MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.


 Cornelius Fisher
 2 years ago
 Views:
Transcription
1 Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth A) by ignoring real GDP per person. B) by focusing on the forces that determine the price level and the inflation rate. C) and ignore what determines the price level. D) by looking only at government policies. 1) 2) In the above figure, for a movement from point c to point d, the marginal product of labor equals A) $150 per hour. B) $45 per hour. C) $100 per hour. D) $200 per hour. 2) 3) If new capital increases labor productivity, the supply of labor and the demand for labor. 3) A) increases; decreases B) decreases; stays the same C) stays the same; increases D) increases; increases 1
2 4) If the real wage rate is such that the quantity of labor supplied by workers is less than the quantity of labor demanded by firms, 4) A) real GDP equals potential GDP since firms make the decision on how many workers to hire. B) the economy is at full employment. C) the real wage rate will decrease. D) the unemployment is less than the natural unemployment rate. 5) Classical growth theory assumes that A) there are no diminishing returns to capital. B) when interest rates increase, savings and investment both increase. C) there are increasing returns to capital. D) population increases when wage rates are above subsistence levels. 5) 6) A problem with the neoclassical growth theory is its A) comparison of the economy to a perpetual motion machine. B) prediction that population growth raises the real wage rate. C) prediction that population growth lowers the real wage rate. D) inability to explain persistent differences between countries' GDP growth rates. 6) 7) Money. A) is any commodity that is generally acceptable as a means of payment B) requires a double coincidence of wants C) is always composed of coins and paper D) loses its value as it becomes older 7) 8) Which of the following is a tool that is used by the Fed to control the quantity of money? A) excess reserves B) government expenditure multiplier C) open market operations D) real interest rate 8) 9) Which of the following is NOT a monetary policy tool? A) required reserve ratio B) federal funds rate C) open market operations D) discount rate 9) 10) The monetary expansion process from an open market operation continues until A) the discount rate is lower than market interest rates. B) excess bank reserves are eliminated. C) required reserves are eliminated. D) the Federal Reserve takes actions to stop the process. 10) 2
3 11) If a customer deposits $10,000 in currency into a checking account, the bank's total reserves. 11) A) do not change B) are greater than 100 percent C) decrease D) increase 12) The quantity theory of money predicts that A) in the long run, a 10 percent increase in the quantity of money leads to a 10 percent increase in real GDP. B) in the long run a 10 percent increase in the quantity of money leads to a 10 percent increase in the price level. C) in the long run, a 10 percent increase in the quantity of money leads to a 10 percent increase in velocity. D) in the short run, a 10 percent increase in the quantity of money leads to a 10 percent increase in velocity. 12) 13) Which of the following counts as part of money? A) $10,000 of government bonds B) $10,000 in a checking account C) $10,000 of gold bars D) $10,000 of corporate bonds 13) 14) Which of the following is an asset of the Federal Reserve? A) Federal Reserve notes B) commercial bank deposits C) loans to commercial bank D) the monetary base 14) 15) If a bank kept all its deposits as reserves A) it would be able to make the most profit. B) it would make only minimal profits. C) We cannot determine how much profit it would make without more information regarding its balance sheet. D) it would not make any profits. 15) 16) If the real interest rate falls, the consumption function A) is unaffected. B) shifts downward. C) has a flatter slope. D) shifts upward. 16) 17) Which of the following events will make the consumption function steeper? A) an increase in the marginal propensity to consume B) an increase in real GDP C) an increase in disposable income D) an increase in unplanned inventory investment 17) 3
4 18) An increase in shifts the AE curve and an increase in shifts the aggregate demand curve. 18) A) autonomous expenditure; upward; the price level; rightward B) autonomous expenditure; upward; the price level; leftward C) the price level; upward; autonomous expenditure; leftward D) the price level; downward; autonomous expenditure; rightward 19) The longrun Phillips curve shows the relationship between the inflation rate and the unemployment rate when the 19) A) real interest rate equals the nominal interest rate. B) real interest rate is zero. C) inflation rate is zero. D) actual inflation rate equals the expected inflation rate. 20) According to the business cycle is the result of shifts in the economy's AD curve. A) the Keynesian, monetarist, and real business cycle theories B) only the Keynesian and monetarist cycle theories C) the Keynesian, monetarist, and new classical cycle theories D) the Keynesian cycle theory only 20) 21) Which of the following is the factor the creates business cycles in the real business cycle theory? A) a change by the Fed in the growth rate of the quantity of money B) an unexpected change in aggregate demand C) a change in expectations about future sales and profits D) a change in the growth rate of productivity 21) 22) The supply side effects of a cut in tax rates include in the supply of labor and in the supply of capital. 22) A) an increase; a decrease B) an increase; an increase C) a decrease; a decrease D) a decrease; an increase 23) According to the RicardoBarro effect, A) financing government spending with taxes has a less severe effect on private investment than financing through government borrowing. B) the government budget has no effect on the real interest rate. C) a government budget deficit crowds out private investment. D) None of the above answers are correct. 23) 4
5 24) Which of the following is one of the Fed's policy goals? A) exchange rate B) price level stability C) help the President win reelection D) monetary base 24) 25) If the Fed follows the Taylor rule and the economy goes into a recession, the Fed would A) lower the federal funds rate. B) increase government expenditures. C) reduce tax rates. D) None of the above answers are correct. 25) 26) If the Fed carries out an open market operation and buys U.S. government securities, the federal funds rate and the quantity of reserves. 26) A) rises; decreases B) rises; increases C) falls; increases D) falls; decreases 27) In the above figure, if the economy is initially at point d, the shortrun effect of a hike in the federal funds rate is given by movement from point 27) A) d to point a, increasing output and decreasing the unemployment rate. B) d to point b, keeping output and the unemployment rate constant. C) d to point b, increasing output and decreasing the unemployment rate. D) d to point c, increasing output and decreasing the unemployment rate. 5
6 28) The figure above shows the PPFs for Utopia and Apogee. The opportunity cost of a truck is A) 5/4 of a car in Utopia. B) 4/5 of a car in Apogee. C) 5 cars in Utopia. D) 2/7 of a car in Apogee. 28) 29) Increasing a tariff will the domestic quantity consumed of the good, while the domestic production of the good. 29) A) decrease; decreasing B) increase; increasing C) increase; decreasing D) decrease; increasing 30) The above figure shows the international market for some good "x". Suppose a tariff is imposed by the governments of importers of x. The tariff is shown as the amount given by the distance 30) A) P0P1. B) ac. C) P1P4. D) dc. 6
7 SHORT ANSWER. Write your answer in the space provided or on a separate sheet of paper. 31) Compare the policy prescriptions of Keynesian, Classical, and Monetarist economists. 32) In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the exchange rate? 33) In the economy of Jokey Island, autonomous consumption expenditure is $60 million, and the marginal propensity to consume is 0.6. Investment is $110 million, government expenditure is $70 million, and there are no income taxes. Investment and government expenditure are constant they do not vary with income. The island does not trade with the rest of the world. a) Draw the aggregate expenditure curve. b) What is the island's autonomous aggregate expenditure? c) What is the size of the multiplier in Jokey Island's economy? d) What is the island's aggregate planned expenditure and what is happening to inventories when real GDP is $800 million? e) What is the economy's equilibrium aggregate expenditure? 7
8 Leisure (hours) Real GDP (2000 dollars) 0 2, , , , ) The people of Palm Island are willing to work 80 hours a day for a real wage rate of $4 an hour. Then each dollar increase in the real wage, they are willing to work 10 additional hours a day. Palm Island's production possibilities are in the table above. a) Draw Palm Island's demand for labor curve. b) Draw Palm Island's supply of labor curve. c) What are the fullemployment equilibrium real wage rate and quantity of labor in Palm Island's economy? d) What is Palm Island's potential GDP? 35) Friedmania is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology so real GDP does not change. In 2006, real GDP was $500 million, the price level, measured by the GDP deflator, was 150 and the velocity of circulation of money was 10. (Because the price level is measured by the GDP deflator, it must be divided by 100 before it is used in the equation of exchange.) In 2007, the quantity of money increased by 20 percent. a) What was the quantity of money in 2006? b) What was the velocity of circulation in 2007? c) What was the price level in 2007? 8
9 Answer Key Testname: FINAL 1) C 2) C 3) C 4) D 5) D 6) D 7) A 8) C 9) B 10) B 11) D 12) B 13) B 14) C 15) D 16) D 17) A 18) D 19) D 20) C 21) D 22) B 23) B 24) B 25) A 26) C 27) D 28) A 29) D 30) D 31) Keynesians believe that without assistance the economy would almost never be at full employment. They prescribe activist fiscal and monetary policy to drive the economy to full employment. Classical economists believe the economy is selfregulating and will always tend towards full employment. Their main policy initiatives center on removing tax created disincentives for growth. Monetarists call for low taxes and consistent money growth because Monetarists believe that recessions are the result of fluctuations in the quantity of money. 9
10 Answer Key Testname: FINAL 32) The figure above shows the effect of the increase in the U.S. interest rate. The demand for dollars increases and the demand curve shifts rightward. The supply of dollars decreases and the supply curve shifts leftward. The equilibrium exchange rate rises, to 100 yen per dollar in the figure. 10
11 Answer Key Testname: FINAL 33) a) See the figure above. Because the island does not trade with the rest of the world, net exports are zero. When net exports are zero, aggregate expenditure, or AE, is given by AE = C + I + G. Consumption equals $60 million plus 0.6 of income, so the consumption function is C = $60 million + 0.6Y, where $60 million is autonomous consumption, 0.60 is the marginal propensity to consume, and Y is real GDP which equals real income. Using the formula in the equation for aggregate expenditure gives AE = $60 million + 0.6Y + $110 million + $70 million, so the formula for aggregate expenditure is AE = $240 million + 0.6Y. b) Autonomous expenditure is expenditure that does not vary with real GDP; it is the level of aggregate expenditure if real GDP were equal to zero. In the economy of Jokey Island, if Y = 0, AE = $ , so autonomous expenditure is $240 million, shown by point A in the figure above. c) The multiplier is the amount by which a change in autonomous expenditure is multiplied to determine the change in equilibrium expenditure and real GDP. The multiplier equals 1/(1  MPC). So in the economy of Jokey Island, the multiplier is 1/(10.6) = 2.5. d) When real GDP is $800 million, aggregate planned expenditure, AE, equals $ $800 million, which is $720 million. This level of aggregate planned expenditure is point B in the figure above. Because this level of aggregate planned expenditures is less than real GDP, point C in the figure, inventories increase. e) Equilibrium expenditure is the level of aggregate expenditure that occurs when aggregate planned expenditure, AE, equals real GDP. In the economy of Jokey Island equilibrium is at point E in the figure, when real GDP and aggregate expenditure equal $600 million. Equilibrium expenditure also can be calculated by solving the equation Y = $240 million + 0.6Y for Y. Start by subtracting 0.6Y from both sides to give 0.4Y = $240 million. Then divide both sides by 0.4 to obtain Y = $240 million/0.4, so that Y, which is real GDP, equals $600 million. 11
12 Answer Key Testname: FINAL 34) a) See the figure above. Palm Island's demand for labor curve is the marginal product of labor curve. The marginal product of labor for each quantity of labor employed is the change in real GDP divided by the change in quantity of labor employed. For example, 100 hours of labor employed is the midpoint between 80 and 120 hours on the production function. The 40 hors of additional labor between 80 and 100 hours produce $1,680  $1,280 = $400 of additional real GDP. So for these 40 hours of labor, one hour will produce additional real GDP of $400/40 = $10 per hour. So the marginal product of labor is $10 per hour when 100 hours of labor are employed. The rest of the marginal products are calculated similarly and are in the figure above. b) The figure above shows the labor supply curve. c) The fullemployment equilibrium real wage rate is the one at which the quantity of labor demanded equals the quantity of labor supplied so that real GDP is at its fullemployment level. In the economy of Palm Island, the figure above shows that the fullemployment equilibrium real wage rate is $8 per hour and the fullemployment quantity of labor is 120 hours per day. d) Potential GDP is the level of real GDP at full employment. As the figure above shows, Palm Island's full employment is 120 hours per day. And the production function shows that 120 hours of labor can produce a real GDP of $1,280. So Palm Island's potential GDP is $1,280 per day. 35) a) The equation of exchange states that the quantity of money, M, multiplied by the velocity of circulation, V, equals real GDP, Y, multiplied by the price level, P. In terms of a formula, the equation of exchange is that M V = P Y. Using this formula, M = PY/V, [(150/100) $500 billion]/10 gives the quantity of money as $75 billion. b) The quantity theory of money asserts that the velocity of circulation is not influenced by the quantity of money. So the velocity of circulation remains constant at 10. c) From the equation of exchange, the price level is P = MV/Y. Because the quantity of money increased by 20 percent, the quantity of money in 2007 is $75 billion 1.2 = $90 billion. So P = [($90 billion 10)/$500 million] 100 = 180. Another way to calculate the price level in 2007 is to notice that according to the quantity theory, a change in the quantity of money has no effect on velocity and real GDP. So if the quantity of money increases by 20 percent, to balance the equation of exchange, the price level must also increase by 20 percent. So from this approach, the price level in Friedmania is , which is also equal to
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Inflation can be started by 1) A) an increase in aggregate supply or a decrease in aggregate
More informationPrinciples of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004
Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Sample Final Exam Name Id # Part B Instructions: Please answer in the space provided and circle your answer on the question paper as well.
More informationCHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY
CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How
More information7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Aggregate Supply
Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Aggregate Supply Topic: Aggregate Supply/Aggregate Demand Model 1) The aggregate supply/aggregate demand model is used to help understand all of the following
More information2009 CHAPTER 11 Self Study Questions
CHAPTER 11 Self Study Questions 1) The aggregate supply/aggregate demand model is used to help understand all of the following except A) inflation. B) business cycle fluctuations. C) the aggregate value
More informationIntroduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky
Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Name Time: 2 hours Marks: 80 Multiple choice questions 1 mark each and a choice of 2 out of 3 short answer question
More informationStudy Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the Keynesian model of aggregate expenditure, real GDP is
More informationPractice Exam. Name: Date: 1. When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand,
Practice Exam Name: Date: 1. When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand, workers will underestimate the real wage rate workers will
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 5 (Money) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The functions of money are 1) A) medium of exchange, unit of account,
More information1. Firms react to unplanned inventory investment by increasing output.
Macro Exam 2 Self Test  T/F questions Dr. McGahagan Fill in your answer (T/F) in the blank in front of the question. If false, provide a brief explanation of why it is false, and state what is true.
More informationTHE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL*
Chapter 8 THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL* The Classical Model: A Preview Topic: Real Variables 1) Real variables A) are those that determine the cost of living. B) are those that determine
More informationFISCAL POLICY* Chapter. The Federal Budget. goods and services. goods and services, the value of transfer payments,
Chapter 15 FISCAL POLICY* The Federal Budget Topic: The Federal Budget 1) Which of the following is considered a purpose of the federal budget? I. To help the economy achieve full employment. II. To finance
More informationUniversity of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi
University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 27 Expenditure Multipliers 1) Disposable income is A) aggregate income minus transfer
More informationEcon 103 Ch 4: Page 88 (page 490 in Economics Define GDP and distinguish between a final good and an intermediate good. Provide examples.
Econ 103 Ch 4: Page 88 (page 490 in Economics) 1. Define GDP and distinguish between a final good and an intermediate good. Provide examples. GDP is the market value of all the final goods and services
More informationMONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*
Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* The Demand for Topic: Influences on Holding 1) The quantity of money that people choose to hold depends on which of the following? I. The price
More informationBUSINESS ECONOMICS CEC2 532751 & 761
BUSINESS ECONOMICS CEC2 532751 & 761 PRACTICE MACROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Based on our understanding of the Keynesian cross, we know with certainty that an equal
More informationEcon 202 Final Exam. Table 31 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5
Econ 202 Final Exam 1. If inflation expectations rise, the shortrun Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment
More information13 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Chapter. Key Concepts
Chapter 3 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Key Concepts Fixed Prices and Expenditure Plans In the very short run, firms do not change their prices and they sell the amount that is demanded.
More informationChapter 12. Aggregate Expenditure and Output in the Short Run
Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)
More information2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E. The College Board. College Level Examination Program
2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E College Level Examination Program The College Board Principles of Macroeconomics Description of the Examination The Subject Examination in
More information7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts
Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),
More informationBADM 527, Fall 2013. Midterm Exam 2. Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME
BADM 527, Fall 2013 Name: Midterm Exam 2 November 7, 2013 Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME 1. According to classical theory, national income (Real
More informationEcon 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3
Econ 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3 1. When firms experience unplanned inventory accumulation, they typically: A) build new plants. B) lay off workers and reduce
More informationFISCAL POLICY* Chapter. Key Concepts
Chapter 11 FISCAL POLICY* Key Concepts The Federal Budget The federal budget is an annual statement of the government s expenditures and tax revenues. Using the federal budget to achieve macroeconomic
More informationI. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question.
Econ 20B Additional Problem Set I. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question. 1.According to the theory of liquidity preference, the money supply
More informationECON 1010 Principles of Macroeconomics Solutions to Exam #3. Section A: Multiple Choice Questions. (40 points; 2 pts each)
ECON 1010 Principles of Macroeconomics Solutions to Exam #3 Section A: Multiple Choice Questions. (40 points; 2 pts each) 1. Domestic savings and foreign savings are: a. sources of funds for investment
More informationChapter 13. Aggregate Demand and Aggregate Supply Analysis
Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and
More informationEC2105, Professor Laury EXAM 2, FORM A (3/13/02)
EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each
More informationQuestions. True/False and Explain
166 CHAPTER 11 (27) Questions True/False and Explain Aggregate Supply 11. At full employment, there is no unemployment. 12. Along the LAS curve, a rise in the price level and all resource prices increase
More informationThe Aggregate Demand Aggregate Supply (ADAS) Model
The ADAS Model The Aggregate Demand Aggregate Supply (ADAS) Model Chapter 9 The ADAS Model addresses two deficiencies of the AE Model: No explicit modeling of aggregate supply. Fixed price level. 2
More informationAggregate Supply and Aggregate Demand
Aggregate Supply and Aggregate Demand Econ 120: Global Macroeconomics 1 1.1 Goals Goals Specific Goals Be able to explain GDP fluctuations when the price level is also flexible. Explain how real GDP and
More informationMacroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment. 1 Financial Institutions and Financial Markets
Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment 1 Financial Institutions and Financial Markets 1) The term "capital," as used in macroeconomics, refers to A) the
More informationEconomics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 22 Aggregate Demand and Supply Analysis. 22.
Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 22 Aggregate Demand and Supply Analysis 22.1 Aggregate Demand 1) The aggregate demand curve is the total quantity of an economy's A)
More informationMacroeconomics: Aggregate Demand & Aggregate Supply
RGDP HOSP 2207 (Economics) Learning Centre Macroeconomics: Aggregate Demand & Aggregate Supply The level of real GDP attained when an economy is at full capacity is called the full capacity GDP or potential
More informationAnswers to Text Questions and Problems. Chapter 22. Answers to Review Questions
Answers to Text Questions and Problems Chapter 22 Answers to Review Questions 3. In general, producers of durable goods are affected most by recessions while producers of nondurables (like food) and services
More informationMacroeconomics, Fall 2007 Exam 3, TTh classes, various versions
Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you
More informationMicro / Macro Economics. Module 7. Classical Keynesian Economics. Classical Keynesian Economics. Aggregate Expenditure The same as Aggregate Demand
Micro / Macro Economics Module 7 Classical Keynesian Economics EM1 1 Classical Keynesian Economics Aggregate Expenditure The same as Aggregate Demand Components of AE include: Consumption 55% Investment
More informationName: Days/Times Class Meets: Today s Date:
Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Spring 2008, Final Exam, several versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you must
More informationAP Macroeconomics. Practice Exam. Advanced Placement Program
Advanced Placement Program AP Macroeconomics Practice Exam The questions contained in this AP Macroeconomics Practice Exam are written to the content specifications of AP Exams for this subject. Taking
More informationExam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) marketclearing assumption.
Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 3312 Macroeconomics Practice Exam 3 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Assuming the economy is starting at the natural rate
More informationECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 3312 Macroeconomics Exam 3 Fall 2014 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Everything else held constant, an increase in net
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Sample Questions for Chapters 12 & 13 Inflation Unemployment & Business Cycles Fiscal Policy MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Inflation
More informationUniversity of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi
University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 23 Finance Saving Investment 1) Capital is A) the tools, instruments, machines,
More information13. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1,000.
Name: Date: 1. In the long run, the level of national income in an economy is determined by its: A) factors of production and production function. B) real and nominal interest rate. C) government budget
More informationChapter 3 AGGREGATE DEMAND AND
Chapter 3 AGGREGATE DEMAND AND AGGREGATE G SULY Dr. Mohammed Alwosabi The aggregate demand and aggregate supply (AS) model determines RGD and GD Deflator and helps us understand the performance of three
More informationWhat causes the business cycle? Why did U.S. economy go into recession in 2008?
What causes the business cycle? Why did U.S. economy go into recession in 2008? Aggregate Supply and 13 Aggregate Demand When you have completed your study of this chapter, you will be able to CHAPTER
More informationEconomics 101 Multiple Choice Questions for Final Examination Miller
Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value
More informationEconomics 152 Solution to Sample Midterm 2
Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation
More information2.If actual investment is greater than planned investment, inventories increase more than planned. TRUE.
Macro final exam study guide True/False questions  Solutions Case, Fair, Oster Chapter 8 Aggregate Expenditure and Equilibrium Output 1.Firms react to unplanned inventory investment by reducing output.
More informationRefer to Figure 171
Chapter 17 1. Inflation can be measured by the a. change in the consumer price index. b. percentage change in the consumer price index. c. percentage change in the price of a specific commodity. d. change
More informationChapter 22. Aggregate Demand and Supply Analysis Aggregate Demand
Chapter 22 Aggregate Demand and Supply Analysis 22.1 Aggregate Demand 1) The aggregate demand curve is the total quantity of an economyʹs A) intermediate goods demanded at all price levels. B) intermediate
More informationMacroeconomics Instructor Miller Aggregate Expenditure Practice Problems
Macroeconomics Instructor Miller Aggregate Expenditure Practice Problems 1. The aggregate expenditure model focuses on the relationship between real spending and. A) shortrun; real GDP B) shortrun; inflation
More informationGovernment Budget and Fiscal Policy CHAPTER
Government Budget and Fiscal Policy 11 CHAPTER The National Budget The national budget is the annual statement of the government s expenditures and tax revenues. Fiscal policy is the use of the federal
More informationBusiness Conditions Analysis Prof. Yamin Ahmad ECON 736
Business Conditions Analysis Prof. Yamin Ahmad ECON 736 Sample Final Exam Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark the answers
More information2. With an MPS of.4, the MPC will be: A) 1.0 minus.4. B).4 minus 1.0. C) the reciprocal of the MPS. D).4. Answer: A
1. If Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to: A) save is threefifths. B) consume is onehalf.
More informationChapter 29 ASAD and the Business Cycle
Chapter 29 ASAD and the Business Cycle 29.1 BusinessCycle Definitions and Facts 1) The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following
More informationThe Macroeconomy in the Long Run The Classical Model
PP556 Macroeconomic Questions The Macroeconomy in the ong Run The Classical Model what determines the economy s total output/income how the prices of the factors of production are determined how total
More informationEcon 102 Aggregate Supply and Demand
Econ 102 ggregate Supply and Demand 1. s on previous homework assignments, turn in a news article together with your summary and explanation of why it is relevant to this week s topic, ggregate Supply
More informationEcon 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam.
, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. When the government spends more, the initial effect is that a. aggregate
More information6 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts
Chapter 6 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),
More informationProblem Set for Chapter 20(Multiple choices)
Problem Set for hapter 20(Multiple choices) 1. According to the theory of liquidity preference, a. if the interest rate is below the equilibrium level, then the quantity of money people want to hold is
More informationAGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand
AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand Suppose that the economy is undergoing a recession because of a fall in aggregate demand. a. Using
More informationSuggested Answers for Mankiw Questions for Review & Problems
Suggested Answers for Mankiw & Problems The answers here will not have graphs, I encourage to refer to the text for graphs. There is a some math, however I don t expect you to replicate these in your exam,
More informationAggregate Supply and Aggregate Demand
26 Aggregate Supply and Aggregate Demand Learning Objectives Explain what determines aggregate supply Explain what determines aggregate demand Explain what determines real GDP and the price level and how
More informationName: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed.
Name: Date: 1 A measure of how fast prices are rising is called the: A growth rate of real GDP B inflation rate C unemployment rate D marketclearing rate 2 Compared with a recession, real GDP during a
More informationThe ShortRun Macro Model. The ShortRun Macro Model. The ShortRun Macro Model
The ShortRun Macro Model In the short run, spending depends on income, and income depends on spending. The ShortRun Macro Model ShortRun Macro Model A macroeconomic model that explains how changes in
More informationEcon 202 Section 4 Final Exam
Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40
More informationRutgers University School of Business Aggregate Economics Fall 2010
Rutgers University School of Business Aggregate Economics Fall 2010 Professor: Dr. Davood Taree Email: dtaree@rbs.rutgers.edu Office hours: Thursday: By appointment Course Information: Course Number: 591:41
More informationMacroeconomics CHAPTER 10. Aggregate Supply and Aggregate Demand. Aggregate Supply. The ShortRun Aggregate Supply Curve
Aggregate Supply Macroeconomics CHAPTER 10 The aggregate supply curve shows the relationship aggregate output. Aggregate Supply and Aggregate Demand 3 What you will learn in this chapter: How the aggregate
More informationLecture 6: Economic Fluctuations. Rob Godby University of Wyoming
Lecture 6: Economic Fluctuations Rob Godby University of Wyoming ShortRun Economic Fluctuations Economic activity fluctuates from year to year. In some years, the production of goods and services rises.
More informationb) What happens to the level of output and the price level in the short run and in the long run?
1) Suppose the Fed reduces the money supply by 5 percent. a) What happens to the aggregate demand curve? If the Fed reduces the money supply, the aggregate demand curve shifts down. This result is based
More informationPreTest Chapter 10 ed17
PreTest Chapter 10 ed17 Multiple Choice Questions 1. Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE 1 to AE 2 would: A. move the economy from
More information_FALSE 1. Firms react to unplanned inventory investment by increasing output.
Macro Exam 2 Self Test  ANSWERS Dr. McGahagan WARNING  Be sure to take the selftest before peeking at the answers. Chapter 8  Aggregate Expenditure and Equilibrium Output _FALSE 1. Firms react to
More informationAnswers: 1. B 2. C 3. A 4. A 5 D 6. C 7. D 8. C 9. D 10. A * Adapted from the Study Guide
Economics 101 Quiz #1 Fall 2002 1. Assume that there are two goods, A and B. In 1996, Americans produced 20 units of A at a price of $10 and 40 units of B at a price of $50. In 2002, Americans produced
More informationAP Macroeconomics: Vocabulary. 1. Aggregate Spending (GDP): The sum of all spending from four sectors of the economy.
AP Macroeconomics: Vocabulary 1. Aggregate Spending (GDP): The sum of all spending from four sectors of the economy. GDP = C+I+G+Xn 2. Aggregate Income (AI) :The sum of all income earned by suppliers of
More information. consumption and investment spending.
Chapter 10 1. The aggregate demand curve: A. is upward sloping because a higher price level is necessary to make production profitable as production costs rise. B. is downward sloping because production
More information1. What is an investment schedule and how does it differ from an investment demand curve? LO1
Chapter 28 The Aggregate Expenditures Model QUESTIONS 1. What is an investment schedule and how does it differ from an investment demand curve? LO1 Answer: An investment schedule shows the level of investment
More informationINTRODUCTION AGGREGATE DEMAND MACRO EQUILIBRIUM MACRO EQUILIBRIUM THE DESIRED ADJUSTMENT THE DESIRED ADJUSTMENT
Chapter 9 AGGREGATE DEMAND INTRODUCTION The Great Depression was a springboard for the Keynesian approach to economic policy. Keynes asked: What are the components of aggregate demand? What determines
More informationEcon 336  Spring 2007 Homework 5
Econ 336  Spring 2007 Homework 5 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The real exchange rate, q, is defined as A) E times P B)
More informationLecture 10: Aggregate Demand and Aggregate Supply I
EC201 Intermediate Macroeconomics EC201 Intermediate Macroeconomics Lecture 10: Aggregate Demand and Aggregate Supply I Lecture Outline:  how to derive the aggregate demand from the ISLM model;  a preliminary
More informationAggregate Demand and Aggregate Supply
Demand and Supply Chapter 31 Copyright 21 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College
More informationI. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question.
Econ 20B Additional Problem Set I. MULTIPLE CHOICES. Choose the one alternative that best completes the statement to answer the question. 1. Which of the following is correct? a. Over the business cycle
More informationIn this chapter we learn the potential causes of fluctuations in national income. We focus on demand shocks other than supply shocks.
Chapter 11: Applying ISLM Model In this chapter we learn the potential causes of fluctuations in national income. We focus on demand shocks other than supply shocks. We also learn how the ISLM model
More informationVANCOUVER ISLAND UNIVERSITY. ECON212: PRINCIPLES OF MACROECONOMICS, Spring 2013 SAMPLE MIDTERM EXAM. Name (Last, First): ID #: Signature:
Important: Please remember it is a sample exam. Number of questions in each section and structure of questions in section b and c would vary as discussed in class VANCOUVER ISLAND UNIVERSITY ECON212: PRINCIPLES
More information1. a. Interestbearing checking accounts make holding money more attractive. This increases the demand for money.
Macroeconomics ECON 2204 Prof. Murphy Problem Set 4 Answers Chapter 10 #1, 2, and 3 (on pages 308309) 1. a. Interestbearing checking accounts make holding money more attractive. This increases the demand
More informationChapter 13: Aggregate Demand and Aggregate Supply Analysis
Chapter 13: Aggregate Demand and Aggregate Supply Analysis Yulei Luo SEF of HKU March 25, 2013 Learning Objectives 1. Identify the determinants of aggregate demand and distinguish between a movement along
More informationThese are some practice questions for CHAPTER 23. Each question should have a single answer. But be careful. There may be errors in the answer key!
These are some practice questions for CHAPTER 23. Each question should have a single answer. But be careful. There may be errors in the answer key! 67. Public saving is equal to a. net tax revenues minus
More informationMONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*
Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Key Concepts The Demand for Money Four factors influence the demand for money: The price level An increase in the price level increases the nominal
More informationExtra Problems #3. ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma. Notice:
ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Extra Problems #3 Notice: (1) There are 25 multiplechoice problems covering Chapter 6, 9, 10, 11. These problems are not homework and
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Survey of Macroeconomics, MBA 641 Fall 2006, Quiz 4 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The central bank for the United States
More informationThe level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices
Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within
More informationMacroeconomics Instructor Miller AD/AS Model Practice Problems
Macroeconomics Instructor Miller AD/AS Model Practice Problems 1. The basic aggregate demand and aggregate supply curve model helps explain A) fluctuations in real GDP and the price level. B) longterm
More informationUniversity of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 29 Fiscal Policy
University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi Chapter 29 Fiscal Policy 1) If revenues exceed outlays, the government's budget balance
More informationAggregate Supply and Aggregate Demand
Aggregate Supply and Aggregate Demand Chapter CHAPTER CHECKLIST Define and explain the influences on aggregate supply. Aggregate supply is the output from all firms. Other things remaining the same, the
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The market demand curve is: A) always horizontal. B) upward sloping. C) negatively sloped.
More information0 100 200 300 Real income (Y)
Lecture 111 6.1 The open economy, the multiplier, and the IS curve Assume that the economy is either closed (no foreign trade) or open. Assume that the exchange rates are either fixed or flexible. Assume
More informationS.Y.B.COM. (SEMIII) ECONOMICS
Fill in the Blanks. Module 1 S.Y.B.COM. (SEMIII) ECONOMICS 1. The continuous flow of money and goods and services between firms and households is called the Circular Flow. 2. Saving constitute a leakage
More information