Brief principles of macroeconomics pdf


 

Full file at ruthenpress.info Gregory-Mankiw-Test-Bank Thinking Like an Economist Multiple Choice. undergraduate and graduate courses in macroeconomics. popular introductory textbook Principles of Economics (Cengage Learning). brief contents. Brief Principles of Macroeconomics, 5e N. Gregory Mankiw Vice President of Editorial, Business: Jack W. Calhoun Vice President/Editor-in-Chief: Alex von.

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Brief Principles Of Macroeconomics Pdf

brief. Part IIntroduction 1. 1 Ten Principles of Economics 3. 2 Thinking Like an Economist 21 18 Open-Economy Macroeconomics: Basic Concepts This is the book Macroeconomics Principles (v. ). This book is licensed Chapter A Brief History of Macroeconomic Thought and Policy Principles of Macroeconomics is focused on the material that students need to government in macroeconomic analysis and policy, we start with a brief look ruthenpress.info pdf.

No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, information storage and retrieval systems, or in any other manner—except as may be permitted by the license terms herein. Windows is a registered trademark of the Microsoft Corporation used herein under license. All Rights Reserved. For your course and learning solutions, visit academic. Gregory Mankiw is professor of economics at Harvard University. As a teacher, he has taught macroeconomics, microeconomics, statistics, and principles of economics. He even spent one summer long ago as a sailing instructor on Long Beach Island. Professor Mankiw is a prolific writer and a regular participant in academic and policy debates. He is also author of the best-selling intermediate-level textbook Macroeconomics Worth Publishers.

What determines how a firm will produce its products? What determines how many workers it will hire? How will a firm finance its business? When will a firm decide to expand, downsize, or even close? In the microeconomic part of this book, we will learn about the theory of consumer behavior and the theory of the firm. Macroeconomics What determines the level of economic activity in a society?

In other words, what determines how many goods and services a nation actually produces?

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What determines how many jobs are available in an economy? What causes the economy to speed up or slow down? What causes firms to hire more workers or to lay workers off? Finally, what causes the economy to grow over the long term? How can macroeconomic policy be used to pursue these goals? For the United States, this is the Federal Reserve.

For the United States, this is the Congress and the executive branch, which originates the federal budget. These are the main tools the government has to work with. Americans tend to expect that government can fix whatever economic problems we encounter, but to what extent is that expectation realistic? These are just some of the issues that will be explored in the macroeconomic chapters of this book.

Key Concepts and Summary Microeconomics and macroeconomics are two different perspectives on the economy. Good theories do not need to be tested. Real-world observations often lead to theories. Economics, as well as other sciences, is concerned primarily with abstract concepts. With respect to how economists study the economy, which of the following statements is most accurate? Economists study the past, but they do not try to predict the future.

Economists devise theories, collect data, and analyze the data to test the theories. Economists use controlled experiments in much the same way that biologists and physicists do. Economists face an obstacle that many other scientists do not face. What is that obstacle? It is often difficult to formulate theories in economics. It is often impractical to perform experiments in economics. Economics cannot be addressed objectively; it must be addressed subjectively.

The scientific method cannot be applied to the study of economics. In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to a. The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in a.

Which of the following statements is are correct? Relative to some other scientists, economists find it more difficult to conduct experiments. Theory and observation are important in economics as well as in other sciences.

To obtain data, economists often rely upon the natural experiments offered by history. Because it is difficult for economists to use experiments to generate data, they generally must a. Which of the following statements is correct? Economists almost always find it easy to conduct experiments in order to test their theories.

Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. Economics is a social science rather than a true science because it cannot employ the scientific method. Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history. Instead of conducting laboratory experiments to generate data to test their theories, economists often a.

The most common data for testing economic theories come from a. In conducting their research, economists often substitute historical events and historical episodes for a.

For economists, substitutes for laboratory experiments often come in the form of a. Economists regard events from the past as a. For economists, historical episodes a. Historical episodes are a. One thing economists do to help them understand how the real world works is a. Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Transit ridership increased in Atlanta following an increase in gas prices. Federal tax revenue increased following a decrease in the tax rate. Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances.

Following the imposition of austerity measures, the growth rate of the economy in Greece slowed. Application Economists make assumptions to a. Economists make use of assumptions, some of which are unrealistic, for the purpose of a.

For an economist, the idea of making assumptions is regarded generally as a a. Knowledge A circular-flow model and production possibilities frontier are similar in that a. An economic theory about international trade that is based on the assumption that there are only two countries trading two goods a. The art in scientific thinking -- whether in chemistry, economics, or biology -- is a. The art in scientific thinking is a.

The decision of which assumptions to make is a. An example of a price that changes only infrequently is the price of a. When studying the effects of public policy changes, economists a. When studying the effects of changes in public policy, economists believe that a.

A model can be accurately described as a a. Which of the following statements about models is correct? The more details a model includes, the better the model. Models assume away irrelevant details. Models cannot be used to explain how the economy functions.

Models cannot be used to make predictions. In building economic models, economists often omit a. Which of the following statements about economic models is correct? Economic models are built to mirror reality exactly. Economic models are useful, but they should not be used for the purpose of improving public policies.

Because economic models omit many details, they allow us to see what is truly important. Economic models seldom incorporate equations or diagrams. Economic models a. Which of the following is not correct about most economic models? They are composed of equations and diagrams. They omit many features of the real-world economy. In constructing models, economists make assumptions. Just like models constructed in other areas of science, economic models a. Which types of models are built with assumptions?

An assumption an economist might make while studying international trade is a. All of the above are possible assumptions. Economists build economic models by a. Economic models are built with a. In constructing models, economists a. Few economic models incorporate assumptions. Different economic models employ different sets of assumptions. Good economic models attempt to mimic reality as closely as possible.

Economic models, to be accepted, must be tested by conducting experiments. Which of these statements about economic models is correct? For economists, economic models provide insights about the world. Economic models are built with assumptions. Economic models are often composed of equations and diagrams. The circular-flow diagram is an example of a. The circular-flow diagram is a a. A circular-flow diagram is a model that a.

Both a and b are correct. The circular-flow diagram a. Which of the following statements about the circular-flow diagram is correct?

One must imagine that the economy operates without money in order to make sense of the diagram. The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. The government cannot be excluded as a decision maker in a circular-flow diagram. In the simple circular-flow diagram, the participants in the economy are a.

Which two groups of decision makers are included in the simple circular-flow diagram? In the circular-flow diagram, firms produce a. Factors of production are a. In the circular-flow diagram, which of the following is not a factor of production? In the circular-flow diagram, a.

Which of these terms are used interchangeably? Another term for factors of production is a. In economics, capital refers to a. Which of the following is an example of a capital input? A model that shows how dollars flow through markets among households and firms is called the a.

In the simple circular-flow diagram, households a. In the simple circular-flow diagram, a. In the simple circular-flow diagram, who downloads the factors of production?

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model? In the circular-flow diagram, another name for goods and services produced by firms is a. Which markets are represented in the simple circular-flow diagram? In the markets for goods and services in the circular-flow diagram, a. In the circular-flow diagram, in the markets for a.

In the markets for the factors of production in the circular-flow diagram, a. In the markets for factors of production in the circular-flow diagram, a.

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram? Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram? Dylan receives a salary for his work as a financial analyst for an investment firm. Kristin downloads two business suits to wear to her job as a Chief Information Officer. Jim receives clean water in his home in exchange for paying his water bill.

Caroline owns a nail salon and receives payments from her clients for her services. The two loops in the circular-flow diagram represent a. The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop? The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop? In the circular-flow diagram, which of the following items does not flow from households to firms?

In the circular-flow diagram, which of the following items does not flow from firms to households? In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services? In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production? In the circular-flow diagram, which of the following items represents a payment for a factor of production?

In the simple circular flow diagram, the flow of money from the firms to the markets for factors of production is called a. In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called a. Among economic models, the circular-flow diagram is unusual in that it a. According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates a. Denny acts as a firm who interacted in the markets for factors of production with Mrs.

Denny acts as a firm who interacted in the markets for goods and services with Mrs. Refer to Figure Which arrow represents the flow of goods and services?

Which arrow represents the flow of spending by households? Which arrow represents the flow of land, labor, and capital? Which arrow represents the flow of income payments? Raymond downloads a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

A only b. C only d.

Harvey receives his first paycheck for working as an ice cream vendor. B only b. Boxes A and B of this circular-flow diagram represent a. Boxes C and D of this circular-flow diagram represent a. If Box A of this circular-flow diagram represents firms, then which box represents households? Box B b.

Box C c. Box D d. Any one of the other boxes B, C, or D could represent households. If households are sellers in the markets represented by Box D of this circular-flow diagram, then a. Box D must represent the markets for factors of production.

Box C must represent the markets for goods and services. If households are downloaders in the markets represented by Box C of this circular-flow diagram, then a. Box C must represent the markets for the factors of production. Box D must represent the markets for goods and services. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then a.

If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes a. If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram, then a. Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. Juan owns office buildings and rents his buildings to companies in exchange for rent payments. Analysis Carla regularly downloads fruits and vegetables at a grocery store.

Roberto regularly pays a lawn- care company to mow his lawn.

If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow a. Which shape refers to the markets for goods and services? What is flowing from rectangle 1 to oval A? Which of the following is an activity undertaken by the actors in rectangle 2? The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and a.

The production possibilities frontier is a graph that shows the various combinations of output that an economy a. When constructing a production possibilities frontier, which of the following assumptions is not made? The economy produces only two goods or two types of goods. Firms produce goods using factors of production. The technology available to firms is given. The quantities of the factors of production that are available are increasing over the relevant time period.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy a. Which of the following is not an assumption of the productions possibilities frontier? A country produces only two goods or types of goods. Technology does not change. The amount of available resources does not change. There is a fixed quantity of money.

1.2 Microeconomics and Macroeconomics

Which of the following is a correct statement about production possibilities frontiers? An economy can produce only on the production possibilities frontier. An economy can produce at any point inside or outside a production possibilities frontier. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

Where can an economy not produce? An economic outcome is said to be efficient if the economy is a. Production is efficient if the economy is producing at a point a. If an economy is producing efficiently, then a. When an economy is operating at a point on its production possibilities frontier, then a. Efficiency is illustrated by a.

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. When an economy is operating inside its production possibilities frontier, we know that a. It is possible for an economy to increase its production of both goods if the economy a. Unemployment would cause an economy to a. The production possibilities frontier provides an illustration of the principle that a. The production possibilities frontier illustrates a.

Which of the following trade-offs does the production possibilities frontier illustrate? If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption.

Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. For an economy to consume more of one good, it must stop consuming the other good entirely.

For an economy to produce and consume goods, it must sacrifice environmental quality. Which of the following concepts cannot be illustrated by the production possibilities frontier? The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. The bowed shape of the production possibilities frontier can be explained by the fact that a. Economists believe that production possibilities frontiers are often bowed because a. On a bowed production possibilities frontier, as you move down along the curve a.

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a. Production possibilities frontiers are usually bowed outward. This is because a. Economists believe that production possibilities frontiers a. Comprehension Table The following table contains some production possibilities for an economy for a given month.

Hammers Nails 3 6? Refer to Table Tennis Rackets Tennis Balls ? If the production possibilities frontier is bowed outward, then "? A production possibilities frontier can shift outward if a. A production possibilities frontier shifts outward when a. In a certain economy, jam and bread are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more jam and more bread, relative to the quantities of those goods that are being produced now?

Unemployed labor is put to work producing jam and bread. The economy puts its idle capital to work producing jam and bread. The economy experiences economic growth. In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier.

Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now? There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. There is a technological advance in the greeting card industry, but the toy industry experiences no such advance.

The country of Gerance produces two goods, cars and wine. Last year, it produced 1, cars and 15, cases of wine. This year, it produced 1, cars and 20, cases of wine. Given no other information, which of the following events could not explain this change? Gerance experienced a reduction in unemployment.

Gerance experienced an improvement in car-making technology. Gerance acquired more resources. Any of these events could explain the change. Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced units of food and 47 machines. This year, it is producing units of food and 52 machines. Which of the following events could not explain the increase in output?

Any of these events could explain the increase in output. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce units of food and 47 machines.

Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry.

In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and gallons of ice cream.

This month, the same economy produced 15 robots and gallons of ice cream. Which of the following statements could explain this change?

This month, the economy reduced the unemployment of its resources. This month, the economy experienced an improvement in technology. This month, the economy experienced an increase in resources d. A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing.

Which of the following concepts cannot be illustrated by this model? The production possibilities frontier is used to illustrate some basic economic ideas, including a. What is the opportunity cost to Footville of increasing the production of shoes from to ?

The opportunity cost of an additional shoes is constant at socks. The opportunity cost of an additional shoes increases as more socks are produced. What is the opportunity cost to Picnicland of increasing the production of hotdogs from to ? What is the opportunity cost to Picnicland of increasing the production of burgers from to ?

At which point is this economy producing its maximum possible quantity of doors? This economy has the ability to produce at which point s? This economy cannot produce at which point s? Efficient production is represented by which point s? Inefficient production is represented by which point s? Unemployment could cause this economy to produce at which point s?

If this economy devotes all of its resources to the production of dryers, then it will produce a.

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It is possible for this economy to produce a. All of the above. It is not possible for this economy to produce at point a. This economy cannot currently produce 70 washers and 70 dryers because a. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

The economy has insufficient resources to produce at a more desirable point. There is widespread unemployment in the economy. Any of the above statements would be a legitimate explanation for this situation. The opportunity cost of this economy moving from point A to point B is a. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is a.

None of the above; the economy cannot move from point D to point C. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is a. None of the above; the economy cannot move from point D to point A.

If this economy devotes all of its resources to the production of blankets, then it will produce a. If this economy devotes one-half of its available resources to the production of blankets and the other half to the production of pillows, it could produce a. A movement from point H to point K could be caused by a.

If this economy moves from point F to point G, then which of the following statements is correct? This economy has moved from a point of inefficient production to a point of efficient production.

This economy has experienced economic growth. This economy has experienced an increase in employment. The opportunity cost of this economy moving from point I to point H is a. The opportunity cost of this economy moving from point I to point F is a. The opportunity cost of this economy moving from point K to point H is a. If this economy devotes all of its resources to the production of engines, then it will produce a. If this economy moved from point P to point N, then a.

It is not possible for this economy to move from point P to point N without additional resources. What is the opportunity cost of moving from point L to point M? What is the opportunity cost of moving from point M to point L?

Point K represents an outcome in which a. Which point on the graph best represents the fact that, because resources are scarce, not every conceivable outcome is feasible? To reach point L, the economy would have to a. None of the above are correct; the economy will never be able to reach point L.

For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails, a. This answer cannot be determined from the graph. Refer to Figure , Panel a. Production at point K is a. Production is a. The movement from point M to point K could be caused by a. The opportunity cost of moving from point J to point L is a.

The opportunity cost of moving from point M to point L is a. The opportunity cost of moving from point K to point L is a.

The opportunity cost of one cup of coffee is highest when the economy produces a. If a printed Study Guide better suits your needs and study habits, the Mankiw 5e Study Guide is unsurpassed in its careful attention to accuracy, concise language, and practice that enhances your study time.

Product Support Website www. Study Guide Helping you achieve your personal best, the Mankiw Study Guide is based completely on the Fifth Edition, covering chapter material comprehensively — and accurately. Very handson, each chapter thoroughly covers the material in the corresponding chapter of Mankiw. Our student surveys show that students like you felt that fill-in-the-blank questions, matching questions, and questions without specific single answers were an inefficient use of their time — and the Mankiw Study Guide avoids these kinds of questions.

To order the study guide, visit www. Self-Study Solutions EconCentral Multiple resources for learning and reinforcing principles concepts are now available in one place! EconCentral is your one-stop shop for the learning tools and activities to help you succeed. At a minimal extra cost, EconCentral equips you with a portal to a wealth of resources that help you both study and apply economic concepts. Ready to apply chapter concepts to the real world?

All the study and application resources in EconCentral are organized by chapter to help you get the most from the Mankiw text and from your classes. Visit www. Acknowledgments In writing this book, I benefited from the input of many talented people. Indeed, the list of people who have contributed to this project is so long, and their contributions so valuable, that it seems an injustice that only a single name appears on the cover.

Let me begin with my colleagues in the economics profession.

The four editions of this text and its supplemental materials have benefited enormously from their input. In reviews and surveys, they have offered suggestions, identified challenges, and shared ideas from their own classroom experience.

I am indebted to them for the perspectives they have brought to the text. Unfortunately, the list has become too long to thank those who contributed to previous editions, even though students reading the current edition are still benefiting from their insights.

Ron and David, both dedicated teachers, have served as reliable sounding boards for ideas and hardworking partners with me in putting together the superb package of supplements. For this new edition, the following diary reviewers recorded their day-to-day experience over the course of a semester, offering detailed suggestions about how to improve the text. Casey R. Craft, University of Richmond Eleanor D.

Freeman, Kansas State University J. Hussey, University of Memphis Hans R. Kalist, Shippensburg University Mark P. Moul, Washington University in St.

Louis Albert A. Okunade, University of Memphis J.

Brief principles of macroeconomics

Park, American University Reza M. Tew, Troy University Jennifer A. Jane Tufts, developmental editor, provided truly spectacular editing—as she always does. Mike Worls, economics executive editor, did a splendid job of overseeing the many people involved in such a large project.

Colleen Farmer, senior content project manager, and Katherine Wilson, senior project manager, had the patience and dedication necessary to turn my manuscript into this book.

Michelle Kunkler, senior art director, gave this book its clean, friendly look.

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