The business cycle diagram represents...

fluctuating levels of real GDP over time (actual output)

total output, regardless of who owns the assets/resources

The SRAS curve will SHIFT TO THE RIGHT if...

minimum wage in the economy decreases

The LRAS curve represents..

total potential output of an economy in the longer term

Expansionary Fiscal Policy involves:

decrease in taxation and increase in government spending

The AD CURVE will SHIFT TO THE LEFT due to:

increase in direct taxation e.g. increased income tax

To measure GNP/GNI, GDP is adjusted for....

net property incomes (from abroad and sent abroad)

The LRAS curve will shift to the right due to...

Age of retirement is increased from 65 to 68

The Keynesian model assumes that

spare capacity may exist in the economy

The SRAS curve represents (in the short run) the....

ability of an economy to produce goods and services

A closed economy circular flow model represents flows between...

households and firms (businesses)

Contractionary monetary policy involves:

decrease in money supply and increase in interest rate

a fall in Real GDP over two consecutive quarters

I spending (by business - physical capital; by government - social overhead and human) will:

TWO of these answers listed (be prepared to state which two)

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IB Economics Macroeconomics Sections 2.1, 2.2 (and 2.4 briefly)

19 termsStudBud Administration97 plays

level of economic activity, aggregate demand and aggregate supply and government policies (briefly)

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Questions 19

Answers

1
the aggregate demand curve slopes downwards - this is NOT due to...
interest rate effect
increased output in an economy
net exports effect
income effect
2
A movement along the aggrgate demand curve is caused by:
change in government spending
change in direct or indirect taxation
change in business confidence
change in average price level
3
The business cycle diagram represents...
fluctuating levels of Average Price Level over time
increasing Real GDP over time
decreasing Real GDP over time
fluctuating levels of real GDP over time (actual output)
4
GDP measures...
total output, regardless of who owns the assets/resources
total output, regardless of where asset location
total output, including imports/exports
total output in an economy
5
The SRAS curve will SHIFT TO THE RIGHT if...
imported raw materials become more expensive
business taxation increases
minimum wage in the economy decreases
all of the above
6
The LRAS curve represents..
total spending in the longer term
short run supply in the economy
total income levels in the longer term
total potential output of an economy in the longer term
7
Expansionary Fiscal Policy involves:
increase in taxation and increase in government spending
increase in interest rate
decrease in taxation and increase in government spending
decrease in interest rate
8
Policies that shift the LRAS curve are known as:
supply side shocks
demand side policies
demand side shifts
supply side policies
9
Factors that shift the SRAS curve are known as ...
supply side shocks
supply side policies
government policies
demand side policies
10
The AD CURVE will SHIFT TO THE LEFT due to:
decrease in interest rate
increase in direct taxation e.g. increased income tax
decrease in consumer or business indebtedness
increase in government spending
11
To measure GNP/GNI, GDP is adjusted for....
exports
imports
net property incomes (from abroad and sent abroad)
government spending
12
The LRAS curve will shift to the right due to...
Age of retirement is increased from 65 to 68
removal of free childcare provision for new parents
University tuition fees for students are increased
reduced government spending on schools and hospitals
13
An example of an INJECTION into the circular flow would be...
Taxation
Imports
Savings
Exports
14
The Keynesian model assumes that
spare capacity may exist in the economy
all resources are used fully and efficiently
people are lazy and unwilling to work
economies grow and expand
15
The SRAS curve represents (in the short run) the....
maximum potential output level in an economy
total spending in an economy
changes in average price level in an economy
ability of an economy to produce goods and services
16
A closed economy circular flow model represents flows between...
firms and government
households and government
households and banks
households and firms (businesses)
17
Contractionary monetary policy involves:
increase in money supply and increase in interest rate
increase in taxation and increase in government spending
decrease in taxation and increase in government spending
decrease in money supply and increase in interest rate
18
A recession is...
a fall in Real GDP over time
a fall in Real GDP over two quarters
an increase in Real GDP over time
a fall in Real GDP over two consecutive quarters
19
I spending (by business - physical capital; by government - social overhead and human) will:
increase LRAS
decrease AD
increase AD
TWO of these answers listed (be prepared to state which two)

IB Economics Macroeconomics Sections 2.1, 2.2 (and 2.4 briefly) Flashcards | StudBud