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Macroeconomics Quiz 2: Monetary Policy, Fiscal Policy, and International Trade
Far too much time has passed since the last quiz
was offered here at The Dark Wraith Forums
, and given that your host just completed Autumn Semester 2008 final exams, what better time to challenge astute, educated, engaged, aware readers with yet another test of great relevance to the current economics of this recession-oriented nation?
The problems below are variations straight from a final exam I would give in a principles of macroeconomics course. I hand-selected 10 of the 100 multiple-choice questions just for you. These are all problems I would expect any economics student to know by the end of the semester. Even if you've never had a core macroeconomics course, if you have been following my articles here (and you can find a summary list of some of them by clicking here
), you will ace this quiz.
Take this quiz, report your results in comments if you so desire, and then brag to your friends about having faced down a killer economics test given by a particularly ill-tempered economics professor.
Or, if things don't go so well, quietly send me a private e-mail message telling me that I'm ugly. I like getting e-mail from friends who care.
Lock and load, good people.
What Your Score Means
|100%:||You know economics too well to be a mainstream media pundit.|
|70%-90%:||You know economics too well to be an adviser to the President.|
|40-60%:||You know economics too well to work for the Democratic Party.|
|10-30%:||You know economics too well to work for the Republican Party.|
|0%:||Okay, it's time for you to get a job in Washington.|
The Dark Wraith awaits the results of this delightful little diversion.
AHA! I cannot work for either political party. I do object to quiz questions that if you blow the first, yoyu automatically blow the second...Having no recall of what the variables/labels on the two charts meant, I reversed the damn things.
Be advised the world is coming to an end...I got an e-mail from someone on a comment thread I was on on You-Tube discussing a Young Turks interview with the lady that wrote the Newsweek cover story on the biblical case for gay marriage. He wrote that while I was talking NT and his arguement came from the OT, my final statement in a comment had made him rethink and throw out his own premise...Anyone invested in devil's ice skates maybe where I can get a piece of the action? This is the very first time I've ever gotten such an e-mail, and while pleased, I am befuddled by it all.
[Any typos are due to the almost 5 year old jostling my mouse arm, keyboard, and/or my own stupidity.]
But I am very proud to have pulled off a 60% anyway.
Good morning, Mr Wraith.
I got 70%.
I missed those questions with the diagrams, too.
Schopenhauer had an interesting case for same-sex marriage; basically that it assists the race in ridding itself of undesirables.
Pretty much my case for universal health care.
There is no better way to kill off the baby boomers than by lulling them into a sense of complacency with false promises of health care. Then we spike their meds with arsenic. Yum!
Some issues are best addressed by governmental intervention.
Good morning, Progressive Traditionalist.
I'm not sure universal heath care is needed for that plan. The pharmaceutical manufacturers are doing a pretty good job of promising something akin to everlasting life while delivering a product considerably different.
The Chinese are doing their part with the melamine-laced food products, too, of course.
Did you ever read the science fiction short story, "Seventy Years of Decrop"? I read it years ago. I thought it was written by Farmer, but I can no longer find reference to it; but the story is still timely in its own, perverse way.
As for me, I'll stick with aspirin for my maladies. That, and rubbing alcohol and hydrogen peroxide. They've banned Merthiolate, which cured all kinds of injuries when I was young, but I guess the government now says it's too dangerous.
That's the same government that approves of the rampant use of what are nothing other than psychotropics and other powerful, mind-altering drugs on millions of children.
I think it's working. Kids don't annoy me as much as they used to. Of course, that could just be me: I'm terribly mellow now that I'm older.
The Dark Wraith is a veritable ray of sunshine on many days, anymore.
Good morning, Wild Clover.
At the very least, you and Progressive Traditionalist had something to say about this quiz. So far, over three hundred people have taken it, but it seems that most folks just sort of quietly eased on out of here afterward.
Interestingly, it looks as if quite a few more started the quiz but quit before getting to the end.
I think I'll need to do some more macroeconomics lecture series here. Once I've upgraded my video equipment, I'm going to do at least some like that. I've been thinking of doing a combination of in-class videos with others that will be more of the "talking head" type, but I am resisting the grand ambition of putting together an actual, complete pair of courses in microeconomics and macroeconomics. If I don't think about doing something that daunting, I might accomplish it over a period of a year or so.
Anyway, finishing the quiz is an admirable achievement; and whether or not you do incredibly well, the real lesson is that this is stuff people really might want to know to make informed judgments about policies our nation's leaders are proposing.
The Dark Wraith might eventually have to provide an explanatory answer key for this latest quiz from Hades.
Interestingly, it looks as if quite a few more started the quiz but quit before getting to the end.
Fortunately, some of us get the articles posted here in an e-mail message, and can return to it at our leisure, without the prying eyes of the teacher glommed on our every movement.
In the interim, here's a comment on Ann Coulter's wanting an apology for calling our next president B. Hussein Obama all these months: Her alibi is that he says he will use his full name in his inauguration:
Turns (out) having Republican next to your name is much worse than having Hussein in it.
sheesh! mr. jeopardy tanked this one. i blame the weather, no, wait, i blame the chinese.
actually it was a combination of not enough coffee, two phone calls, and finally just guessing. i was trying to make educated guesses so my result was worse than pure random.
The lesson therein is obvious, Minstrel Boy, and it is one that I have actually told my students: if you have no idea of which answer is best, then randomly guess from all of the possible choices; if, however, you know that several cannot possibly be right, make a random guess from those remaining, but do not try to tease out the one remaining that is correct. You have already concluded that you do not know the right answer, so trying to find the right answer will waste your time that could be spent on other problems, and if you get it wrong, you will give yourself a false sense of certainty in related problems.
And by the way, Problems #5 and #6 are very important to understand, so I shall publish a straight-up article explaining supply and demand dynamics of bonds and how the Fed uses these principles (which are actually microeconomics concepts with huge macroeconomic implications) in conducting monetary policy through open market operations.
Once readers get the hang of how this works, a light bulb may come on about what the Fed's trick has been to try to keep the economy going, why Alan Greenspan was a toad, why Ben Bernanke is a twit, why we had a credit crisis, and why Barack Obama's policies (with the help of the Fed) are going to be like opening a river of gasoline on top of a raging inferno that's percolating right underneath the foundation (or what's left of it) of the U.S. economy.
The Dark Wraith has some serious educational ranting to do over the next couple of weeks.
i just went through doing a blind guess strategy, merely trying to remember what i had answered before and not answering that.
got me all the way up to 50%.
maybe if i read more ayn rand i too could be an economic policy setter.
Better to watch Monty Python reruns. Ingmar Bergman could work, too.
That, or X-Files.
The Dark Wraith knows how to feed his inner economist.
Supply and Demand?
When I first saw that So, I thought, What are these oxides of sulfur doing on an economics quiz? But then I thought it was just a 'fire & brimstone' type of quiz from the Dark Wraith.
After studying the charts diligently, I came to the conclusion that the 'S' stood for 'Sh*t,' as in 'all of the sh*t that people go out and buy everyday;' that is, the sh*t that makes up an economy.
I was most perplexed by the D. As best I could figure, it stood for 'Dude,' as in the Big Dude, or the Head Honcho of the Federal Reserve; meaning Bearded Benny (you can tell BB has been ass-kissing here lately because of that stripe in his beard).
So, it's perfectly understandable that I missed both of those questions.
You can see for yourself, that when the sh*t is going down and the Dude is headed up then that would indicate a set of circumstances other than the same chart were read in terms of Supply & Demand.
The other one I missed was #7, because 'expansionary monetary policy will tend to cause the Federal funds rate to rise' seems to me to be a natural occurence.
I still don't see how a contractionary policy might cause bond prices to fall. It seems like bond prices would rise.
I'm looking at this wrong.
Is this Supply & Demand again?
Good evening, Progressive Traditionalist.
What began as an explanatory answer to you has become a behemoth of an exposition. It more than qualifies as a major article, and I will publish it as such tomorrow, once I have fleshed out a few points in it.
The Dark Wraith should have known better than to start an answer with "In summary..."
I scored 50%. Not bad I think, as this is another test where I had to figure out stuff during the test.
I flunked a test like that in High School Geometry once, because I missed class the day those topics were covered and I answered them correctly anyway. I was told it was impossible for me to figure the theorems myself, so I must've cheated...
But I digress...
I thought those were various sulphur radicals myself at first. And it's been a long time since I did any chem labs... then I try to figure out what the charts conveyed, and ended up guessing.
It's all good though, because I figured out the Fed script in 1988, based on Econ 101 principles, physics and thermodynamics... That was when I first figured out that there really is order to the universe, and that the most successful economists tend to be clueless con artists that worship complexity without comprehension.
Once I realized that physical laws actually do set the boundaries for economics and economics has zero means to account for these limits, everything made sense.
Then toss in a little wave theory from an electronics perspective... And I began to see why the system destabilizes, why it oscillates, and how public policy tends to reinforce the oscillations rather than dampen them, as we might expect.
So I knew that the Fed would increase the money supply every time oil supplies became tight and industry couldn't be increased. and the Fed would contract the money supply anytime industry could increase. It's because they mistakenly believe that money is a power source and makes the sun shine and the planets follow their orbits... They believe they are leading the horses from inside the carriage.
And as I've become more cynical, I begin to think that the whole point is to keep all the money away from the people. To keep us from having real wealth and savings.
But it's impossible to maintain this without a resource base that is infinite. I think Friedman recognized this, so he tried to use witchcraft to make the Earth flat, by publishing a book that made people into believers in a flat Earth.
These people will never change. Never understand how they are wrong. Our government will spend the next decade trying to inflate our way back to prosperity, like a driver trying to pump a gas pedal, when the fuel line is clogged.
With our resource base contracting and our money supply increasing exponentially, we are in a world of hurt.
But they can't see this. Because they view economics from the inside, and see the world through that prism. It's a matter of perspective. I get the mental picture of seeing a house with the roof on fire. The people inside can't see the fire, though it's obvious to all the neighbors.
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