PROBLEMS AND APPLICATIONS
Question 1.4
1. List three macroeconomic issues that have been in the news lately.
Question 1.5
2. What do you think are the defining characteristics of a science? Do you think macroeconomics should be called a science? Why or why not?
Question 1.6
3. Use the model of supply and demand to explain how a fall in the price of frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables.
Question 1.7
4. How often does the price you pay for a haircut change? What does your answer imply about the usefulness of market-
1 The first five quotations are from William Breit and Barry T. Hirsch, eds., Lives of the Laureates, 4th ed. (Cambridge, MA: MIT Press, 2004). The sixth, seventh, and ninth are from the Nobel Web site. The eighth is from Arnold Heertje, ed., The Makers of Modern Economics, vol. II (Aldershot, U.K.: Edward Elgar Publishing, 1995).
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