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Macroeconomics Unit 2 Review Flashcards | StudBud
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Macroeconomics Unit 2 Review
Macroeconomics Unit 2 Review
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1
During a time of stagflation,
GDP goes down and prices hold steady
GDP goes down and prices rise
GDP goes up and employment goes down
GDP goes up and prices go up
2
Which of the following could shift the demand curve for loanable funds to the left?
increased taxes on businesses
inflation
an optimistic economic outlook
an increase in the interest rate
3
If AD decreases, GDP and the price level will change in which of the following ways?
GDP down, PL up
GDP up, PL up
GDP up, PL down
GDP down, PL down
4
A positive demand shock won't cause inflation
if the government doesn't raise taxes
over the flat portion of the AS curve
over the horizontal portion of the LRAS curve
over the vertical portion of the AS curve
5
A decrease in labor productivity will shift
the AD curve to the right
the AS curve to the left
the AS curve to the right
the AD curve to the left
6
Bob's MPC is 0.8. His income goes up by $500. How much will he save?
$400
$100
$40
$20
7
Stagflation is most likely to be caused by
an increase in aggregate demand
an increase in aggregate supply
a decrease in aggregate supply
a decrease in aggregate demand
8
Which is associated with a higher average propensity to consume?
expected deflation
significant debt
higher income
lower income
9
Businesses will purchase capital according to what formula?
r ≥ i
i ≥r
i ≥P of capital
P of capital ≥r
10
What does 'r' stand for in the market for loanable funds?
ratio
refraction
recessionary gap
rate of return
11
What is the typical effect of a positive demand shock?
GDP increase, employment increase
GDP increase, unemployment increase
positive supply shock
a recessionary gap
12
Which of the following would cause a shift to the left in aggregate supply?
An increase in oil prices
An increase in diamond prices
Improved production technology
A decrease in income taxes
13
If the government reduces spending, we should expect all of the following except
inflation
a reduction in GDP
increased unemployment
14
Over the intermediate portion of the AS curve
the economy is in a recession
the multiplier effect will be weakened by inflation
the multiplier effect is enhanced
cuts in government spending will cause inflation
15
The MPS is 0.2. The government increases spending by $3. It also raises taxes by $3.
GDP will hold steady.
GDP will rise by $3.
GDP will rise by $1.
GDP will fall by $1.
16
Which of the following is not an explanation for "sticky" wages?
efficiency wages
rising input costs
minimum wage
wage contracts
17
Which is the equation for the spending multiplier?
1/(1-MPS)
1/(1-MPC)
DI-AE
-MPC/MPS
18
An increase in AD over the vertical portion of the AS curve will cause
demand-pull deflation.
cost-push inflation.
cost-pull inflation.
demand-pull inflation.
19
Which of the following is not a reason that the aggregate demand curve slopes downward?
The interest rate effect
The wealth effect
The foreign purchases effect
The substitution effect
20
A decrease in U.S. prices relative to those in other countries
is utterly impossible.
will lead to a decrease in net exports.
would not affect net exports.
will lead to an increase in net exports.
21
What is the biggest factor in determining overall spending by consumers?
wealth
home values
interest rates
income
22
How many U.S. states have higher GDP per capita than Great Britain?
0
1
50
49
