REVIEW QUESTIONS
1. How have total output and output per worker changed over time in the United States? How have these changes affected the lives of typical people?
2. What is a business cycle? How does the unemployment rate behave over the course of a business cycle? Does the unemployment rate ever reach zero?
3.
Define inflation and deflation. Compare the behavior of consumer prices in the United States in the years before and after World War II.4. Historically, when has the Federal government been most likely to run budget deficits? What has been the recent experience?
5. Define trade deficit and trade surplus. In recent years, has the U.S. economy had trade deficits or trade surpluses? What was the U.S. experience from 1900 to 1970?
6. List the principal professional activities of macroeconomists. What role does macroeconomic research play in each of these activities?
7. What steps are involved in developing and testing an economic theory or model? What are the criteria for a useful theory or model?
8. Might two economists agree about the effects of a particular economic policy but disagree about the desirability of implementing the policy? Explain your answer.
9. Compare the classical and Keynesian views on the speed of wage and price adjustment. What are the important consequences of the differences in their views?
10. What was stagflation, and when did it occur? How did it change economists' views about macroeconomics?
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