TEST BANK for Macroeconomics, 6th Canadian Edition by Stephen Williamson

Test Bank for Macroeconomics, 6th Canadian Edition, 6e by Stephen D. Williamson TEST BANK ISBN-13: 9780135651568 Full chapters included PART 1 Introduction and Measurement Issues 1 Introduction What Is Macroeconomics? Gross Domestic Product, Economic Growth, and Business Cycles Macroeconomic Models Microeconomic Principles Disagreement in Macroeconomics What Do We Learn from Macroeconomic Analysis? Understanding Recent and Current Macroeconomic Events Productivity Growth Government Spending and the Government Surplus Unemployment Inflation Interest Rates Trade and the Current Account Surplus Business Cycles Chapter Summary Questions for Review Problems 2 Measurement Measuring GDP: The National Income and Expenditure Accounts The Product Approach to Measuring GDP The Expenditure Approach The Income Approach An Example with Inventory Investment An Example with International Trade What does GDP Leave Out? The Components of Aggregate Expenditure Nominal and Real GDP and Price Indices Real GDP Measures of the Price Level Problems with Measuring Real GDP and the Price Level Macroeconomics in Action 2.1 Price Indices and Monetary Policy in Canada Savings, Wealth, and Capital Macroeconomics in Action 2.2 Comparing Real GDP across Countries and the Penn Effect Labour Market Measurement Macroeconomics in Action 2.3 Differences in Unemployment Rates in Canada and the United States 3 Business Cycle Measurement Regularities in GDP Fluctuations Macroeconomics in Action 3.1 Economic Forecasting and the Financial Crisis Comovement The Components of GDP The Price Level and Inflation Macroeconomics in Action 3.2 Instability in the Canadian Phillips Curve Labour Market Variables Macroeconomics in Action 3.3 The Great Moderation? Comovement Summary PART 2 Basic Macroeconomic Models: A One-Period Model, and Models of Search and Unemployment 4 Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization The Representative Consumer The Representative Consumer’s Preferences The Representative Consumer’s Budget Constraint Consumer Optimization Macroeconomics in Action 4.1 How Elastic Is Labour Supply? The Representative Firm The Effect of a Change in Total Factor Productivity on the Production Function Macroeconomics in Action 4.2 Management and Productivity in Canada Theory Confronts the Data 4.1 Total Factor Productivity and the Canadian Aggregate Production Functi The Profit Maximization Problem of the Representative Firm 5 A Closed-Economy One-Period Macroeconomic Model Government Competitive Equilibrium Optimality Sources of Social Inefficiencies How to Use the Model Working with the Model: The Effects of a Change in Government Purchases Macroeconomics in Action 5.1 Sticky Wages and Prices: Empirical Evidence on the Government Spending Working with the Model: A Change in Total Factor Productivity Interpretation of the Model’s Predictions Macroeconomics in Action 5.2 The Long Run: Total Factor Productivity in Canada and the United States Theory Confronts The Data 5.1 The Short Run: Total Factor Productivity and GDP A Distorting Tax on Wage Income, Tax Rate Changes, and the Laffer Curve A Simplified One-Period Model with Proportional Income Taxation Income Tax Revenue and the Laffer Curve Keynesian Sticky Wages and Prices 6 Search and Unemployment The Behaviour of the Unemployment Rate, the Participation Rate, and the Employment/ Population Ratio A One-Sided Search Model of Unemployment Macroeconomics in Action 6.1 Unemployment and Employment in the United States and Europe The Welfare of Employed and Unemployed Workers The Reservation Wage The Determination of the Unemployment Rate A Two-Sided Search Model of Unemployment and Labour Market Participation Consumers Firms Matching Optimization by Consumers Optimization by Firms Equilibrium Macroeconomics in Action 6.2 On-the-Job Search, and Transitions from Not-in-the-Labour-Force to Empl An Increase in the Employment Insurance Benefit An Increase in Productivity A Decrease in Matching Efficiency Theory Confronts the Data 6.1 The Beveridge Curve PART 3 Economic Growth 7 Economic Growth: Malthus and Solow Economic Growth Facts The Malthusian Model of Economic Growth Analysis of the Steady State in the Malthusian Model How Useful is the Malthusian Model of Economic Growth? The Solow Model: Exogenous Growth Analysis of the Steady State Theory Confronts the Data 7.1 The Recent Trend in Economic Growth in Canada Growth and the Distribution of Income Growth Accounting Macroeconomics in Action 7.1 Resource Misallocation and Total Factor Productivity Solow Residuals and Productivity Slowdowns A Growth Accounting Exercise Macroeconomics in Action 7.2 Development Accounting 8 Income Disparity among Countries and Endogenous Growth Convergence Macroeconomics in Action 8.1 Slow Adoption of Technology Without Barriers Theory Confronts the Data 8.1 Is Income per Worker Converging in the World? Macroeconomics in Action 8.2 Measuring Economic Welfare: Per Capita Income, Income Distribution, Lei Endogenous Growth: A Model of Human Capital Accumulation Economic Policy and Growth Macroeconomics in Action 8.3 Education and Growth Convergence in the Endogenous Growth Model Endogenous Growth and the Distribution of Income PART 4 Savings, Investment, and Government Deficits 9 A Two-Period Model: The Consumption–Savings Decision and Credit Markets A Two-Period Model of the Economy Theory Confronts the Data 9.1 Consumption Smoothing and the Stock Market Macroeconomics in Action 9.1 Registered Retirement Savings Plans, Savings, and Consumption The Ricardian Equivalence Theorem Ricardian Equivalence: A Numerical Example Ricardian Equivalence: A Graph Ricardian Equivalence and Credit Market Equilibrium Ricardian Equivalence and the Burden of the Government Debt Macroeconomics in Action 9.2 The Potential for Government Default and the February 1995 Federal Budg 10 Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security Credit Market Imperfections and Consumption Example: Credit Market Imperfections in General Equilibrium Asymmetric Information and Financial Crises Theory Confronts the Data 10.1 Asymmetric Information and Interest Rate Spreads Limited Commitment and Financial Crises Macroeconomics in Action 10.1 Housing, Collateral, and Mortgage Debt in Canada Ricardian Equivalence, Intergenerational Redistribution, and Social Security Macroeconomics in Action 10.2 Social Security and Incentives 11 A Real Intertemporal Model with Investment Current Labour Supply The Current Demand for Consumption Goods Profits and Current Labour Demand The Representative Firm’s Investment Decision Investment with Asymmetric Information: The Financial Crisis The Current Labour Market and the Output Supply Curve The Current Goods Market and the Output Demand Curve The Complete Real Intertemporal Model The Equilibrium Effects of a Temporary Increase in G: Stimulus, the Multiplier, and Crowding Out Theory Confronts the Data 11.1 The 1990s Fiscal Contraction and the Government Expenditure Multiplie The Equilibrium Effects of a Decrease in the Current Capital Stock, K: Capital Destruction from Wars The Equilibrium Effects of an Increase in Current Total Factor Productivity, z The Equilibrium Effects of an Increase in Future Total Factor Productivity, z_: News about the Futur Theory Confronts the Data 11.2 News, the Stock Market, and Investment Expenditures Housing Market Bubbles and Aggregate Activity PART 5 Money and Business Cycles 12 A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy What Is Money? Measuring the Money Supply Monetary Intertemporal Model Real and Nominal Interest Rates and the Fisher Relation Banks and Alternative Means of Payment Equilibrium in the Market for Credit Card Services and the Demand for Money Competitive Equilibrium—The Complete Intertemporal Monetary Model A Level Increase in the Money Supply and Monetary Neutrality Shifts in Money Demand Theory Confronts the Data 12.1 Instability in the Money Demand Function in Canada Conventional Monetary Policy, the Liquidity Trap, and Unconventional Monetary Policy Quantitative Easing Negative Nominal Interest Rates Corridor Systems and Floor Systems Macroeconomics in Action 12.1 A Floor System in Canada 13 Business Cycles The Real Business Cycle Model Real Business Cycles and the Behaviour of Nominal Variables Implications of Real Business Cycle Theory for Government Policy Critique of Real Business Cycle Theory The New Keynesian Model The Non-Neutrality of Money in the New Keynesian Model The Role of Government Policy in the New Keynesian Model Macroeconomics in Action 13.1 Policy Lags Does the New Keynesian Model Replicate the Data? The Liquidity Trap and Sticky Prices Theory Confronts the Data 13.1 New Keynesian Models and the Taylor Rule Criticisms of Keynesian Models Macroeconomics in Action 13.2 How Sticky Are Nominal Prices? 14 Inflation: Phillips Curves and Neo-Fisherism Inflation in a Basic New Keynesian Model Theory Confronts the Data 14.1 The Phillips Curve Monetary Policy Goals Low Real Interest Rates and the Zero Lower Bound Macroeconomics in Action 14.1 Forward Guidance in the United States after 2008 Neo-Fisherism and a New Keynesian Rational Expectations Model Neo-Fisherism and Taylor Rules PART 6 International Macroeconomics 15 International Trade in Goods and Assets A Two-Period Small Open-Economy Model Theory Confronts the Data 15.1 Is a Current Account Deficit a Bad Thing? Credit Market Imperfections and Default Theory Confronts the Data 15.2 Greece and Sovereign Default Production, Investment, and the Current Account The Effects of An Increase in the World Real Interest Rate A Temporary Increase in Government Expenditure and the Effects On the Current Account and Domestic O The Effects of Increases in Current and Future Total Factor Productivity Current Account Deficits, Consumption, and Investment Tariff Barriers Macroeconomics in Action 15.1 Measuring the Effects of NAFTA 16 Money in the Open Economy The Nominal Exchange Rate, the Real Exchange Rate, and Purchasing Power Parity Theory Confronts the Data 16.1 The PPP Relationship for the United States and Canada Flexible and Fixed Exchange Rates A Monetary Small Open-Economy Model with a Flexible Exchange Rate The Neutrality of Money with a Flexible Exchange Rate A Nominal Shock to the Domestic Economy from Abroad: P* Increases A Real Shock to the Domestic Economy from Abroad A Monetary Small Open-Economy Model with a Fixed Exchange Rate A Nominal Foreign Shock Under a Fixed Exchange Rate A Real Foreign Shock Under a Fixed Exchange Rate Exchange Rate Devaluation Flexible versus Fixed Exchange Rates Macroeconomics in Action 16.1 Sovereign Debt and the EMU Macroeconomics in Action 16.2 Foreign Exchange Intervention in Canada and Switzerland Capital Controls The Capital Account and the Balance of Payments The Effects of Capital Controls A New Keynesian Sticky Price Open-Economy Model Flexible Exchange Rate Fixed Exchange Rate Tariff Wars and Short Run Macroeconomic Activity PART 7 Money, Inflation, and Banking 17 Money and Inflation: A Deeper Look Alternative Forms of Money Macroeconomics in Action 17.1 Commodity Money and Commodity-Backed Paper Money: Yap Stones and Playi Money and the Absence of Double Coincidence of Wants: The Roles of Commodity Money and Fiat Money Anticipated Inflation and the Friedman Rule: A Lagos-Wright Monetary Model Pareto-Optimal Allocation Equilibrium in the Lagos-Wright Model Optimal Monetary Policy: The Friedman Rule Macroeconomics in Action 17.2 The Bank of Canada’s Goals 18 Financial Intermediation and Banking Properties of Assets Financial Intermediation The Diamond-Dybvig Bankin