Final

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion, potential GDP is:

$510 billion (If it was positive: 490)

In a mixed open economy, if aggregate expenditures exceed GDP,

Ig + X + G > Sa + M + T.

The phase of the business cycle in which output and employment is at a minimum is called

The trough

Examples of macroeconomic statements

Viewpoint of the entire economy/ The gross profits of all businesses were 182 billion last year.

Refer to the diagram for a private closed economy. Aggregate saving in this economy will be zero

When GDP is 60 billion

An appropriate fiscal policy for severe demand pull inflation is

a tax rate increase

The immediate short-run aggregate supply curve represents circumstances where

both input and output prices are fixed

The study of economics is primarily concerned with:

choices that are made in seeking the best use of resources

If the MPC is 0.8 and disposable income is $200, then

consumption and saving cannot be determined from the information given. Or...saving will be $40 ?

The size of the multiplier associated with an initial increase in spending will be

diminished if inflation occurs.

Discretionary fiscal policy refers to

intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

Refer to the diagrams. The location of curve B depends on the

interest rate together with the location of curve A.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. A recession is depicted by

panels (A) and (B).

Real GDP per capita is

real GDP divided by the total population

Refer to the diagram. Arrows (1) and (2) represent

resources and goods. Arrows 3 and 4: income and output

Graphically, demand-pull inflation is shown as a:

rightward shift of the AD curve along an upsloping AS curve.

Refer to the graph. Growth of production capacity is shown by the

shift from AB to CD.

Modern economic growth has lasted for

The last 250 years

GDP is defined as

the market value of all final goods and services produced within a country in a given period of time

Refer to the given data. The marginal propensity to consume is

0.80

The table contains information about a hypothetical economy. All figures are in millions. The labor force is

102 million (Employed + unemployed)

Refer to the accompanying data (all figures in billions). GDP is

121 billion

Suppose that GDP was 200 billion in Year 1 and that all other components of expenditures remained the same in Year 2 except that business inventories FELL by 10 billion. GDP in year 2 is

190 billion (If they had increased: 210)

The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. The level of productivity in the economy is

2

Refer to the table. Between years 1 and 2, real GDP per capita grew by approximately __________ percent in Alta.

2 Between years 2 and 3: 3.5%

In the diagram, the economy's short-run AS curve is line _____ and its long run AS curve is line ____.

2, 1

The table contains data for a hypothetical single-product economy. Nominal GDP in Year 1 is

256 Year 2: 468 Year 3: 756 Year 4: 1,196

One year the CPI was 296 and the next year the CPI was 273. The inflation rate was

8.4 %

For the United States, with a current nominal GDP of about 28 trillion, the difference between an 8 percent and 12 percent rate of growth in the number of years it would take to double the economy is

About 3 years

The short-run aggregate supply curve is steeper at outputs above the full-employment output. This is because the economy's

Available resources are already employed and adding more workers to a fixed number of capital resources reducing the efficiency of workers leading to rising per-unit production costs.

Refer to the diagram. If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by

BD

Refer to the diagram. Other things equal, this economy will shift its production possibilities curve outward the most if it

Chooses point A

Refer to the diagram, in which Qf is the full-employment output. The shift in the aggregate demand curve from AD3 to AD2 could result from which of the following fiscal policy actions?

Contractionary fiscal policy

Real GDP refers to

GDP data that have been adjusted for changes in the price level.

In the Covid recession in 2020, to try to eliminate the recessionary expenditure gap as quickly as possible, policy makers undertook various macroeconomic stimulus policies such as

Lowering the interest rate to encourage investment.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, a decline in net exports caused by the foreign purchases effect of a price-level increase is depicted by the

Shift of the AD curve in A Or....move from point a to point b in panel (B).

A recessionary expenditure gap is

The amount by which the aggregate expenditure at the full employment GDP fall short of those required to achieve the full employment GDP.