03 Williamson 4ce Tif
03 Williamson 4ce Tif
03 Williamson 4ce Tif
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Chapter 3 Business Cycle Measurement
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6) In Canada, three important recessions occurred between
A) 1944-1946, 1951-1952, and 1962-1964.
B) 1978-1979, 1984-1985, and 1988-1989.
C) 1974-1975, 1981-1982, and 1990-1992.
D) 1981-1982, 1996-1997, and 2003-2004.
E) 1987-1988, 1994-1995, and 2002-2003.
Answer: C
Type: MC Page Ref: P. 64
8) The 2008-2009 rcession was more severe than all recent recessions except the one in
A) 1981-1982.
B) 1974-1975.
C) 1990-1991.
D) 2001-2002.
E) 1969-1973.
Answer: A
Type: MC Page Ref: P. 64
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11) Which of the following is a feature of recent Canadian business cycles?
A) The time series of deviations from trend in real GDP is quite choppy.
B) The time series of deviations from trend in real GDP is quite smooth.
C) There is no regularity to the amplitude of fluctuations in GDP below trend.
D) There is no regularity to the frequency of fluctuations in GDP below trend.
E) They are difficult to measure.
Answer: A
Type: MC Page Ref: P. 65
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16) The property that macroeconomic variables fluctuate together in patterns that exhibit strong
regularities is called
A) coincidence.
B) comovement.
C) correlation.
D) coexistence.
E) a leading indicator.
Answer: B
Type: MC Page Ref: P. 66
17) Robert Lucas has popularized the notion that with respect to
A) severity, business cycles are all alike.
B) causation, business cycles are all alike.
C) quantitative behaviour of comovements among series, business cycles are all alike.
D) qualitative behaviour of comovements among series, business cycles are all alike.
E) deviations from trend real GDP, business cycles over time are all alike.
Answer: D
Type: MC Page Ref: P. 66
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21) Negative correlation between x and y implies that
A) when x is high, y is high.
B) when x is high, y is low.
C) xy < 0.
D) x/y < 0.
E) the trend is unpredictable.
Answer: B
Type: MC Page Ref: P. 67-68
22) If we plotted cigarettes smoked per year against the incidence of lung cancer, we would observe a
A) negative correlation.
B) positive correlation.
C) zero correlation.
D) an uncertain result.
E) time series.
Answer: B
Type: MC Page Ref: P. 67-68
23) If we plotted the level of good cholesterol in the blood against the incidence of heart disease, we
would observe a
A) negative correlation.
B) positive correlation.
C) zero correlation.
D) an uncertain result.
E) time series.
Answer: A
Type: MC Page Ref: P. 67-68
24) If deviations from trend in a macroeconomic variable are positively correlated with deviations from
trend in real GDP, that variable is said to be
A) useful in predicting future movements in real GDP.
B) procyclical.
C) countercyclical.
D) acyclical.
E) uncorrelated.
Answer: B
Type: MC Page Ref: P. 68
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26) If the correlation between GDP and y is -0.75, we say y is
A) procyclical.
B) acyclical.
C) positively correlated.
D) countercyclical.
E) persistent.
Answer: D
Type: MC Page Ref: P. 68
27) If deviations from trend in a macroeconomic variable are negatively correlated with deviations from
trend in real GDP, that variable is said to be
A) useless in predicting future movements in real GDP.
B) procyclical.
C) countercyclical.
D) acyclical.
E) uncorrelated.
Answer: C
Type: MC Page Ref: P. 68
28) If the deviations from trend in a macroeconomic variable is neither procyclical not countercyclical, it
is
A) positively correlated.
B) a correlation coefficient.
C) lagging.
D) coincident.
E) acyclical.
Answer: E
Type: MC Page Ref: P. 68
30) If the correlation coefficient between x and y is equal to 1, we say that x and y are
A) perfectly positively correlated.
B) acyclical.
C) perfectly negatively correlated.
D) leading variables.
E) lagging variables.
Answer: A
Type: MC Page Ref: P. 71
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31) If the correlation coefficient between x and y is equal to -1, we say that x and y are
A) imperfectly negatively correlated.
B) perfectly negatively correlated.
C) lagging variables.
D) perfectly positively correlated.
E) countercyclical.
Answer: B
Type: MC Page Ref: P. 71
32) If a macroeconomic variable tends to aid in predicting the future path of real GDP, it is said to be a
A) convenient variable.
B) coincident variable.
C) leading variable.
D) lagging variable.
E) correlated variable.
Answer: C
Type: MC Page Ref: P. 71
33) If real GDP helps to predict the path of a particular macroeconomic variable, it is said to be a
A) conventional variable.
B) coincident variable.
C) leading variable.
D) lagging variable.
E) correlated variable.
Answer: D
Type: MC Page Ref: P. 71
34) Forecasting the future path of real GDP by exploiting past statistical relationships
A) is never very reliable.
B) can be accomplished by the construction and use of an index of leading variables.
C) can be accomplished by the construction and use of an index of lagging variables.
D) can be accomplished by the construction and use of an index of coincident variables.
E) can only be accomplished if there is a perfectly positive correlation.
Answer: B
Type: MC Page Ref: P. 71-72
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36) Comovement can be discerned by
A) calculating the percentage deviations from trend in real GDP.
B) whether it is a procyclical or countercyclical variable.
C) calculating the correlation coefficient between the percentage deviations from trend.
D) determining if it is a lagging or leading indicator.
E) looking at the composite index of business leading indicators.
Answer: C
Type: MC Page Ref: P. 73
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41) The Phillips curve shows the relationship between
A) real and nominal interest rates.
B) real and nominal GDP.
C) money prices and aggregate economic activity.
D) procyclical and countercyclical variables.
E) lagging an leading variables.
Answer: C
Type: MC Page Ref: P. 74
44) For the period 1961-2011 in Canada, the price level was
A) countercyclical.
B) bicyclical.
C) procyclical.
D) acyclical.
E) leading.
Answer: D
Type: MC Page Ref: P. 75
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46) In their study on business cycles, Backus and Kehoe found
A) correlations amongst real economic variables differed greatly among countries.
B) price level was consistently procyclical.
C) no consistent correlations amongst economic variables.
D) price level was consistently countercyclical.
E) correlations amongst real economic variables were similar across countries and over time.
Answer: E
Type: MC Page Ref: P. 76
47) The observation that the money supply is procyclical and leading the level of aggregate economic
activity is most closely associated with
A) Lucas and Friedman.
B) Friedman and Schwartz.
C) Kydland and Prescott.
D) David Runkle.
E) Keynes.
Answer: B
Type: MC Page Ref: P. 77-78
48) For the period 1961-2011 in Canada, the money supply was
A) procyclical and leading.
B) procyclical and lagging.
C) countercyclical and leading.
D) countercyclical and lagging.
E) coincident.
Answer: A
Type: MC Page Ref: P. 77-78
49) The Great Moderation is a period of reduced variability in real GDP that
A) applies well to the experience in the U.S. from 1980-2007, but less so in Canada.
B) applies well to the experience in Canada from 1980-2007, but less so in the U.S.
C) was perceived to have occurred but really did not.
D) applies well to the experience in the U.S. and Canada from 1940-1980.
E) applies well to the experience in Canada since 2010, but less so in the U.S.
Answer: A
Type: MC Page Ref: P. 78
50) The Great Moderation best applies to the behaviour of which series in Canada?
A) stock prices
B) real GDP
C) investment
D) inflation
E) nominal GDP
Answer: D
Type: MC Page Ref: P. 78-79
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51) Which of the following best explains why the U.S. experienced a Great Moderation while Canada
did not?
A) Canadian luck was worse than the U.S.'s.
B) Financial development was stronger in the U.S.
C) Monetary policies differed significantly between the two countries.
D) Canadian luck was better than the U.S.'s.
E) Financial development was stronger in Canada.
Answer: A
Type: MC Page Ref: P. 79
54) The weight of empirical evidence suggests that in Canada, the real wage rate is
A) acyclical.
B) bicyclical.
C) procyclical.
D) countercyclical.
E) lagging.
Answer: C
Type: MC Page Ref: P. 79
55) Difficulties in determining the cyclical pattern in real wage rates from aggregate data are primarily
due to biases due to
A) substitution behavior.
B) substantial differences across different business cycles.
C) variations in the composition of the labour force over the business cycle.
D) changing policy responses to business cycles.
E) variations in inflation and unemployment
Answer: C
Type: MC Page Ref: P. 80
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56) Average labour productivity is computed as the
A) ratio of industrial production to the employment rate.
B) ratio of real output in manufacturing to the level of real GDP.
C) ratio of real GDP to the unemployment rate.
D) ratio of real GDP to the level of employment.
E) ratio of labour input to real GDP.
Answer: D
Type: MC Page Ref: P. 80
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