LCCC Macroeconomics Final Exam Questions & Answers 2024

LCCC Macroeconomics Final Exam Questions & Answers 2024 Leakage - ANSWERS*A diversion of income from spending on domestic output What will happen if leakages are greater than injections? - ANSWERSThe economy will slow What does the multiplier process describe? - ANSWERS*How layoffs in one sector can spread to other sectors Formula for the multiplier - ANSWERS1 / (1 - MPC) What does a recessionary gap represent? - ANSWERSThe value of goods and services that could be produced but were not due to unemployed resources What is the major difference between classical and Keynesian economists? - ANSWERSKeynesians argue that the economy will not self-adjust to fluctuations in aggregate demand According to Keynes, what is the source of high unemployment? - ANSWERSInsufficient aggregate demand Example of fiscal policy - ANSWERSPresident Obama's stimulus package What is fiscal stimulus intended to do? - ANSWERSShift aggregate demand to the right When does "crowding out" occur? - ANSWERSWhen government issues debt, thus making it more difficult for the private sector to issue debt