E) eliminate the dependent variable.
Answer: A
