Unit 3
Use the Multiplier Formula to answer the following question: Calculate the change in RGDP if the MPC is .6 and initial spending is $500,000
$1,250,000.00
The Marginal Propensity to Consume is how much you spend for every dollar your income increases. How much money is spent if MPC is .8 and you have a $10,000 raise
$8,000
The Spending Multiplier is found by the following formula [M=1/(1-MPC)]. What is the Multiplier of the MPC is .75
4
Which of the following would most likely look like an Aggregate Demand Curve
A
What would happen to the Aggregate Demand Curve if a majority of Americans were to get pay raises and the unemployment rate decreased
A positive shift would move AD1 to AD3
With what is a decrease in the Short-Run Aggregate Supply Curve associated
A shift to the lefr
What would happen to the Aggregate Demand Curve if the feds raised the interest rates from 4% to 7%
AD1 would shift to AD2 (negative shift)
What economic terms should be associated with macroeconomics in regards to a supply and demand curve
Aggregate
Consumer confidence has a positive correlation with Aggregate Demand. As consumer confidence decreases, what will happen to Aggregate Demand
Aggregate Demand shifts downwards
Consumer confidence has a positive correlation with Aggregate Demand. As consumer confidence increases, what will happen to Aggregate Demand
Aggregate Demand shifts upwards
In this scenario, what would be considered as the "Short-Run Macroeconomics" example
All the farmers who sold fruit as the real output of the economy
A vertical curve means that any increase in GDP will result in which of the following for the average price level
An increase
The Short Run Aggregate Supply Curve can shift either left or right. Which of the following would shift the SRAS curve to the right
An increase in government subsides to help consumers
In Microeconomics, we focus on individuals, unique markets, and individual firms. Which of the following is a could be viewed as a type of Microeconomics
Apple farmers
Which of the following variables would be "X" in the Short-Term Aggregate Supply curve
Average Price Level
In comparing the two graphs, which of the following statements is true
Both curves have the similar slopes in regards to Demand or Aggregate Demand
Which of the following graphs best represents what a "Classical Long-Term Aggregate Supply Curve" should look like
C
Aggregate Demand is everything produced while Simple Demand is one good. Which statement reflects Aggregate Demand
Calculating all expenditures in Argentina
Aggregate Demand is everything produced, while Simple Demand is only one good. Which statement reflects Aggregate Demand
Calculating the average price level and real output for Germany
Aggregate Demand is everything produced while Simple Demand is only one good. Which statement reflects Aggregate Demand
Calculating the total output for Spain
Any change in Aggregate Demand will have what affect in the Long-Run Classical Macroeconomics Equilibrium Model (LRAS)
Changes in the Aggregate Price Level only
Which of the following would be considered an example of microeconomics
Community credit union with five branches
Which of the following would occur if businesses all over the nation began laying off workers
Consumer spending with decreased due to unemployment rising
Aggregate Demand is everything produced while Simple Demand is one good. Which statement reflects the similarity between both
Downward Sloping Curve
Which of the following explains the implications of a Classical LRAS Curve
Economies are always at full efficiency
The third party of the Keynesian LRAS Curve and the Classical Curve are the same. This means the effects of shifts are what
Exactly the dame
In the aggregate demand model, which of the following do households give to businesses in return for goods and services
Expenditures
Which of the following is NOT a category of spending made by consumer choices
Export Rate
In a Classical Long Run Supply model, the economy is always doing what
Fully utilizing its resources
The formula for calculating Aggregate Demand is Y=C+I+G+Nx. What does this make Aggregate Demand equal to
GDP
The formula for calculating Aggregate Demand is Y=C+I+G+Nx. What does this make Aggregate Demand equal to
Gross domestic product
In Microeconomics, we focus on individuals, unique markets, and individual firms. Which of the following is a potential subject of Microeconomics
Healthcare insurance
According to Keynesianism, what should happen when the need for output increasws
Hiring of employees should increase
Which of the following would be true about the Circular Flow Model
Household, government, and businesses rely on taxes and services
Which of the following is NOT a factor for the LRAS Curve
Improve quality of entrepreneurship
Which of the following will shift the LRAS curve to the right
Increase in quality of capital
Which of the options below would be the focus of microeconomics
Individual decisions under scarcity for a single corporation
The Aggregate Demand (AD=C+G+I+X+M) is made up of all of the following EXCEPT which one
Inflation
The Short-Run Macroeconomic Model is very similar to the standard model for markets. In what ways are these two models similar
Invisible Hand guides each to equilibrium
Which of the following best describes a purpose for the Circular Flow Diagram
Is an economic model of how Households, Businesses, and the Government interact
What is the purpose of this model
It could help show how outputs and spending are recycled in economics
If improvements occurred with any of the four factors of production, what occurs with the Real Output
It expands
According to the Keynesian model, when Real Output (Y) is maxed, what will happen to the price
It will continue to increase
In the Aggregate Demand model, as the real output decreases, what happens to the average price
It will continue to rise
The government place is higher taxes on a product. Starting at the SRAS1, which of the following curves would most likely represent a shift in the SRAS curve based upon the governments actions
It would move to SRAS2
Starting at SRAS1, which of the following curves would most likely represent a shift on the SRAS curves based upon the positive impact on a product
It would move to SRAS3
What type of example is this curve known for
Keynesian
What are the two types of Long-Run Macroequilibriums
Keynesian and Classical
What is the term given to the "green curve" in this model
LRAS - Long Run Aggregate Supply
Adam Smith believed the government should do which of the following for the economy
Leave the markets to the buyer and seller to decide and not interfere
Which of the following would cause an increase in Supply for the Short-Run Macroeconomic model
Lower prices will increase the demand
What is the difference between macroeconomics and microeconomics
Micro looks at only one product, all macro looks at a group of products in the economy
Which of the following statements would be true
Microeconomics would focus on the only Mexican restaurant in Pevely, Missouri
In the Short-Run Macroeconomic model, what happens when the Supply slope shifts to the eight
Price decrease
The Long-Run Classical Macroeconomics model has a vertical Long-Run Aggregate Supply Curve. What does rhus mena
Prices can change, but Real Output (Y) will remain the dame
Which of the following statements would be true based upon the story
Re-electing the President will have a positive impact on the expectation of the economy's future
In comparing the two graphs, the Demand Curve uses "quantity." What is term is used in place of "quantity" on the Aggregate Demand Curve
Real Output
Using the diagram as a reference, what should be represented by the letter "X"
Real Output
What value is usually associated with the term "(Y)"
Real Output
The formula for calculating Aggregate Demand is Y=C+I+G+Nx. What does this make Aggregate Demand equal to
Real output
Which of the following would be seen as an improvement on the quality of capital or a positive investment
Research and development has improved
The Short-Run Aggregate Supply Curve is upward sloping. This means there is a positive relationship between Real Output and Aggregate Price. An increase in GDP will do what
Result in an increase in aggregate price
The determinants for the Aggregate Demand Curve are Income, Interest, Rates, and Consumer Confidence. What do these determinants have the power to do
Shift the Aggregate Demand Curve
Which of the following represents both the Keynesian and Classical LRAS Curves
Similar in nature
In Microeconomics, we focus on individuals, unique markets, and individual firms. Which of the following is a potential subject of Microeconomics
Single market structure
Which of the following goes to the government in the aggregate demand model
Taxes laid
Which of the following statements would be true based upon the story
The Aggregate Demand Curve should shift to the right after the election
The LRAS Curve is horizontal in the FIRST phase. What does this mean
The Aggregate Price Level does not change
According to the Keynesian model, when we are at full Real Output, which of the following will be a factor in the LRAS curve
The Average Price Level will change
The third phase of the Keynesian LRAS Curve shows the economy at full employment. What does this mean
The Factors of Production are being used at full capacity
Which of the following statements would be true as the LRAS curve moves from point A to D
The LRAS curve begins as Keynesian, but will eventually look like a Classic LRAS curve
If the real output is at a near maximum level, which of the following should be considered
The aggregate supply will eventually become unsustainable
Which of the following statements is true about comparing a Short-Term Aggregate Supply Curve and a traditional Supply Curve
The curves are identicsl
The first part of the LRAS Curve conveys as economic recession. What does this mean
The economy is an efficient and has excess capacity for production
The LRAS Curve begins to slope upward in the second phase. What does this mean
The economy is becoming more efficient
The Circular Flow Model shows that if the government handout out a tax cut, what should happen with the money
The money will cycle through household and businesses on a continuing basis
A positive relationship means that as one variable increases, what happens
The other variable increases
According to Keynesianism, as more items are being made, what happens to proces
The prices increase
In the Short-Run (SRAS), when output and price are both maxed out, what is the result
The production will not be sustained long-term
The Long-Run Aggregate Supply Curve is very different from the SRAS Curve. How many "parts" make up the LRAS Curve
Three
Income has a positive correlation with Aggregate Demand. This means an increase in income will have what effect
To shift Aggregate Demand to the right
Macroeconomics deals with all EXCEPT which of the following
Unique markets
In Macroeconomics, we focus on regional, national, and global economies. We also focus on issues which affect entire nations. Which of the following is a subject of Macroeconomics
United States unemployment
The Classical School believes the LRAS Curve is very different from the Keynesian LRAS Curve. According to the Classicists, the LRAS Curve is only what
Vertical (a straight line that is up and down)
A vertical curve means that any change in the Aggregate Price Level will have what result
Very little or no change in Real Output
The Aggregate Supply Curve can be viewed two different ways, the Long Run and the Short Run. Which of the following occurs during a Short-Run
Wages are flexible in the Short-Run
What is the reason classical economists believe that the LRAS Curve is vertical
Wages are seen as adjustable
If the real output it at a very high level, which of the following will occur with wages
Wages will dramatically rise
The second part of the LRAS Curve is the upward sloping part. At this point, which of the following is true
We are more efficient and begin to make choices under more scarcity
