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Krugman/WellsMacroeconomics:TheBigPicture22CHECKYOURUNDERSTANDING
CheckYourUnderstanding22-1
Question1
Whichofthefollowingquestionsinvolvemicroeconomicsandwhichinvolvemacroeconomics?
microeconomicsmacroeconomics1a)Whydidconsumersswitchtosmallercarsin2008?
microeconomicsmacroeconomics1b)Whydidoverallconsumerspendingslowdownin2008?
microeconomicsmacroeconomics1c)WhydidthestandardoflivingrisemorerapidlyinthefirstgenerationafterWorldWarIIthaninthesecond?
microeconomicsmacroeconomics1d)Whyhavestartingsalariesforstudentswithgeologydegreesrisensharplyoflate?
microeconomicsmacroeconomics1e)Whatdeterminesthechoicebetweenrailandroadtransportation?
microeconomicsmacroeconomics1f)Whyhassalmongottencheaperoverthepast20years?
microeconomicsmacroeconomics1g)Whydidinflationfallinthe1990s?
CheckYourUnderstanding22-1
Question1*
changinggovernmentspendingandtaxes.changingthemoneysupplyandinterestrates.1a*)Monetarypolicyinvolves:
changinggovernmentspendingandtaxes.changingthemoneysupplyandinterestrates.1a*)Fiscalpolicyinvolves:
CheckYourUnderstanding22-1
Question2In2008problemsinthefinancialsectorledtoadryingupofcreditaroundthecountry:homebuyerswereunabletogetmortgages,studentswereunabletogetloans,carbuyerswereunabletogetcarloans,etc.
TrueFalse2a)Dryingupofcreditusuallyhaslittleimpactontheeconomybeyondthefinancialsector.
TrueFalse2b)Ifyoubelievedtheeconomywasself-regulating,thenyouwouldadvocatedecreasingtaxesinresponsetotheslump.
TrueFalse2c)IfyoubelievedinKeynesianeconomics,youwouldadvocatemonetaryand/orfiscalpolicyinresponsetotheslump.
CheckYourUnderstanding22-2
Questions1and2
1.Weusuallytalkaboutbusinesscyclesforthewholeeconomyratherthanasupsanddownsofparticularindustries.TrueFalse
2.Inflationisthemostharmfuleffectofarecess
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