ECO 285 – Macroeconomics
Dr. D. Foster – Spring 2015
Homework #2 Quiz
20 true/false [This is an individual assignment – do your own work.]
1. Although there is no specific “founder” of macroeconomics, John Maynard Keynes is usually cited as such.
2. As a general rule, business cycles are quite predictable.
3. The expansion and contraction of business inventories creates a rather short cycle called the
“Kuznets Wave.”
4. Economic growth through the 1980s and 1990s was known as “The Great Moderation.”
5. It is generally accepted that the Natural Bureau of Economic Research determines the dates of peaks and troughs of the business cycle.
6. A hallmark of the Keynesian theory is that the business cycle has exogenous causes and that we should respond with only minimal government policy.
7. The theory that the successive election of a public administration will lead to economic fluctuations is known as the “Real Business Cycle Theory.”
8. The Austrian School theory of the business cycle is referred to as ASBC.
9. The Austrian School attributes business cycles to credit expansion by the banking system.
10. Those that believe Say’s Law is wrong hold that an economy can experience a general glut of goods and services during a depression.
11. The two flows in the circular flow model are the flow of physical inputs and the flow of physical outputs.
12. The idea of the circular flow was illustrated in the video with the example of a large museum that built visitor displays and sold food and gift shop items.
13. The critique of the circular flow notes that it ignores the beginning and end of the economic process.
14. According to Stossel, it is our intuition to think that without government, business would treat workers like dogs.
15. According to Stossel, about 75% of the workforce makes more than minimum wage.
16. One of the most successful of the “utopian experiments” mentioned by Stossel was the Dharma
Initiative in Hawaii.

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ECO 285 - Macroeconomics
Homework #2
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