Answer key to sample problems for test 1

Chapter 1

fill in questions
1. macroeconomics; microeconomics
2. Real GDP; recession; depression
3. unemployment
4. inflation
5. models
6. exogenous; endogenous
7. price flexibility; price stickiness
8. market-clearing (what we've later termed "neoclassical")

multiple-choice questions
1. B
2. D
3. D
4. B
5. D
6. C

Chapter 2

fill-ins
1. Nominal gross domestic product; real gross domestic product
2. unemployment rate; labor force
3. value added
4. consumer price index; Laspeyres
5. GDP deflator; nominal gross domestic product; real gross domestic product; Paasche
6. stock; flow
7. depreciation
8. labor-force participation rate
9. disposable personal income
10. imputed value
11. nominal gross national product; nominal gross domestic product
12. national income accounting identity; consumption; investment; government purchases, net exports
13. core inflation

multiple-choice questions
1-C; 2-B; 3-C; 4-C; 5-C; 6-C; 7-A; 8-D; 9-B; 10-B;
11-A; 12-C; 13-C; 14-A; 15-D; 16-D; 17-C; 18-D; 19-B; 20-D;

Chapter 3

fill ins

1. factors of production
2. factor prices
3. marginal product of labor; marginal product of capital
4. production function
5. constant returns to scale
6. competition; marginal product of labor; real rental price of capital
7. real wage
8. accounting profit
9. Euler's theorem; economic profit
10. Cobb-Douglas production function
11. diminishing marginal productivity
12. consumption function; marginal propensity to consume, disposable income
13. nominal interest rate; real interest rate
14. national saving
15. private saving
16. public saving; crowding out
17. loanable funds, loanable funds; loanable funds
18. financial intermediaries

multiple-choice

1-C; 2-D; 3-B; 4-C; 5-A; 6-A; 7-A;
8-B; 9-B; 10-A; 11-C; 12-D; 13-D; 14-A;
15-C; 16-D; 17-C; 18-B; 19-B; 20-C; 21-C.

These answers came from the study guide. In my experience, sometimes study guides can have wrong answer keys. (Note: everything worth doing is not necessarily worth doing well. This is counter to every argument other than the opportunity cost argument which is so damn compelling.) Just let me know if you think any of these is incorrect. It may be a typo or it may be a wrong answer and I'll fix it.

Good luck.