# Practice Exam. Name: Date: 1. When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand,

Save this PDF as:

Size: px
Start display at page:

Download "Practice Exam. Name: Date: 1. When workers and employers correctly anticipate an increase in inflation caused by an increase in aggregate demand,"

## Transcription

1 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 overestimate the real wage rate unemployment will be at the natural rate there will be no unemployment 2. Which of the figures best shows the start of a demand-pull inflation? Figure A Figure B Figure C Figure D 3. The data in the table indicate that autonomous expenditure is \$3.0 trillion \$0.3 trillion \$4.8 trillion indeterminate from the information given 1

2 4. One reason the aggregate expenditure curve slopes upward is because increases when real GDP increases. investment exports consumption expenditure government expenditures on goods and services 5. If the annual interest paid on a \$500 loan is \$25, the nominal interest rate is percent per year. If the inflation rate is 2 percent a year, the real interest rate is per year. 5; 7 5; 3 4; 2 6. The quantity of real GDP demanded equals \$12.2 trillion when the GDP deflator is 90. If the GDP deflator rises to 95, the quantity of real GDP demanded equals less than \$12.2 trillion \$12.2 trillion more than \$12.2 trillion more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change 7. If real disposable income increases by \$1500, consumption expenditures will increase by more than \$1500 increase by less than \$1500 decrease by less than \$1500 stay constant 8. The size of the multiplier decreases in the longer run stays positive in the longer run increases in the longer run is unaffected by the amount of time that elapses 9. A fall in the price level shifts the aggregate demand curve rightward and increases equilibrium GDP shifts both the aggregate planned expenditures curve and aggregate demand curve upward decreases aggregate planned expenditures and shifts the aggregate demand curve leftward shifts the aggregate planned expenditure curve upward and increases the quantity of real GDP demanded 2

3 10. In the figure, the economy is initially at point B. If the government decreases transfer payments, there is a shift to AD 2 a movement to point A a movement to point C a shift to AD In the macroeconomic long-run, regardless of the price level, the economy is producing at potential GDP the economy is at full employment real GDP equals potential GDP All of the above are correct 12. A lower price level combined with a decrease in real GDP occurs when the short-run aggregate supply curve shifts leftward short-run aggregate supply curve shifts rightward aggregate demand curve shifts rightward aggregate demand curve shifts leftward 13. If investment increases by \$300 and, in response, equilibrium aggregate expenditure increases by \$600, then the multiplier must be Which of the following is NOT a potential start of a demand-pull inflation? an increase in the money supply an increase in exports an increase in government expenditure an increase in taxes 3

4 15. Which of the following does NOT shift the short-run aggregate supply curve? a change in the nominal wage rate technological progress a reduction in the price of a raw material a change in the price level 16. Which of the following can start an inflation? a decrease in aggregate supply an increase in aggregate supply an increase in aggregate demand answers A and C are correct 17. If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the LAS curve shifts rightward SAS curve shifts rightward SAS curve shifts leftward LAS curve shifts leftward 18. According to the intertemporal substitution effect, a higher price level makes it less costly for people to buy houses and cars lowers the costs of building new plants and equipment decreases the quantity of real GDP demanded increases the quantity of real GDP demanded 19. The slope of the consumption function is 1 negative less than 1 greater than A one-time rise in the price level can turn into a demand-pull inflation when. taxes consistently increase the nominal wage rate continues to increase the quantity of money persistently increases the quantity of money persistently decreases 21. Which of the following would shift the aggregate demand curve leftward year after year? a one-time tax cut inflation a one-time increase in government expenditures on goods and services negative growth in the quantity of money 4

5 22. An economy is at full employment when: There is no cyclical unemployment All unemployment is structural and cyclical The unemployment rate is less than the natural unemployment rate Al unemployment is cyclical 23. In the figure, which movement illustrates the impact of a constant price level and a rising nominal wage rate? E to J E to F E to H E to I 24. An increase in investment spending results in a the aggregate planned expenditure curve and the aggregate demand curve. shift in; has no effect on movement along; a shift in shift in; a shift in shift in; a movement along 25. Actual aggregate expenditure is always equal to real GDP only equal to real GDP at the equilibrium level of aggregate planned expenditure never greater than real GDP but can be less than real GDP never less than real GDP but can be greater than real GDP 26. A leftward shift in the short-run aggregate supply curve increases both the price level and real GDP is the result of consumer expenditures exceeding available output is the result of the Fed increasing the quantity of money is the result of a rise in the price of a key resource 5

6 27. By itself, an increase in the price of oil, which is a production input, shifts the short-run aggregate supply curve leftward and does not shift the aggregate demand curve aggregate demand curve leftward and does not shift the short- run aggregate supply curve aggregate demand curve rightward and does not shift the short-run aggregate supply curve short-run aggregate supply curve rightward and does not shift the aggregate demand curve 28. In April 2008 the price of oil was approximately \$130 per barrel; in April 2015, it was approximately \$40 per barrel. This change in the price of oil could have started both a cost-push and a demand-pull inflation a cost-push inflation a demand-pull inflation None of the above answers are correct 29. Because of the multiplier, a one-time change in expenditure will generate more additional income than the initial change in expenditure expand income by an infinite amount have little secondary effect on income decrease saving and investment activity and future income 30. If aggregate planned expenditure exceeds real GDP actual inventories decrease below their target firms are not maximizing their profits planned consumption expenditure is less than actual consumption expenditure planned investment is greater than planned saving 6

7 Answer Key 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 overestimate the real wage rate unemployment will be at the natural rate there will be no unemployment 2. Which of the figures best shows the start of a demand-pull inflation? Figure A Figure B Figure C Figure D 3. The data in the table indicate that autonomous expenditure is \$3.0 trillion \$0.3 trillion \$4.8 trillion indeterminate from the information given 1

8 4. One reason the aggregate expenditure curve slopes upward is because increases when real GDP increases. investment exports consumption expenditure government expenditures on goods and services 5. If the annual interest paid on a \$500 loan is \$25, the nominal interest rate is percent per year. If the inflation rate is 2 percent a year, the real interest rate is per year. 5; 7 5; 3 4; 2 6. The quantity of real GDP demanded equals \$12.2 trillion when the GDP deflator is 90. If the GDP deflator rises to 95, the quantity of real GDP demanded equals less than \$12.2 trillion \$12.2 trillion more than \$12.2 trillion more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change 7. If real disposable income increases by \$1500, consumption expenditures will increase by more than \$1500 increase by less than \$1500 decrease by less than \$1500 stay constant 8. The size of the multiplier decreases in the longer run stays positive in the longer run increases in the longer run is unaffected by the amount of time that elapses 9. A fall in the price level shifts the aggregate demand curve rightward and increases equilibrium GDP shifts both the aggregate planned expenditures curve and aggregate demand curve upward decreases aggregate planned expenditures and shifts the aggregate demand curve leftward shifts the aggregate planned expenditure curve upward and increases the quantity of real GDP demanded 2

9 10. In the figure, the economy is initially at point B. If the government decreases transfer payments, there is a shift to AD 2 a movement to point A a movement to point C a shift to AD In the macroeconomic long-run, regardless of the price level, the economy is producing at potential GDP the economy is at full employment real GDP equals potential GDP All of the above are correct 12. A lower price level combined with a decrease in real GDP occurs when the short-run aggregate supply curve shifts leftward short-run aggregate supply curve shifts rightward aggregate demand curve shifts rightward aggregate demand curve shifts leftward 13. If investment increases by \$300 and, in response, equilibrium aggregate expenditure increases by \$600, then the multiplier must be Which of the following is NOT a potential start of a demand-pull inflation? an increase in the money supply an increase in exports an increase in government expenditure an increase in taxes 3

10 15. Which of the following does NOT shift the short-run aggregate supply curve? a change in the nominal wage rate technological progress a reduction in the price of a raw material a change in the price level 16. Which of the following can start an inflation? a decrease in aggregate supply an increase in aggregate supply an increase in aggregate demand answers A and C are correct 17. If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the LAS curve shifts rightward SAS curve shifts rightward SAS curve shifts leftward LAS curve shifts leftward 18. According to the intertemporal substitution effect, a higher price level makes it less costly for people to buy houses and cars lowers the costs of building new plants and equipment decreases the quantity of real GDP demanded increases the quantity of real GDP demanded 19. The slope of the consumption function is 1 negative less than 1 greater than A one-time rise in the price level can turn into a demand-pull inflation when. taxes consistently increase the nominal wage rate continues to increase the quantity of money persistently increases the quantity of money persistently decreases 21. Which of the following would shift the aggregate demand curve leftward year after year? a one-time tax cut inflation a one-time increase in government expenditures on goods and services negative growth in the quantity of money 4

11 22. An economy is at full employment when: There is no cyclical unemployment All unemployment is structural and cyclical The unemployment rate is less than the natural unemployment rate Al unemployment is cyclical 23. In the figure, which movement illustrates the impact of a constant price level and a rising nominal wage rate? E to J E to F E to H E to I 24. An increase in investment spending results in a the aggregate planned expenditure curve and the aggregate demand curve. shift in; has no effect on movement along; a shift in shift in; a shift in shift in; a movement along 25. Actual aggregate expenditure is always equal to real GDP only equal to real GDP at the equilibrium level of aggregate planned expenditure never greater than real GDP but can be less than real GDP never less than real GDP but can be greater than real GDP 26. A leftward shift in the short-run aggregate supply curve increases both the price level and real GDP is the result of consumer expenditures exceeding available output is the result of the Fed increasing the quantity of money is the result of a rise in the price of a key resource 5

12 27. By itself, an increase in the price of oil, which is a production input, shifts the short-run aggregate supply curve leftward and does not shift the aggregate demand curve aggregate demand curve leftward and does not shift the short- run aggregate supply curve aggregate demand curve rightward and does not shift the short-run aggregate supply curve short-run aggregate supply curve rightward and does not shift the aggregate demand curve 28. In April 2008 the price of oil was approximately \$130 per barrel; in April 2015, it was approximately \$40 per barrel. This change in the price of oil could have started both a cost-push and a demand-pull inflation a cost-push inflation a demand-pull inflation None of the above answers are correct 29. Because of the multiplier, a one-time change in expenditure will generate more additional income than the initial change in expenditure expand income by an infinite amount have little secondary effect on income decrease saving and investment activity and future income 30. If aggregate planned expenditure exceeds real GDP actual inventories decrease below their target firms are not maximizing their profits planned consumption expenditure is less than actual consumption expenditure planned investment is greater than planned saving 6

### Effects of Inflation Unanticipated Inflation in the Labor Market

Effects of Inflation Unanticipated Inflation in the Labor Market Unanticipated inflation has two main consequences in the labor market: Redistribution of income Departure from full employment Effects of

### 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

### CHAPTER 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

### Principles 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.

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

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

### Pre-Test Chapter 10 ed17

Pre-Test 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

### ECON 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

### Problem Set #4: Aggregate Supply and Aggregate Demand Econ 100B: Intermediate Macroeconomics

roblem Set #4: Aggregate Supply and Aggregate Demand Econ 100B: Intermediate Macroeconomics 1) Explain the differences between demand-pull inflation and cost-push inflation. Demand-pull inflation results

### 7 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 ),

### MONEY, 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

### THE 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

### INTRODUCTION 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

### Chapter 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

### University 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

### Extra 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 multiple-choice problems covering Chapter 6, 9, 10, 11. These problems are not homework and

### ] 100 where P 1. is the current price level and P 0

C h a p t e r 12 INFLATION Chapter Key Ideas Outline From Rome to Rio de Janeiro A. Inflation is a very old problem and some countries even in recent times have experienced rates as high as 40 percent

### FISCAL 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

### AP 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

### Introduction 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

### THE ECONOMY AT FULL EMPLOYMENT. Objectives. Production and Jobs. Objectives. Real GDP and Employment. Real GDP and Employment CHAPTER

THE ECONOMY AT 29 FULL EMPLOYMENT CHAPTER Objectives After studying this chapter, you will able to Describe the relationship between the quantity of labour employed and real GDP Explain what determines

### Econ 202 Final Exam. Table 3-1 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 short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment

### 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* * Chapter Key Ideas. Outline

C h a p t e r 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* * Chapter Key Ideas Outline Production and Prices A. What forces bring persistent and rapid expansion of real GDP? B. What leads to inflation? C.

### MONEY, 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

### Government 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

### Name: Date: 2. The IS-LM model takes as exogenous. A) the price level and national income B) the price level C) national income D) the interest rate

Name: Date: 1. John Maynard Keynes wrote that responsibility for low income and high unemployment in economic downturns should be placed on: A) low levels of capital. B) an untrained labor force. C) inadequate

### Aggregate Demand and Aggregate Supply Ing. Mansoor Maitah Ph.D. et Ph.D.

Aggregate Demand and Aggregate Supply Ing. Mansoor Maitah Ph.D. et Ph.D. Aggregate Demand and Aggregate Supply Economic fluctuations, also called business cycles, are movements of GDP away from potential

### Pre-Test Chapter 15 ed17

Pre-Test Chapter 15 ed17 Multiple Choice Questions 1. The extended AD-AS model: A. distinguishes between short-run and long-run aggregate demand. B. explains inflation but not recession. C. includes G

### Aggregate 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

### Problem 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

### BADM 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

### Econ 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

### Econ 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

### Macroeconomics Instructor Miller Fiscal Policy Practice Problems

Macroeconomics Instructor Miller Fiscal Policy Practice Problems 1. Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.

### I. Introduction to Aggregate Demand/Aggregate Supply Model

University of California-Davis Economics 1B-Intro to Macro Handout 8 TA: Jason Lee Email: jawlee@ucdavis.edu I. Introduction to Aggregate Demand/Aggregate Supply Model In this chapter we develop a model

### Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy

Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy The Role of Aggregate Demand & Supply Endogenizing the Price Level Inflation Deflation Price Stability The Aggregate Demand Curve Relates

### Macroeconomics, 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

### 13 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.

### The Aggregate Demand- Aggregate Supply (AD-AS) Model

The AD-AS Model The Aggregate Demand- Aggregate Supply (AD-AS) Model Chapter 9 The AD-AS Model addresses two deficiencies of the AE Model: No explicit modeling of aggregate supply. Fixed price level. 2

### Macroeconomics, 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

### 2. 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 three-fifths. B) consume is one-half.

### The Short-Run Macro Model. The Short-Run Macro Model. The Short-Run Macro Model

The Short-Run Macro Model In the short run, spending depends on income, and income depends on spending. The Short-Run Macro Model Short-Run Macro Model A macroeconomic model that explains how changes in

### University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 22 Economic Growth

University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi Chapter 22 Economic Growth 1) Economic growth is A) equal to real GDP per capita multiplied

### Economics 152 Solution to Sample Midterm 1

Economics 152 Solution to Sample Midterm 1 N. Das PART 1 (81 POINTS):Answer the following 27 multiple choice questions on the scan sheet. Each question is worth 3 points). 1. Gross domestic product (GDP)

### AP Macroeconomics 2007 Scoring Guidelines

AP Macroeconomics 2007 Scoring Guidelines The College Board: Connecting Students to College Success The College Board is a not-for-profit membership association whose mission is to connect students to

### AP Macroeconomics 2011 Scoring Guidelines

AP Macroeconomics 2011 Scoring Guidelines The College Board The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. Founded

### Study 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

### I. 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

### ECON 101 Exam 2. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Name: Class: Date: ECON 101 Exam 2 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Al s Aluminum Company sells \$1 million worth of aluminum to Shiny Foil

### Econ 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

### Chapter 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)

### The 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

### Suggested 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,

### ECON 3560/5040 Week 2. 1. What Determines the Total Production of Goods and Services

ECON 3560/5040 Week 2 NATIONAL INCOME 1. What Determines the Total Production of Goods and Services - Factors of production: the inputs used to produce goods and services (1) Capital (K) (2) Labor (L)

### The Circular Flow of Income and Expenditure

The Circular Flow of Income and Expenditure Imports HOUSEHOLDS Savings Taxation Govt Exp OTHER ECONOMIES GOVERNMENT FINANCIAL INSTITUTIONS Factor Incomes Taxation Govt Exp Consumer Exp Exports FIRMS Capital

### EC2105, 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

### Econ 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

### Econ 202 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.

, Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. On average over the past 50 years, the U.S.

### Professor Christina Romer. LECTURE 17 MACROECONOMIC VARIABLES AND ISSUES March 17, 2016

Economics 2 Spring 2016 Professor Christina Romer Professor David Romer LECTURE 17 MACROECONOMIC VARIABLES AND ISSUES March 17, 2016 I. MACROECONOMICS VERSUS MICROECONOMICS II. REAL GDP A. Definition B.

### BUSINESS ECONOMICS CEC2 532-751 & 761

BUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MACROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format

### University 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

### AP Macroeconomics 2011 Scoring Guidelines Form B

AP Macroeconomics 2011 Scoring Guidelines Form B The College Board The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity.

### 10) In the above figure, if the price is 8 then there is a A) surplus of 100. B) shortage of 200. C) surplus of 200. D) shortage of 100.

1) perfectly inelastic supply curve represents a ) fixed supply of a good. ) product with a constant price, regardless of the quantity offered for sale. C) product in abundant supply. ) product supply

### Macroeconomics Topic 8: Explain how slow price adjustments might affect the short-run response of the economy to economic shocks.

Macroeconomics Topic 8: Explain how slow price adjustments might affect the short-run response of the economy to economic shocks. Reference: Gregory Mankiw s Principles of Microeconomics, 2 nd edition,

### LECTURE NOTES ON MACROECONOMIC PRINCIPLES

LECTURE NOTES ON MACROECONOMIC PRINCIPLES Peter Ireland Department of Economics Boston College peter.ireland@bc.edu http://www2.bc.edu/peter-ireland/ec132.html Copyright (c) 2013 by Peter Ireland. Redistribution

### Thinkwell s Homeschool Economics Course Lesson Plan: 36 weeks

Thinkwell s Homeschool Economics Course Lesson Plan: 36 weeks Welcome to Thinkwell s Homeschool Economics! We re thrilled that you ve decided to make us part of your homeschool curriculum. This lesson

Agenda What is a Business Cycle? Business Cycles.. 11-1 11-2 Business cycles are the short-run fluctuations in aggregate economic activity around its long-run growth path. Y Time 11-3 11-4 1 Components

### CHAPTER 9 Building the Aggregate Expenditures Model

CHAPTER 9 Building the Aggregate Expenditures Model Topic Question numbers 1. Consumption function/apc/mpc 1-42 2. Saving function/aps/mps 43-56 3. Shifts in consumption and saving functions 57-72 4 Graphs/tables:

### I d ( r; MPK f, τ) Y < C d +I d +G

1. Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, the real interest rate, consumption, investment, and the

### Chapter 3 A Classical Economic Model

Chapter 3 A Classical Economic Model what determines the economy s total output/income how the prices of the factors of production are determined how total income is distributed what determines the demand

### 12.1 Introduction. 12.2 The MP Curve: Monetary Policy and the Interest Rates 1/24/2013. Monetary Policy and the Phillips Curve

Chapter 12 Monetary Policy and the Phillips Curve By Charles I. Jones Media Slides Created By Dave Brown Penn State University The short-run model summary: Through the MP curve the nominal interest rate

### Refer to Figure 17-1

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

### Solution. Solution. Monetary Policy. macroeconomics. economics

KrugmanMacro_SM_Ch14.qxp 10/27/05 3:25 PM Page 165 Monetary Policy 1. Go to the FOMC page of the Federal Reserve Board s website (http://www. federalreserve.gov/fomc/) to find the statement issued after

### Use the following to answer question 9: Exhibit: Keynesian Cross

1. Leading economic indicators are: A) the most popular economic statistics. B) data that are used to construct the consumer price index and the unemployment rate. C) variables that tend to fluctuate in

### 3 Macroeconomics LESSON 8

3 Macroeconomics LESSON 8 Fiscal Policy Introduction and Description Fiscal policy is one of the two demand management policies available to policy makers. Government expenditures and the level and type

### Chapter 6 Economic Growth

Chapter 6 Economic Growth 1 The Basics of Economic Growth 1) The best definition for economic growth is A) a sustained expansion of production possibilities measured as the increase in real GDP over a

### Answer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique

1.The aggregate demand curve shows the relationship between inflation and: A) the nominal interest rate. D) the exchange rate. B) the real interest rate. E) short-run equilibrium output. C) the unemployment

### Aggregate Demand and Aggregate Supply

CHAPTER 10 Aggregate Demand and Aggregate Supply In an update of its Monetary Policy Report in October 2005, the Bank of Canada reported: In line with the Bank s outlook, and given that the Canadian economy

### Econ 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)

### AP Macroeconomics 2010 Scoring Guidelines

AP Macroeconomics 2010 Scoring Guidelines The College Board The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. Founded

### Lesson 8 - Aggregate Demand and Aggregate Supply

Lesson 8 - Aggregate Demand and Aggregate Supply Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section 1: Aggregate Demand The second macroeconomic

### Macroeconomics 2301 Potential questions and study guide for exam 2. Any 6 of these questions could be on your exam!

Macroeconomics 2301 Potential questions and study guide for exam 2 Any 6 of these questions could be on your exam! 1. GDP is a key concept in Macroeconomics. a. What is the definition of GDP? b. List and

### Practiced Questions. Chapter 20

Practiced Questions Chapter 20 1. The model of aggregate demand and aggregate supply a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution

### MULTIPLE 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,

### MULTIPLE 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

### Econ 100B: Macroeconomic Analysis Fall Problem Set #3 ANSWERS (Due September 15-16, 2008)

Econ 100B: Macroeconomic Analysis Fall 2008 Problem Set #3 ANSWERS (Due September 15-16, 2008) A. On one side of a single sheet of paper: 1. Clearly and accurately draw and label a diagram of the Production

### Agenda. Productivity, Output, and Employment, Part 1. The Production Function. The Production Function. The Production Function. The Demand for Labor

Agenda Productivity, Output, and Employment, Part 1 3-1 3-2 A production function shows how businesses transform factors of production into output of goods and services through the applications of technology.

### Chapter 20. Short-Run Economic Fluctuations KEY FACTS ABOUT ECONOMIC FLUCTUATIONS

Chapter 2 urpose of Chapter 2: Develop a model that economists use to analyze the economy s short-run fluctuations - the model of demand and. Short-Run Economic Fluctuations Economic activity fluctuates

### FISCAL POLICY* Chapter. Key Concepts

Chapter 15 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

### The Money Market and the Interest Rate. 2003 South-Western/Thomson Learning

The Money Market and the Interest Rate 2003 South-Western/Thomson Learning Individuals Demand for Money An individual s quantity of money demanded is the amount of wealth that the individual chooses to

### With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy.

The Digital Economist Lecture 9 -- Economic Policy With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. There is still great debate about

1. The rate of economic growth is best defined as the: A) percentage increase in real GDP over time. B) increase in investment as a percentage of GDP over time. C) percentage increase in consumption expenditures

### Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams

Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams Textbooks: Economics: Principles, Problems and Policies, 18th Edition, by McConnell, Brue,

### Econ 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

### 17. Suppose demand is given by Q d = 400 15P + I, where Q d is quantity demanded, P is. I = 100, equilibrium quantity is A) 15 B) 20 C) 25 D) 30

Ch. 2 1. A relationship that shows the quantity of goods that consumers are willing to buy at different prices is the A) elasticity B) market demand curve C) market supply curve D) market equilibrium 2.

Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis Chapter Outline The FE Line: Equilibrium in the Labor Market The IS Curve: Equilibrium in the Goods Market The LM Curve:

### D) surplus; negative. 9. The law of one price is enforced by: A) governments. B) producers. C) consumers. D) arbitrageurs.

1. An open economy is one in which: A) the level of output is fixed. B) government spending exceeds revenues. C) the national interest rate equals the world interest rate. D) there is trade in goods and

### ECO 2251 PRINCIPLES OF MACROECONOMICS I Section: TEWA Fall Semester 2010

ECO 2251 PRINCIPLES OF MACROECONOMICS I Section: TEWA Fall Semester 2010 Instructor: Course Prerequisites: Office Hours: Phillip Mixon Assistant Professor of Economics Center for International Business

### Answers: 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