PRINCIPLES OF MACROECONOMICS FINAL PAPER SOLVED QUESTIONS WITH COMPLETE ANSWERS

PRINCIPLES OF MACROECONOMICS FINAL
PAPER SOLVED QUESTIONS WITH COMPLETE
ANSWERS

◉ Causes/Effects of Unemployment.
Answer: -age, skills/occupation, race, education
-worker's choice, seasonal demand, seeking first job (HS/college);
skills no longer needed in society, no education or training needed;
decline in total spending, lack of demand eliminates jobs;


◉ Causes/Effects of Inflation.
Answer: rise in prices, lower purchasing power of money, real
income falls, low wage workers suffer the most, savings decrease,
interest offsets inflation (SLIGHTLY)


◉ Types of Unemployment.
Answer: frictional, structural, cyclical, full enployment


◉ Types of Inflation.
Answer: -anticipated: price levels increase at the expected rate
-unanticipated: price level increases quicker than expected

, ◉ APC/APS.
Answer: percent of income consumed versus the percent of income
saved


◉ MPC/MPS.
Answer: changes in consumption and saving over the change in
income


◉ Relationships between interest rate and investment.
Answer: as interest rate decreases, the investments rate increases


◉ Multiplier Effect.
Answer: The process by which an increase in autonomous
expenditure leads to a larger increase in real GDP


◉ AD/AS Model.
Answer:


◉ AS Shocks.
Answer: high inflation and unemployment, large increases in
resource costs that shift the AS curve to the left


◉ Relationship between price level and output.