2025|2026 EC390 Macroeconomics EVERY QUESTIONS YOU’LL EXPECT ON FINAL EXAM Test Bank - Wilfrid Laurier University

2025|2026 EC390 Macroeconomics EVERY QUESTIONS YOU’LL EXPECT ON FINAL EXAM Test Bank - Wilfrid Laurier University 2025|2026 EC390 Macroeconomics EVERY QUESTIONS YOU’LL EXPECT ON FINAL EXAM Test Bank - Wilfrid Laurier University Macroeconomics, 6e (Williamson) Chapter 1 Introduction 1.1 Multiple-Choice Questions 1) In 2014, the per-capita GDP in the United States, in 2005 dollars, was about A) $17,500. B) $27,500. C) $50,000 D) $47,500. Answer: C LO: 1.2: Explain the key features of trend growth and deviations from trend in per capita gross domestic product in the United States from 1900 to 1914. Difficulty: easy Classification: concept AACSB: application of knowledge 2) Which of the following topics is NOT a primary concern of macroeconomists? A) fluctuations in the level of economic activity B) differences in standards of living across countries C) relative wages of skilled and unskilled workers D) unemployment Answer: C LO: 1.1: State the two focuses of study in macroeconomics, the key differences between microeconomics and macroeconomics, and the similarities between microeconomics Difficulty: moderate Classification: concept AACSB: analytical thinking 3) Primarily, macroeconomists use microeconomic principles to study A) business cycles and trends in the stock market. B) long-run economic growth and antitrust policies. C) trends in the stock market and long-term economic growth. D) long-run economic growth and business cycles. Answer: D LO: 1.1: State the two focuses of study in macroeconomics, the key differences between microeconomics and macroeconomics, and the similarities between microeconomics Difficulty: moderate Classification: concept AACSB: application of knowledge 4) Which is a question of interest in this book? A) What causes growth in the long term? B) How should a labor contract be structured? C) How should a government be elected? D) What is the impact of government provided health care? Answer: A LO: 1.1: State the two focuses of study in macroeconomics, the key differences between microeconomics and macroeconomics, and the similarities between microeconomics Difficulty: difficult Classification: concept AACSB: analytical thinking 5) Which is a question of interest in this book? A) Where is the stock market heading? B) What is the optimal inflation rate? C) How are stock options priced? D) What are commodity futures? Answer: B LO: 1.1: State the two focuses of study in macroeconomics, the key differences between microeconomics and macroeconomics, and the similarities between microeconomics Difficulty: moderate Classification: concept AACSB: application of knowledge 6) Over the course of the twentieth century, the typical American A) remained equally as rich. B) became twice as rich. C) became five times as rich D) became ten times as rich. Answer: D LO: 1.2: Explain the key features of trend growth and deviations from trend in per capita gross domestic product in the United States from 1900 to 1914. Difficulty: easy Classification: application AACSB: analytical thinking 7) Which of the following assertions is false? A) The Great Depression was a typical business cycle. B) Very rapid growth occurred during World War II. C) Real GDP per capita dipped about 30% during the Great Depression. D) On average, the U.S. economy grows at a rate of 2.1%. Answer: A LO: 1.2: Explain the key features of trend growth and deviations from trend in per capita gross domestic product in the United States from 1900 to 1914. Difficulty: moderate Classification: application AACSB: application of knowledge 8) The business cycle component of the log of real per-capita GNP is equal to A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP. Answer: A LO: 1.2: Explain the key features of trend growth and deviations from trend in per capita gross domestic product in the United States from 1900 to 1914. Difficulty: easy Classification: concept AACSB: analytical thinking 9) For the study of economic growth, it is most helpful to examine movements in ; for the study of business cycles, it is most helpful to examine movements in . A) trend GNP; trend GNP B) trend GNP; deviations from trend in GNP C) deviations from trend in GNP; trend GNP D) deviations from trend in GNP; deviations from trend in GNP Answer: B LO: 1.2: Explain the key features of trend growth and deviations from trend in per capita gross domestic product in the United States from 1900 to 1914. Difficulty: difficult Classification: application AACSB: application of knowledge 10) A useful macroeconomic model A) is extremely realistic. B) is simple. C) never generates testable hypotheses. D) provides a lot of intricate details. Answer: B LO: 1.3: Explain why models are useful in macroeconomics. Difficulty: moderate Classification: concept AACSB: application of knowledge 11) Macroeconomic models are A) never wrong. B) accurate descriptions of the economy. C) simple abstractions of reality. D) consistent with all economic data. Answer: C LO: 1.3: Explain why models are useful in macroeconomics. Difficulty: easy Classification: concept AACSB: application of knowledge 12) What characterizes a competitive equilibrium? A) Markets are rationed. B) Governments stay out of the market. C) Economic agents are price-takers. D) It is costly to experiment with policies. Answer: C LO: 1.3: Explain why models are useful in macroeconomics. Difficulty: moderate Classification: concept AACSB: application of knowledge 13) What do we assume about households and firms? A) They act irrationally. B) They do what the government tells them to do. C) They look after each other. D) They optimize. Answer: D LO: 1.3: Explain why models are useful in macroeconomics. Difficulty: moderate Classification: concept AACSB: application of knowledge 14) According to the Lucas critique, the effects of changes in economic policy A) can be determined by looking at macroeconomic data. B) cannot always be predicted by looking at historical macroeconomic relationships. C) are easy to predict. D) do not require macroeconomic theory. Answer: B LO: 1.4: Discuss how microeconomic principles are important in constructing useful macroeconomic models. Difficulty: difficult Classification: concept AACSB: analytical thinking 15) Which aspect of macroeconomics generates the most controversy? A) economic growth B) the causes of business cycles C) supply and demand D) competitive equilibrium Answer: B LO: 1.5: Explain why there is disagreement among macroeconomists, and what they disagree about. Difficulty: moderate Classification: application AACSB: application of knowledge 16) According to Keynesian coordination failure theory, the primary causes of business cycles are A) shocks to aggregate demand. B) monetary factors. C) technology shocks. D) waves of self-fulfilling optimism and pessimism. Answer: D LO: 1.5: Explain why there is disagreement among macroeconomists, and what they disagree about. Difficulty: moderate Classification: concept AACSB: application of knowledge 17) The macroeconomic models that are most supportive of the role of government policy aimed at smoothing business cycles are A) real business cycle models. B) endogenous growth models. C) Keynesian models. D) Solow growth models. Answer: C LO: 1.5: Explain why there is disagreement among macroeconomists, and what they disagree about. Difficulty: moderate Classification: concept AACSB: application of knowledge 18) Adam Smith's Wealth of Nations emphasized A) how free markets produce socially efficient outcomes. B) that Scotland produced several key technological innovations. C) that the government should intervene to smooth business cycles. D) the existence of externalities. Answer: A LO: 1.6: List the 12 key ideas that will be covered in this book. Difficulty: moderate Classification: concept AACSB: application of knowledge 19) Improvements in a country's standard of living are brought about in the long run by A) technological progress. B) growth in the population. C) constructing more machines and buildings. D) immigration policy. Answer: A LO: 1.6: List the 12 key ideas that will be covered in this book. Difficulty: difficult Classification: concept AACSB: analytical thinking 20) Tax cuts A) may have no effect, if people take account of future taxes. B) always stimulate economic activity. C) will surely make the government default on its debts. D) cause the government to borrow less. Answer: A LO: 1.6: List the 12 key ideas that will be covered in this book. Difficulty: easy Classification: application AACSB: application of knowledge 21) Credit markets are A) bad, as they cause people to accumulate debt. B) not important for the financial crisis. C) important, but given too little attention in the past by some macroeconomists. D) markets that work perfectly. Answer: C LO: 1.6: List the 12 key ideas that will be covered in this book. Difficulty: moderate Classification: concept AACSB: application of knowledge 22) Monetary policy in the United States is determined by A) The Securities Exchange Commission. B) The United States Treasury. C) The Federal Reserve System. D) Wall Street. Answer: C LO: 1.6: List the 12 key ideas that will be covered in this book. Difficulty: moderate Classification: concept AACSB: application of knowledge