Chapter 11 & Appendix B Exam Questions with Correct Answers
Question 1:
The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the
tax rate is
0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government
spending is 60, exports are 40, and imports are 0.1 of after-tax income.
What is the equilibrium level of national income for this economy?
Answer:
Y=300
Question 2:
What is the key idea in the aggregate expenditure-output model?
Answer:
in any particular year, the level of GDP is determined by the level of aggregate expenditure
Question 3:
How would an increase in interest rates affect investment?
Answer:
real investment spending declines
Question 4:
When aggregate expenditure exceeds GDP,
Answer:
inventories decrease, GDP increases and employment increases
Question 5:
Sasha earns $50,000 in wages before taxes, she gets $10,000 in transfer payments, and she
pays $5000 in taxes. What is Sasha's disposable income?
Answer:
$55,000
Question 6:
Economic production has fallen to less than full potential due to inadequate incentives for firms
to produce. The duration of this economic condition will likely be:
Answer:
short-term
, Question 7:
results when an economy experiences high unemployment and high inflation at the same time.
Answer:
Stagflation
Question 8:
In macroeconomics,
Answer:
denotes the relationship between the total quantity of domestically produced goods and
services purchased by consumers, business, and governments and the price level for output.
aggregate demand (AD)
Question 9:
As the aggregate price level in an economy decreases,
Answer:
imports decrease.
Question 10:
The graph above reflects a significant increase in world oil prices. What will the impact on
aggregate supply most likely lead to?
Answer:
an increase in input prices
Question 11:
The following table shows the aggregate supply and demand data for a country. What is the
equilibrium output?
Answer:
7,000
Question 12:
In an AD/AS model, the point where the economy has excess capacity is called the:
Keynesian zone of the AS curve
are economists who generally emphasize the importance of aggregate supply in determining
the size of the macroeconomy over the
Answer:
.
Neoclassical economists; long run
Question 1:
The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the
tax rate is
0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government
spending is 60, exports are 40, and imports are 0.1 of after-tax income.
What is the equilibrium level of national income for this economy?
Answer:
Y=300
Question 2:
What is the key idea in the aggregate expenditure-output model?
Answer:
in any particular year, the level of GDP is determined by the level of aggregate expenditure
Question 3:
How would an increase in interest rates affect investment?
Answer:
real investment spending declines
Question 4:
When aggregate expenditure exceeds GDP,
Answer:
inventories decrease, GDP increases and employment increases
Question 5:
Sasha earns $50,000 in wages before taxes, she gets $10,000 in transfer payments, and she
pays $5000 in taxes. What is Sasha's disposable income?
Answer:
$55,000
Question 6:
Economic production has fallen to less than full potential due to inadequate incentives for firms
to produce. The duration of this economic condition will likely be:
Answer:
short-term
, Question 7:
results when an economy experiences high unemployment and high inflation at the same time.
Answer:
Stagflation
Question 8:
In macroeconomics,
Answer:
denotes the relationship between the total quantity of domestically produced goods and
services purchased by consumers, business, and governments and the price level for output.
aggregate demand (AD)
Question 9:
As the aggregate price level in an economy decreases,
Answer:
imports decrease.
Question 10:
The graph above reflects a significant increase in world oil prices. What will the impact on
aggregate supply most likely lead to?
Answer:
an increase in input prices
Question 11:
The following table shows the aggregate supply and demand data for a country. What is the
equilibrium output?
Answer:
7,000
Question 12:
In an AD/AS model, the point where the economy has excess capacity is called the:
Keynesian zone of the AS curve
are economists who generally emphasize the importance of aggregate supply in determining
the size of the macroeconomy over the
Answer:
.
Neoclassical economists; long run
