If discouraged workers are included in the labor force, what was the unemployment rate for 2000?

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "If discouraged workers are included in the labor force, what was the unemployment rate for 2000?"

Transcription

1 1. award: (Assume the figures above represent the working age population). If discouraged workers are included in the labor force, what was the unemployment rate for 2000? rev: 08_09_ percent. 3.8 percent. 4.3 percent percent. By including discouraged workers, this new unemployment figure may give a better estimate of the actual unemployment rate: (3 + 10)/( ). Learning Objective: How unemployment is measured.

2 2. award: Nancy returns to school to study medicine. After graduating, she spends six months looking for a job. During this period, she is considered Cyclically unemployed. Structurally unemployed. Frictionally unemployed. Seasonally unemployed. Frictionally unemployed workers do not usually stay unemployed because they have skills that are needed by employers, but it takes some time to find the best match for the worker and the employer. Learning Objective: The major types of unemployment. 3. award: Someone 18 years old who is not employed and is not actively seeking work is considered Not in the labor force. In the labor force. Employed. Unemployed. Those not in the labor force include anyone who is not working and not actively seeking work, such as retired people, homemakers, and many students. Learning Objective: How unemployment is measured. 4. award: An unemployed worker who wants a job but has given up in the search for a new job is referred to as a/an Unemployed worker. Phantom unemployed worker. Discouraged worker. Underemployed worker. The presence of discouraged workers distorts our official unemployment figures. Learning Objective: How unemployment is measured.

3 5. award: If a nation experiences a year of unusually high immigration that increases the size of the labor force, we can conclude that the Nation will choose a different point on the production possibilities curve. Nation's production possibilities curve will shift outward. Nation's production possibilities curve will shift inward. Nation's capital per worker will rise. Production possibilities will increase whenever there is an increase in resources. Learning Objective: How unemployment is measured. 6. award: (Assume the figures above represent the working age population). What was the labor force participation rate in Nationland in 2000? rev: 08_09_ percent percent percent percent. The labor force participation rate is simply the labor force divided by the population: ( )/110. Learning Objective: How unemployment is measured.

4 7. award: Unemployment was fairly low during all of the following periods except World War II. The Korean War. The late 1990s. The Great Depression. The Great Depression saw the worst period of unemployment in U.S. economic history. Learning Objective: How unemployment is measured. 8. award: After Christmas, retail sales fall and many clerks are laid off until the following Christmas. This is an example of which of the following types of unemployment? Structural unemployment. Frictional unemployment. Cyclical unemployment. Seasonal unemployment. Some workers lose their jobs when the seasons change and work is no longer available. Learning Objective: The major types of unemployment. 9. award: If cyclical unemployment is zero, the economy is Outside the production possibilities curve. Inside the production possibilities curve. On the fixed production possibilities curve. On the production possibilities curve that shifts inward. At the natural rate of unemployment (frictional + structural), the economy is on the production possibilities curve. This is also where cyclical unemployment is zero. If cyclical unemployment is above zero, the economy moves inside the production possibilities curve. Learning Objective: The meaning of full employment.

5 10. award: An underemployed worker who is looking for a full time job is A discouraged worker. Phantom unemployed. Structurally unemployed. None of the choices are correct. An underemployed worker is employed. Learning Objective: The major types of unemployment. 11. award: When the labor force participation rate is declining, the Unemployment rate is rising faster than the total population rate. Percentage of the working age population that is outside the labor force is declining. Percentage of the working age population that is willing and able to work is declining. Percentage of the total population that is employed is rising. A lower labor force participation rate means a smaller fraction of the population is employed or unemployed. Learning Objective: How unemployment is measured. 12. award: Ceteris paribus, if structural unemployment increases, the economy is Outside the production possibilities curve. Inside the production possibilities curve. On the fixed production possibilities curve. On the production possibilities curve that shifts inward. At the natural rate of unemployment (frictional + structural), the economy is on the production possibilities curve. If any part of the natural rate of unemployment increases, the production possibilities curve shifts inward. Learning Objective: The meaning of full employment.

6 13. award: (Assume the figures above represent the working age population). What is the unemployment rate in Year 5 in Table 6.3? rev: 08_09_ percent. 6.9 percent. 4.0 percent percent. The number of unemployed people divided by the number of people in the labor force equals the unemployment rate: {( )/145} * 100. Learning Objective: How unemployment is measured. 14. award: Why has structural unemployment in the United States increased over the last 20 years? Rapid technology changes have eliminated the needs for certain skill sets. Companies are increasingly outsourcing certain task to cheaper foreign markets. Increased trade with other countries has shut down U.S. factories competing with import industries. All of the choices are correct. Structural unemployment has increased due to rapid technology changes and increased trade and outsourcing. Learning Objective: The major types of unemployment.

7 15. award: When migrant workers seek employment after the crops have been picked, the unemployment rate goes up. This situation is an example of Frictional unemployment. Seasonal unemployment. Structural unemployment. Cyclical unemployment. Certain types of work take place during the appropriate season. As a result, unemployment tends to rise and fall in sync with the seasons. Learning Objective: The major types of unemployment. 16. award: Based on Table 7.1, the real GDP for 2004 was $4,970.3 billion. $6,811.7 billion. $6,584.2 billion. $6,984.1 billion. One can calculate real GDP by dividing the nominal GDP by the GDP deflator and then multiplying the result by 100. Learning Objective: How inflation is measured.

8 17. award: If the CPI increases from 250 to 275 for one year, the rate of inflation for that year is 13 percent. 10 percent. 25 percent. 15 percent. The percentage change in the price level from one year to the next is the difference in the CPI divided by the value in the first year, in this case {( ) 250} x 100 = 10 percent. Learning Objective: How inflation is measured. 18. award: Which of the following is a likely macroeconomic consequence of inflation? Focus on long term planning. Speculation. Antitrust issues. None of the other choices. Individuals will buy and hold real assets and shy away from currency when they think the real assets will go up in value with the rising price level. Learning Objective: Why inflation is a socioeconomic problem.

9 19. award: During the time period represented in Figure 7.3, the purchasing power of the average worker Increased because nominal wages increased. Decreased because real income decreased. Stay the same because COLAs probably kept purchasing power approximately constant. Decreased because nominal income decreased. The price level was actually rising faster than nominal wages over the same period, so real income would be lower. Learning Objective: Why inflation is a socioeconomic problem.

10 20. award: The redistributive mechanics of inflation include all of the following except Price effects. Income effects. Wealth effects. Output effects. Redistribution occurs because different people buy and sell different goods and own different assets. Learning Objective: Why inflation is a socioeconomic problem. 21. award: Speculation during periods of inflation can result in all of the following except People buying resources for resale later, rather than using the resources for current production. A movement inside the production possibilities curve. People buying gold, silver, jewelry, and the like instead of capital for production. More resources going into the production process. In fact, resources are actually diverted away from productive uses when individuals speculate. Learning Objective: Why inflation is a socioeconomic problem. 22. award: The most visible consequence of inflation is A rise in employment. A rise in production. A rise in the price level. A change in government regulation. People who buy products that are increasing in price the fastest end up worst off. Learning Objective: Why inflation is a socioeconomic problem.

11 23. award: A sudden increase in inflation, ceteris paribus, Raises the real income of lenders relative to borrowers. Raises the CPI and reduces real income. Reduces the nominal income of those who have constant real incomes. Makes everyone worse off. Real income falls because an increase in the price level holding nominal income constant reduces purchasing power of money. It makes those people holding real assets better off than those who are holding cash. Learning Objective: How inflation is measured. 24. award: A friend tells you that his income has risen every year by 5 percent. At the same time, prices, on average, have risen by 5 percent. Your friend claims he is better off. Your friend Is experiencing money illusion. Really is better off as he suggests. Has experienced an increase in nominal and real income. Has experienced an increase in real income only. Since your friend is using only nominal income to determine if he's better off and his real income is remaining constant, he is experiencing money illusion. Learning Objective: Why inflation is a socioeconomic problem. 25. award: If the nominal interest rate is 6 percent and the anticipated rate of inflation is 6 percent, the real interest rate is 6 percent. 12 percent. 3 percent. 0 percent. The real interest rate is equal to the nominal interest rate minus the anticipated rate of inflation. Learning Objective: The broad causes of inflation.

12 26. award: All of the following are detrimental macro consequences of inflation except Uncertainty. Speculation. Bracket creep. COLAs. COLAs are designed to protect workers and retirees against rising prices that would erode their purchasing power. Learning Objective: The broad causes of inflation. 27. award: Based on Table 7.1, the real GDP for 2003 was $4,832.0 billion. $6,811.7 billion. $6,584.2 billion. $6,984.1 billion. Real GDP can be calculated by dividing the nominal GDP by the GDP deflator and then multiplying the result by 100. Learning Objective: How inflation is measured.

13 28. award: When production costs increase and producers raise output prices, the result is The price effect. Unemployment. Cost push inflation. Demand pull inflation. When inflation results from higher production costs, the economy is experiencing cost push inflation. Learning Objective: The broad causes of inflation. 29. award: Which of the following is not associated with the aggregate supply curve? Factors of production. The interest rate effect. The profit effect. The cost effect. The interest rate effect is one factor that explains the downward sloping aggregate demand curve. Learning Objective: The nature of aggregate demand (AD) and aggregate supply (AS). 30. award: If aggregate demand decreases and aggregate supply decreases, the level of real output will Decrease, and the price level will definitely decrease. Decrease, and the price level will definitely increase. Either increase or decrease, but the price level will stay the same. Decrease, but the price level is indeterminate. Since both the aggregate demand and aggregate supply curves shift to the left, the output, which is on the horizontal axis, must be lower; but the price level could rise, fall, or stay the same depending on the relative changes in aggregate demand and aggregate supply. Learning Objective: How changes in AD and AS affect macro outcomes.

14 31. award: In Figure 8.2, an improvement in technology is best represented as a movement from point A to point B. C to point A. C to point B. B to point A. An improvement in technology leads to an increase in the AS curve, thereby shifting the curve to the right. Learning Objective: How changes in AD and AS affect macro outcomes.

15 32. award: Two potential problems with macro equilibrium are Undesirability and instability. The profit effect and the real balance effect. External shocks and policy levers. Multiple shifts to AS and AD. Macro equilibrium may be short lived and may or may not occur at full employment and acceptable inflation levels. Learning Objective: The major macro outcomes and their determinants. 33. award: Ceteris paribus, the price level will decrease if the aggregate Supply curve shifts to the left. Demand curve shifts to the left. Demand curve shifts to the right. Supply and demand curves both shift to the right. If aggregate demand decreases, people are purchasing less. So surpluses build up, thereby leading to a falling price level. Learning Objective: How changes in AD and AS affect macro outcomes.

16 34. award: Using Figure 8.2, a decrease in real output resulting from the profit effect would be depicted as a movement from point A to point C. B to point A. B to point C. C to point B. As the price level falls, some costs would remain fixed temporarily, such that profit would shrink and output would fall along the aggregate supply curve. Learning Objective: How changes in AD and AS affect macro outcomes.

17 35. award: Which of the following is a potential problem at macro equilibrium? It is inconsistent with the macroeconomic goals. A surplus of goods exists. A shortage of goods exists. The economy is permanently stuck there. It is possible that the macro equilibrium may occur at an output level below full employment or with a lot of externalities, which is undesirable. Learning Objective: The nature of aggregate demand (AD) and aggregate supply (AS). 36. award: The laissez faire view of government involvement in the economy is most consistent with the Classical theory. Keynesian theory. Monetary theory. Supply side theory. According to classical theory, there is little or no need for government involvement in the economy; and if the market left alone, it will adjust on its own to the optimal outcome. Learning Objective: Why the debate over macro stability is important. 37. award: During the Great Depression, this group of economists assured everyone that the setbacks in production and employment were temporary and would soon vanish: Supply side economists. Classical economists. Keynesian economists. Monetarist economists. The idea that the economy self adjusts in a short period of time to restore full employment and production is a cornerstone of classical theory. Learning Objective: Why the debate over macro stability is important.

18 38. award: Ceteris paribus, if average prices in the U.S. economy fall, then the Real balances effect will lead to a lower quantity of U.S. output demanded. Foreign trade effect will lead to a lower quantity of U.S. output demanded. Interest rate effect will lead to a higher quantity of U.S. output demanded. Cost effect will lead to a higher quantity of U.S. output demanded. As the price level falls, interest rates fall, so spending on interest sensitive items such as cars and plasma TVs increases. Even with a constant quantity of nominal money, interest rates fall because a decrease in the price level causes an increase in the supply of real money in a lending institution. Learning Objective: The nature of aggregate demand (AD) and aggregate supply (AS).

19 39. award: Using Figure 8.1, a decrease in the quantity of aggregate demand resulting from the interest rate effect would be depicted as a movement from point B to point A. A to point C. B to point C. C to point A. When the interest rate rises because prices have risen, some spending is reduced since borrowing costs are higher. This is known as the interest rate effect, which explains why the aggregate demand is downwardsloping. Learning Objective: How changes in AD and AS affect macro outcomes.

20 40. award: If the full employment level of income in Figure 9.7 is $200 billion, there is A recessionary gap of $100 billion per year. A recessionary gap of $200 billion per year. An inflationary gap of $100 billion per year. Achievement of macro equilibrium. The macro equilibrium occurs at the full employment level of income. Learning Objective: How and when macro failure occurs.

21 41. award: Using Figure 9.1, dissaving occurs at all income levels Above $2,000 billion. Above $3,000 billion. Below $2,000 billion. Below $3,000 billion. Dissaving occurs at any level to the left of the intersection of the consumption function and the 45 degree line. Learning Objective: What the consumption function tells us.

22 42. award: All of the following will shift the investment curve except Innovation. Improvements in available technology. Changes to expectations. Changes to the interest rate. Changes to the interest rate cause a movement along the investment curve, not a shift. Learning Objective: The determinants of investment spending. 43. award: Which of the following most likely occurs when an inflationary gap exists? A bidding war for available goods and services. More layoffs. Rising inventories. Excessive saving. An inflationary gap will cause the price level to rise because too many dollars are chasing too few resources. Learning Objective: How and when macro failure occurs. 44. award: A sudden increase in confidence by the business community could best be represented by The consumption curve shifting downward. The AS curve shifting downward. An aggregate expenditure curve shifting upward. An aggregate expenditure curve shifting downward. When businesses feel good about the future, investment will be higher, resulting in a higher equilibrium level of output. Learning Objective: How and why AD shifts occur.

23 45. award: Given the information in Figure 9.7, dissaving would occur at all income levels below $100 billion per year. $150 billion per year. $200 billion per year. $300 billion per year. Below $100 billion, consumption is greater than disposable income, so dissaving must occur. Learning Objective: What the consumption function tells us. 46. award: Which of the following is not a determinant of autonomous consumption? Wealth. Technology. Tax policy. Consumer confidence. Technology is a determinant not of consumption but of production possibilities and aggregate supply. Learning Objective: What the consumption function tells us.

24 47. award: Which of the following is not a determinant of autonomous consumption? The disposable income level. Taxes. The availability of credit. The price level. Autonomous consumption refers to consumption spending that is independent of current disposable income. The income level is a determinant of spending but would not be considered autonomous spending. Learning Objective: What the consumption function tells us. 48. award: The four components of aggregate demand include all of the following except Consumption. Saving. Investment. Net exports. Saving is not an actual spending category but is the source of funds for investment. Learning Objective: What the major components of aggregate demand are. 49. award: If consumption and investment spending decline, then state and local government spending is likely to Decline, leading to more economic instability. Increase, leading to more economic instability. Decline, leading to less economic instability. Increase, leading to less economic instability. The drop in consumption would hurt state and local sales tax revenues, leading to a drop in government spending in an effort to balance the budget. Learning Objective: What the major components of aggregate demand are.

25 50. award: Which of the following is not true about the marginal propensity to consume? It is equal to the change in consumption divided by the change in disposable income. It is equal to the slope of the consumption function. It is equal to 1 MPS. It is always equal to or greater than 1. The value of MPC must fall between 0 and 1. Learning Objective: What the major components of aggregate demand are.

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

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 information

INTRODUCTION AGGREGATE DEMAND MACRO EQUILIBRIUM MACRO EQUILIBRIUM THE DESIRED ADJUSTMENT THE DESIRED ADJUSTMENT

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

More information

7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts

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 ),

More information

1. Firms react to unplanned inventory investment by increasing output.

1. 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 information

CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY

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

More information

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004

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.

More information

Government Budget and Fiscal Policy CHAPTER

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

More information

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

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

More information

Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions

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

More information

Chapter 12. Aggregate Expenditure and Output in the Short Run

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)

More information

THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL*

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

More information

Economics 101 Multiple Choice Questions for Final Examination Miller

Economics 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 information

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

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

More information

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

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

More information

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS ANSWERS TO END-OF-CHAPTER QUESTIONS 9-1 Explain what relationships are shown by (a) the consumption schedule, (b) the saving schedule, (c) the investment-demand curve, and (d) the investment schedule.

More information

14.02 Principles of Macroeconomics Problem Set 1 Fall 2005 ***Solution***

14.02 Principles of Macroeconomics Problem Set 1 Fall 2005 ***Solution*** Part I. True/False/Uncertain Justify your answer with a short argument. 14.02 Principles of Macroeconomics Problem Set 1 Fall 2005 ***Solution*** Posted: Monday, September 12, 2005 Due: Wednesday, September

More information

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 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

More information

FISCAL POLICY* Chapter. Key Concepts

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

More information

I. Introduction to Aggregate Demand/Aggregate Supply Model

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

More information

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. 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

More information

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. 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 information

At the end of Chapter 10, you will be able to answer the following:

At the end of Chapter 10, you will be able to answer the following: 1 Objectives for Chapter 10 The Circular Flow Model At the end of Chapter 10, you will be able to answer the following: 1. Explain the basic circular flow model. 2. Define "consumption" and "saving" 3.

More information

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. 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 information

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing 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 information

SRAS. is less than Y P

SRAS. is less than Y P KrugmanMacro_SM_Ch12.qxp 11/15/05 3:18 PM Page 141 Fiscal Policy 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant

More information

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 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 information

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

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

More information

Suggested Answers for Mankiw Questions for Review & Problems

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,

More information

Macroeconomics Instructor Miller Fiscal Policy Practice Problems

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.

More information

Chapter 13. Aggregate Demand and Aggregate Supply Analysis

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

More information

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

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.

More information

CHAPTER 23 FISCAL POLICY: COPING WITH INFLATION AND UNEMPLOYMENT

CHAPTER 23 FISCAL POLICY: COPING WITH INFLATION AND UNEMPLOYMENT CHAPTER 23 FISCAL POLICY: COPING WITH INFLATION AND UNEMPLOYMENT Chapter in a Nutshell To say that an economy is in equilibrium tells us very little about the general state of the economy. The model showing

More information

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

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

More information

Study Questions for Chapter 9 (Answer Sheet)

Study Questions for Chapter 9 (Answer Sheet) DEREE COLLEGE DEPARTMENT OF ECONOMICS EC 1101 PRINCIPLES OF ECONOMICS II FALL SEMESTER 2002 M-W-F 13:00-13:50 Dr. Andreas Kontoleon Office hours: Contact: a.kontoleon@ucl.ac.uk Wednesdays 15:00-17:00 Study

More information

BUSINESS ECONOMICS CEC2 532-751 & 761

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

More information

The Circular Flow of Income and Expenditure

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

More information

LECTURE NOTES ON MACROECONOMIC PRINCIPLES

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

More information

The level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices

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

More information

Problem Set for Chapter 20(Multiple choices)

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

More information

EC2105, Professor Laury EXAM 2, FORM A (3/13/02)

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

More information

Chapter 12 Unemployment and Inflation

Chapter 12 Unemployment and Inflation Chapter 12 Unemployment and Inflation Multiple Choice Questions 1. The origin of the idea of a trade-off between inflation and unemployment was a 1958 article by (a) A.W. Phillips. (b) Edmund Phelps. (c)

More information

CHAPTER 8. Practise Problems

CHAPTER 8. Practise Problems CHAPTER 8 Practise Problems 1. The labor force is: A) the total of people employed. B) the total population. C) the total of the population of working age. D) the total of people employed and unemployed.

More information

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. 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. 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 information

Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky

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

More information

Introduction to The IS-LM Model

Introduction to The IS-LM Model Chapter 9 The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis Economics 282 University of Alberta Introduction to The IS-LM Model This name originates from its basic equilibrium conditions:

More information

Assignment #3. ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma. Notice:

Assignment #3. ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma. Notice: ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Assignment #3 Notice: (1) There are 25 multiple-choice problems and 2 analytic (short-answer) problems. This assignment is due on March

More information

chapter: Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58

chapter: Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58 chapter: 12 >> Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58 WHAT YOU WILL LEARN IN THIS CHAPTER How the aggregate demand curve illustrates the relationship between

More information

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

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

More information

Change Effect on nominal money demand Effect on real money demand Decrease in aggregate price level Shift nominal money demand to left Has no effect

Change Effect on nominal money demand Effect on real money demand Decrease in aggregate price level Shift nominal money demand to left Has no effect AP Macroeconomics Unit 4 Review Session Money Market 1. Draw the money market, indicating the equilibrium interest rate and quantity. 2. Use the following table to answer this question. Change Effect on

More information

Answers to Text Questions and Problems. Chapter 22. Answers to Review Questions

Answers 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 information

AP Macroeconomics. Practice Exam. Advanced Placement Program

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

More information

Refer to Figure 17-1

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

More information

Chapter 9 Aggregate Demand and Economic Fluctuations Macroeconomics In Context (Goodwin, et al.)

Chapter 9 Aggregate Demand and Economic Fluctuations Macroeconomics In Context (Goodwin, et al.) Chapter 9 Aggregate Demand and Economic Fluctuations Macroeconomics In Context (Goodwin, et al.) Chapter Overview This chapter first introduces the analysis of business cycles, and introduces you to the

More information

S.Y.B.COM. (SEM-III) ECONOMICS

S.Y.B.COM. (SEM-III) ECONOMICS Fill in the Blanks. Module 1 S.Y.B.COM. (SEM-III) 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

FISCAL POLICY* Chapter. Key Concepts

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

More information

_FALSE 1. Firms react to unplanned inventory investment by increasing output.

_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 self-test before peeking at the answers. Chapter 8 -- Aggregate Expenditure and Equilibrium Output _FALSE 1. Firms react to

More information

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: 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

More information

Extra Problems #3. ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma. Notice:

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

More information

Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.)

Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.) Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.) Chapter Overview This chapter introduces you to a formal analysis of fiscal policy, and puts it in context with real-world data and

More information

Economics 152 Solution to Sample Midterm 1

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)

More information

Miami Dade College. ECO 2013.005 Principles of Macroeconomics Spring 2014. Midterm #1 2/12/14

Miami Dade College. ECO 2013.005 Principles of Macroeconomics Spring 2014. Midterm #1 2/12/14 Miami Dade College ECO 2013.005 Principles of Macroeconomics Spring 2014 Midterm #1 2/12/14 1. A point on a nation s production possibilities curve represents a) An undesirable combination of goods and

More information

Econ 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam.

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

More information

Econ 202 Section 4 Final Exam

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

More information

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750 KrugmanMacro_SM_Ch07.qxp 11/9/05 4:47 PM Page 87 Tracking the Macroeconomy 1. Below is a simplified circular-flow diagram for the economy of Micronia. a. What is the value of GDP in Micronia? b. What is

More information

Answers to Text Questions and Problems in Chapter 8

Answers to Text Questions and Problems in Chapter 8 Answers to Text Questions and Problems in Chapter 8 Answers to Review Questions 1. The key assumption is that, in the short run, firms meet demand at pre-set prices. The fact that firms produce to meet

More information

Miami Dade College ECO 2013.003 Principles of Macroeconomics - Fall 2014 Practice Test #2

Miami Dade College ECO 2013.003 Principles of Macroeconomics - Fall 2014 Practice Test #2 Miami Dade College ECO 2013.003 Principles of Macroeconomics - Fall 2014 Practice Test #2 1. Whose analysis serves as the foundation of modern macroeconomics? A) Milton Friedman B) John Maynard Keynes

More information

Chapter 22. The Classical Foundations. Learning Objectives. Introduction

Chapter 22. The Classical Foundations. Learning Objectives. Introduction Chapter 22 The Classical Foundations Learning Objectives Define Say s law and the classical understanding of aggregate supply Understand the supply of saving and demand for investment that leads to the

More information

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly Economics 212 Principles of Macroeconomics Study Guide David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 2006 Current

More information

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! 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

More information

* * * 8 NATIONAL INCOME. Unit 1 : National Income Analysis

* * * 8 NATIONAL INCOME. Unit 1 : National Income Analysis 8 NATIONAL INCOME Macro / Topic 8-1 / P. 1 Unit 1 : National Income Analysis I Concepts and Meaning ( Definition ) II Approaches and Formulae III Measurement of GNP IV Economic Analysis of GNP National

More information

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. 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 information

CHAPTER 9 Building the Aggregate Expenditures Model

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:

More information

Practiced Questions. Chapter 20

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

More information

chapter: Solution Fiscal Policy

chapter: Solution Fiscal Policy Fiscal Policy chapter: 28 13 ECONOMICS MACROECONOMICS 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant to

More information

Lesson 8 - Aggregate Demand and Aggregate Supply

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

More information

Tutor2u Economics Essay Plans Summer 2002

Tutor2u Economics Essay Plans Summer 2002 Macroeconomics Revision Essay Plan (2): Inflation and Unemployment and Economic Policy (a) Explain why it is considered important to control inflation (20 marks) (b) Discuss how a government s commitment

More information

Lesson 7 - The Aggregate Expenditure Model

Lesson 7 - The Aggregate Expenditure Model Lesson 7 - The Aggregate Expenditure Model Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section : The Aggregate Expenditures Model Aggregate

More information

a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis

a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis Determinants of AD: Aggregate demand is the total demand in the economy. It measures spending on goods and services by consumers, firms, the

More information

Chapter 11: Activity

Chapter 11: Activity Economics for Managers by Paul Farnham Chapter 11: Measuring Macroeconomic Activity 11.1 Measuring Gross Domestic Product (GDP) GDP: the market value of all currently yproduced final goods and services

More information

Chapter 32 A Macroeconomic Theory of the Open Economy

Chapter 32 A Macroeconomic Theory of the Open Economy Chapter 32 A Macroeconomic Theory of the Open Economy TRUE/FALSE 1. Over the past two decades, the United States has persistently exported more goods and services than it has imported. ANS: F DIF: 1 REF:

More information

Econ 202 Final Exam. Douglas, Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 202 Final Exam. Douglas, Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. , Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam Multiple Choice. 2 points each. 1. According to the long-run

More information

13 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Chapter. Key Concepts

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.

More information

The Keynesian Total Expenditures Model

The Keynesian Total Expenditures Model The Keynesian Total Expenditures Model LEARNING OBJECTIVES 1. Draw the consumption function and explain its appearance. 2. Discuss the factors that will shift the consumption function to a new position.

More information

Long run v.s. short run. Introduction. Aggregate Demand and Aggregate Supply. In this chapter, look for the answers to these questions:

Long run v.s. short run. Introduction. Aggregate Demand and Aggregate Supply. In this chapter, look for the answers to these questions: 33 Aggregate Demand and Aggregate Supply R I N C I L E S O F ECONOMICS FOURTH EDITION N. GREGOR MANKIW Long run v.s. short run Long run growth: what determines long-run output (and the related employment

More information

Econ 336 - Spring 2007 Homework 5

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)

More information

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

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

More information

Aggregate Supply and Aggregate Demand

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

More information

1. a. Interest-bearing checking accounts make holding money more attractive. This increases the demand for money.

1. a. Interest-bearing 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 308-309) 1. a. Interest-bearing checking accounts make holding money more attractive. This increases the demand

More information

Politics, Surpluses, Deficits, and Debt

Politics, Surpluses, Deficits, and Debt Defining Surpluses and Debt Politics, Surpluses,, and Debt Chapter 11 A surplus is an excess of revenues over payments. A deficit is a shortfall of revenues relative to payments. 2 Introduction After having

More information

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

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

More information

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

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.

More information

Econ 202 H01 Final Exam Spring 2005

Econ 202 H01 Final Exam Spring 2005 Econ202Final Spring 2005 1 Econ 202 H01 Final Exam Spring 2005 1. Which of the following tends to reduce the size of a shift in aggregate demand? a. the multiplier effect b. the crowding-out effect c.

More information

Chapter 3 Productivity, Output, and Employment

Chapter 3 Productivity, Output, and Employment Chapter 3 Productivity, Output, and Employment Multiple Choice Questions 1. A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the (a) real

More information

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

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.

More information

Objectives for Chapter 9 Aggregate Demand and Aggregate Supply

Objectives for Chapter 9 Aggregate Demand and Aggregate Supply 1 Objectives for Chapter 9 Aggregate Demand and Aggregate Supply At the end of Chapter 9, you will be able to answer the following: 1. Explain what is meant by aggregate demand? 2. Name the four categories

More information

Answer: A. Answer: A.16. Use the following to answer questions 6-9:

Answer: A. Answer: A.16. Use the following to answer questions 6-9: 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

More information

13. 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.

13. 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 information

Agenda. Business Cycles. What Is a Business Cycle? What Is a Business Cycle? What is a Business Cycle? Business Cycle Facts.

Agenda. Business Cycles. What Is a Business Cycle? What Is a Business Cycle? What is a Business Cycle? Business Cycle Facts. 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

More information

INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS

INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In May 2009, Ford Motor Company's sales

More information

Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on :

Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : The money supply Interest rates Nominal Interest rates i1 i2 Sm1

More information