Macroeconomics Final Possible Questions

When the domestic demand for loanable funds is strong, we would expect the domestic interest rate to be relative: A) High leading to capital inflows from foreign countries B) High leading to capital outflows to foreign countries C) Low leading to capital inflows from foreign countries D) Low leading to capital outflows to foreign countries E) None of the above

A) High leading to capital inflows from foreign countries

Which of the following is the most unstable category of GDP? A) Investment B) Consumption C) Government purchases D) Net exports

A) Investment

Private saving equals: A) Y - C - T + TR B) Y + C + T + TR C) Y + C + T - TR D) Y + C - T - TR E) TR - Y - C - T

A) Y - C - T + TR

Which of the following must be true? A) Savings must equal investment in an open economy. B) Savings must equal investment in a closed. C) Savings must equal consumption in an open economy. D) Savings must equal consumption in an closed economy.

B) Savings must equal investment in a closed.

Most economics believe that the financial crisis of 2008 began because of problems in the __________ industry. A) Computer B) Automotive C) Housing D) Banking

C) Housing

Based on the table below, which of the following is true?

D) All of the above

As the price level increases, the quantity of RGDP demanded ______, and when the price level decreases, the quantity of RGDP demanded in the economy_____. A) decreases, decreases B) increases, increases C) increases, decreases D) decreases, increases

D) decreases, increases

A decrease in real interest rates leads to an increase in the demand for loanable funds.

False

A rational individual would rather receive $5,000 today than receive $6,000 in one year if the applicable interest rate was 10%.

False

A trade deficit means that net exports are positive.

False

If the overall price level decreases, then the aggregate demand curve shifts to the right.

False

If the price level in the United States decreases, domestic goods will become relatively cheaper than foreign goods, the demand for U.S. made goods will increase, and the U.S. aggregate demand curve will shift to the right.

False

If there is currently an expansionary gap , an increase in aggregate demand will make the expansionary gap smaller, but decrease in aggregate demand will make the expansionary gap larger.

False

Incentives for borrowers and savers in the loanable funds market are determined by the nominal interest rate as opposed to be the real interest rate.

False

The SRAS curve is vertical at the natural level of real output.

False

The long-run level of RGDP changes whenever the aggregate demand curve shifts.

False

The quantity of RGDP supplied will decrease in both the short run and long run when the price level falls.

False

A consumption tax would lead to an increase in the supply of loanable funds and a decrease in interest rates.

True

An increase in real state interest rates will lead to an increase in the quantity of loanable funds supplied.

True

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

True