Ch 1 Introduction to Macroeconomics

1. What is the fundamental difference between microeconomics and macroeconomics? Page 3
2. What are economic agents? Page 3
3. According to Adam Smith, why do buyers and sellers participate in markets? Page 4
4. What are the three reasons economists realised they needed to study macroeconomics beyond microeconomic principles? Page 3
5. Who are the macroeconomic decision-makers? Give examples. Page 4
6. What distinguishes macroeconomic agents from microeconomic decision-makers? Page 4
7. When and why did macroeconomics emerge as a separate branch of economics? Page 5
8. What was the classical tradition in economics before Keynes? Page 5
9. What is the historical context of this macroeconomics textbook? Page 6
10. What are the four criteria that define a capitalist economy? Page 6-7
11. What are the four factors of production and how are they compensated? Page 6
12. What is a firm in the context of a capitalist economy? Page 7
13. What are the four major sectors in an economy according to macroeconomics? Page 7-8
14. What is the role of the Government in the economy? Page 7
15. What is a household in macroeconomic terms? Page 7
16. What are exports and imports? Page 8
17. Besides exports and imports, how else does the rest of the world affect the domestic economy? Page 8

Who published “The General Theory of Employment, Interest and Money” in 1936?

In which year was the Great Depression?

From 1929 to 1933, the unemployment rate in the USA rose from 3% to what percentage?

From 1929 to 1933, aggregate output in the USA fell by approximately what percentage?

Who is regarded as the founding father of modern economics?

In which year was Adam Smith’s “An Enquiry into the Nature and Cause of the Wealth of Nations” published?

Adam Smith was a professor at which university?

According to Adam Smith, what motivates the butcher, brewer, and baker to provide our dinner?

The Physiocrats were prominent thinkers of political economy from which country?

John Maynard Keynes was educated at which college in Cambridge?

What was Keynes’ book published in 1919 about the peace agreement of World War I?

In a capitalist economy, what is the revenue earned by selling output used for?

Profit earned by entrepreneurs is often used for what purpose in the next period?

Expenses which raise productive capacity are examples of which type of expenditure?

Which of the following is NOT one of the four sectors in an economy according to macroeconomics?

In a capitalist economy, production activities are mainly carried out by which type of enterprises?

Which of the following is NOT a characteristic of a capitalist economy?

In many underdeveloped countries, production in agriculture is carried out by which type of units?

The book “General Theory of Employment, Interest and Money” is regarded as one of the most influential economics books of which century?

What is the full form of RBI? Page 4

What is the full form of SEBI? Page 4

What is the name of Adam Smith’s well-known book published in 1776? Page 4

What is a period of rising prices called? Page 2

What is the term for a situation when employment and production levels are going down? Page 2

What is the unemployment rate? Page 5

Who is the British economist who founded macroeconomics? Page 5

In which year was John Maynard Keynes born? Page 5

What is the money earned from selling output called? Page 6

What is the payment for the service of land called? Page 6

What is the payment for capital called? Page 6

What is the payment for labour called? Page 6

What is the residual earning of entrepreneurs after paying rent, interest, and wages called? Page 6

Goods sold by the domestic country to the rest of the world are called? Page 8

Goods bought by the domestic economy from the rest of the world are called? Page 8

Who is the Scotsman regarded as the founding father of modern economics? Page 4

What is the term for people who exercise control over major decisions and bear a large part of the risk associated with the firm? Page 6