BMAL 590 MACROECONOMICS 4 2026
CERTIFICATION EVALUATION TEST PAPER
QUESTIONS SOLUTIONS GRADED A PLUS
◉ Keynesian economics.
Answer: The central theme is the role of government in the economy.
Keynes argued that government intervention could be an effective
toolin addressing the problems of unemployment and sluggishness
output. Thus, government becomes a facilitator in stimulating
aggregate demand and lifting the economy out of a recession. The
definition of people not working according to Keynes are those not
able to find a job at the current wage rate.
Keynesian economics was deemed to be the answer until the events
of the 1970s and 1980s demonstrated the limitations of government
intervention and led to considerable disillusionment.
◉ Walter Heller.
Answer: used the term "Fine-tuning" to explain the role of
government in regulating unemployment and inflation.
◉ The law of demand states that.
,Answer: price and quantity demanded are inversely related
The law of demand states that the quantity demanded of goods falls
when the price of the goods rises, and vice versa, provided all other
factors that affect buyers' decisions are unchanged.
The quantity demanded of a consumer good such as ice cream
depends on:
- The price of ice cream
- The prices of related goods
- Consumers' incomes
- Consumers' tastes
- Consumers' expectations about future prices and incomes
- Number of buyers, etc.
The law of demand says that the quantity demanded of a good is
inversely related to its price, provided all other factors are
unchanged.
Shifts in demand are caused by changes in the factors of demand:
- Economics (the economy, consumer income, GDP, xfc etc.)
- Prices of related goods
- Consumer tastes and preferences
,- Legal/Government
- Expectations about future prices and prospects
- Technology
- Number of buyers
◉ examples of how factors can shift an entire demand curve
include:.
Answer: Consumer Income:
- As income increases, the demand for a normal good will increase.
- As income increases, the demand for an inferior good will decrease.
Prices of Related Goods:
- When a fall in the price of one good reduces the demand for
another good, the two goods are called substitutes.
- When a fall in the price of one good increases the demand for
another good, the two goods are called complements.
When considering the factors involved one should be able to
understand how changes in the factors cause changes in demand,
with an entire shift not a movement along the demand curve.
◉ Quantity supplied.
Answer: the amount of a good that sellers are willing and able to sell.
, ◉ Supply.
Answer: a full description of how the quantity supplied of a
commodity responds to changes in its price.
◉ The law of supply states:.
Answer: the quantity supplied of a good rises when the price of the
good rises, as long as all other factors that affect suppliers' decisions
are unchanged
◉ Market Supply.
Answer: the combined supply of everyone willing and able to sell a
good in a market. Market supply is graphically represented by a
positively-sloped market supply curve (remember previous slide),
which can be derived by combining, or adding, the individual
supplies of every seller in the market.
◉ Stagflation.
Answer: a period of slow economic growth and high unemployment
(stagnation) while prices rise (inflation)
a phenomenon that has baffled economists. Stagflation is often
caused by a supply side shock. For example, rising commodity
prices, such as oil prices, will cause a rise in business costs
CERTIFICATION EVALUATION TEST PAPER
QUESTIONS SOLUTIONS GRADED A PLUS
◉ Keynesian economics.
Answer: The central theme is the role of government in the economy.
Keynes argued that government intervention could be an effective
toolin addressing the problems of unemployment and sluggishness
output. Thus, government becomes a facilitator in stimulating
aggregate demand and lifting the economy out of a recession. The
definition of people not working according to Keynes are those not
able to find a job at the current wage rate.
Keynesian economics was deemed to be the answer until the events
of the 1970s and 1980s demonstrated the limitations of government
intervention and led to considerable disillusionment.
◉ Walter Heller.
Answer: used the term "Fine-tuning" to explain the role of
government in regulating unemployment and inflation.
◉ The law of demand states that.
,Answer: price and quantity demanded are inversely related
The law of demand states that the quantity demanded of goods falls
when the price of the goods rises, and vice versa, provided all other
factors that affect buyers' decisions are unchanged.
The quantity demanded of a consumer good such as ice cream
depends on:
- The price of ice cream
- The prices of related goods
- Consumers' incomes
- Consumers' tastes
- Consumers' expectations about future prices and incomes
- Number of buyers, etc.
The law of demand says that the quantity demanded of a good is
inversely related to its price, provided all other factors are
unchanged.
Shifts in demand are caused by changes in the factors of demand:
- Economics (the economy, consumer income, GDP, xfc etc.)
- Prices of related goods
- Consumer tastes and preferences
,- Legal/Government
- Expectations about future prices and prospects
- Technology
- Number of buyers
◉ examples of how factors can shift an entire demand curve
include:.
Answer: Consumer Income:
- As income increases, the demand for a normal good will increase.
- As income increases, the demand for an inferior good will decrease.
Prices of Related Goods:
- When a fall in the price of one good reduces the demand for
another good, the two goods are called substitutes.
- When a fall in the price of one good increases the demand for
another good, the two goods are called complements.
When considering the factors involved one should be able to
understand how changes in the factors cause changes in demand,
with an entire shift not a movement along the demand curve.
◉ Quantity supplied.
Answer: the amount of a good that sellers are willing and able to sell.
, ◉ Supply.
Answer: a full description of how the quantity supplied of a
commodity responds to changes in its price.
◉ The law of supply states:.
Answer: the quantity supplied of a good rises when the price of the
good rises, as long as all other factors that affect suppliers' decisions
are unchanged
◉ Market Supply.
Answer: the combined supply of everyone willing and able to sell a
good in a market. Market supply is graphically represented by a
positively-sloped market supply curve (remember previous slide),
which can be derived by combining, or adding, the individual
supplies of every seller in the market.
◉ Stagflation.
Answer: a period of slow economic growth and high unemployment
(stagnation) while prices rise (inflation)
a phenomenon that has baffled economists. Stagflation is often
caused by a supply side shock. For example, rising commodity
prices, such as oil prices, will cause a rise in business costs
