INTERNATIONAL MACROECONOMICS 11TH
EDITION ACTUAL TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ GDP.
Answer: Gross Domestic Product: the total market value of final
goods and services produced inside a country in a period.
◉ Growth.
Answer: An increase in real GDP/output over time, meaning the
economy is producing more goods and services.
◉ Imports.
Answer: Goods and services bought from other countries. Imports
are a leakage from domestic spending.
◉ Exports.
Answer: Goods and services sold to other countries. Exports are an
injection into domestic spending.
◉ Weak Dollar.
,Answer: A dollar that has fallen in value compared with other
currencies. It makes imports more expensive and U.S. exports
cheaper for foreigners.
◉ Strong Dollar.
Answer: A dollar that has risen in value compared with other
currencies. It makes imports cheaper and U.S. exports more
expensive for foreigners.
◉ Money.
Answer: Anything generally accepted as payment and used as a
medium of exchange, unit of account, and store of value.
◉ Inflation.
Answer: A sustained increase in the overall price level, meaning
money loses purchasing power.
◉ Stagflation.
Answer: High inflation and weak growth/high unemployment at the
same time.
◉ Deflation.
Answer: A sustained decrease in the overall price level.
, ◉ Income.
Answer: Money earned by households/firms. In macro, income
equals production equals spending in the circular flow.
◉ Fiscal Policy.
Answer: Government use of spending and taxes to influence AD,
output, employment, and inflation.
◉ Monetary Policy.
Answer: Federal Reserve actions that affect the money supply and
interest rates to influence borrowing, investment, AD, employment,
and prices.
◉ Consumption Investment.
Answer: Consumption is household spending. Investment is
business spending on capital/new production capacity, plus
inventory changes.
◉ Trade Deficit.
Answer: Imports are greater than exports.
◉ Trade Surplus.
Answer: Exports are greater than imports.
EDITION ACTUAL TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ GDP.
Answer: Gross Domestic Product: the total market value of final
goods and services produced inside a country in a period.
◉ Growth.
Answer: An increase in real GDP/output over time, meaning the
economy is producing more goods and services.
◉ Imports.
Answer: Goods and services bought from other countries. Imports
are a leakage from domestic spending.
◉ Exports.
Answer: Goods and services sold to other countries. Exports are an
injection into domestic spending.
◉ Weak Dollar.
,Answer: A dollar that has fallen in value compared with other
currencies. It makes imports more expensive and U.S. exports
cheaper for foreigners.
◉ Strong Dollar.
Answer: A dollar that has risen in value compared with other
currencies. It makes imports cheaper and U.S. exports more
expensive for foreigners.
◉ Money.
Answer: Anything generally accepted as payment and used as a
medium of exchange, unit of account, and store of value.
◉ Inflation.
Answer: A sustained increase in the overall price level, meaning
money loses purchasing power.
◉ Stagflation.
Answer: High inflation and weak growth/high unemployment at the
same time.
◉ Deflation.
Answer: A sustained decrease in the overall price level.
, ◉ Income.
Answer: Money earned by households/firms. In macro, income
equals production equals spending in the circular flow.
◉ Fiscal Policy.
Answer: Government use of spending and taxes to influence AD,
output, employment, and inflation.
◉ Monetary Policy.
Answer: Federal Reserve actions that affect the money supply and
interest rates to influence borrowing, investment, AD, employment,
and prices.
◉ Consumption Investment.
Answer: Consumption is household spending. Investment is
business spending on capital/new production capacity, plus
inventory changes.
◉ Trade Deficit.
Answer: Imports are greater than exports.
◉ Trade Surplus.
Answer: Exports are greater than imports.
