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Chapterm1.mThemSciencemofmMacroeconomics
Macroeconomicsmdoesmnotmtrymtomanswermthemquestionmof:
whymsomemcountriesmexperiencemrapidmgrowth.whatmismthemratemofmreturnmonmeducation.whymsomemcountriesmhavemhighmratesmofminflation.whatmcausesmrecessionsmandmdepressions.
Amtypicalmtrendmduringmamrecessionmismthat:
themunemploymentmratemfalls.thempopularitymofmthemincumbentmpresidentmrises.incomesmfall.theminflationmratemrises.
Macroeconomicsmismthemstudymofmthe:
activitiesmofmindividualmunitsmofmthemeconomy.decisionmakingmbymhouseholdsmandmfirms.economymasmamwhole.interactionmofmfirmsmandmhouseholdsminmthemmarketplace.
Themstudymofmthemeconomymasmamwholemismcalled:
householdmeconomics.businessmeconomics.microeconomics.macroeconomics.
Themabilitymofmmacroeconomistsmtompredictmthemfuturemcoursemofmeconomicmevents:
ismnombettermthanmammeteorologist'smabilitymtompredictmthemnextmmonth'smweather.ismmuchmbettermthanmammeteorologist'smabilitymtompredictmthemnextmmonth'smweather.hasmgottenmworsemovermtime.ismlessmprecisemthanmitmwasminmthem1920s.
WhichmofmthemcombinationsmlistedmismnotmamU.S.mpresidentmandmanmimportantmeconomicm issuemofmhismadministration?PresidentmCarter,minflation PresidentmReagan,mbudgetmdeficits PresidentmG.mH.mW.mBush,mbudgetmdeficits PresidentmClinton,minflation 2 / 4
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Allmofmthemfollowingmaremtypesmofmmacroeconomicsmdatamexceptmthe:
pricemofmamcomputer.growthmratemofmrealmGDP.inflationmrate.unemploymentmrate.
Allmofmthemfollowingmexceptm aremimportantmmacroeconomicmvariables.realmGDP themunemploymentmrate themmarginalmratemofmsubstitution theminflationmrate
Themtotalmincomemofmeveryoneminmthemeconomymadjustedmformthemlevelmofmbasemyearmpricesmis
mcalled:
amrecession.anminflation.realmGDP.ambusinessmfluctuation.
Ammeasuremofmhowmfastmthemgeneralmlevelmofmpricesmismrisingmismcalledmthe:
growthmratemofmrealmGDP.inflationmrate.unemploymentmrate.market-clearingmrate.
Theminflationmratemismammeasuremofmhowmfast:
themtotalmincomemofmthemeconomymismgrowing.unemploymentminmthemeconomymismincreasing.themgeneralmlevelmofmpricesminmthemeconomymismrising.themnumbermofmjobsminmthemeconomymismexpanding.
RealmGDPm overmtime,mandmthemgrowthmratemofmrealmGDPm .grows;mfluctuates ismsteady;mismsteady grows;mismsteady ismsteady;mfluctuates 3 / 4
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TwomstrikingmfeaturesmofmamgraphmofmU.S.mrealmGDPmpermcapitamovermthemtwentiethmcenturyma
remthe:
overallmupwardmtrendminterruptedmbymamlargemdownturnmduemtomthemeconomicmde pressionminmthem1930s.nearlymconstantmlevelmwithmamlargemdownturnminmthem1930s.downwardmtrendminmthemfirstmhalfmofmthemcenturymfollowedmbymthemupwardmtrendminmthems econdmhalf.constantmlevelminmthemfirstmhalfmofmthemcenturymfollowedmbymthemupwardmtrendminmthems econdmhalf.
InmthemU.S.meconomymtoday,mrealmGDPmpermperson,mcomparedmwithmitsmlevelminm1900,misma
bout:
50mpercentmhigher.twicemasmhigh.threemtimesmasmhigh.eightmtimesmasmhigh.
RecessionsmaremperiodsmwhenmrealmGDP:
increasesmslowly.increasesmrapidly.decreasesmmildly.decreasesmseverely.
ComparedmwithmrealmGDPmduringmamrecession,mrealmGDPmduringmamdepression:
increasesmmoremrapidly.increasesmatmapproximatelymthemsamemrate.decreasesmatmapproximatelymthemsamemrate.decreasesmmoremseverely.
Amseveremrecessionmismcalledma(n):
depression.deflation.exogenousmevent.market-clearingmassumption.
ThemannualminflationmrateminmthemUnitedmStatesmaveraged:
nearlymzerombetweenm1900mandm1950.nearlymzerombetweenm1950mandm2000.aboutm10mpercentmbetweenm1900mandm1950.aboutm10mpercentmbetweenm1950mandm2000.
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