This document provides instructions and questions for a take-home macroeconomics test. It includes 25 true/false questions and 25 multiple choice questions covering topics like national income, GDP, consumption, investment, aggregate demand and supply, fiscal and monetary policy, and economic growth. Students are asked to indicate whether statements are true or false and identify the best answer for incomplete statements or questions. The test is due on November 7th, 2013 and covers material from the fall semester.
This document provides instructions and questions for a take-home macroeconomics test. It includes 25 true/false questions and 25 multiple choice questions covering topics like national income, GDP, consumption, investment, aggregate demand and supply, fiscal and monetary policy, and economic growth. Students are asked to indicate whether statements are true or false and identify the best answer for incomplete statements or questions. The test is due on November 7th, 2013 and covers material from the fall semester.
This document provides instructions and questions for a take-home macroeconomics test. It includes 25 true/false questions and 25 multiple choice questions covering topics like national income, GDP, consumption, investment, aggregate demand and supply, fiscal and monetary policy, and economic growth. Students are asked to indicate whether statements are true or false and identify the best answer for incomplete statements or questions. The test is due on November 7th, 2013 and covers material from the fall semester.
This document provides instructions and questions for a take-home macroeconomics test. It includes 25 true/false questions and 25 multiple choice questions covering topics like national income, GDP, consumption, investment, aggregate demand and supply, fiscal and monetary policy, and economic growth. Students are asked to indicate whether statements are true or false and identify the best answer for incomplete statements or questions. The test is due on November 7th, 2013 and covers material from the fall semester.
Intro to Macroeconomics Take-home Test 2 Fall 2013
Due Nov 7 2013 in Class
Name__________________________________Section______ True/False 25% Indicate whether the statement is true or false. ____ 1 Colle!e tuition costs have risen "aster than #rices in !eneral "rom 1$7% to 2000 ____ 2 &ll increases that take #lace in the level o" human ca#ital take #lace in schools ____ 3 & nation's ca#ital consists mainl( o" stocks) *on+s) an+ other "inancial assets ____ , -hen the econom( +evotes more o" its resources to investment !oo+s) it must +evote "e.er resources to consumer !oo+s ____ / In the 0nite+ States) the .a!e rates "or hi!h school !ra+uates are !ro.in! "aster than the .a!e rates "or colle!e !ra+uates ____ 1 Investment s#en+in!) ca#ital "ormation) an+ ra#i+ technolo!ical #ro!ress are +irectl( relate+ ____ 7 Forei!n +irect investment !enerall( lea+s to technolo!ical a+vancements in #oorer countries ____ % 2overnment #urchases are inclu+e+ in national #ro+uct ____ $ &n economic *oom in one countr( usuall( causes a recession in other countries ____ 10 I" the econom( is su""erin! a recession) inventories are #ro*a*l( "allin! ____ 11 -hen income rises) total e3#en+itures remain constant ____ 12 -hen 2D4 +ecreases) consum#tion s#en+in! increases ____ 13 &n e3#en+iture sche+ule sho.s the relationshi# *et.een 2D4 an+ total out#ut ____ 1, 5eaka!es "rom the circular "lo. inclu+e savin! an+ im#orts ____ 1/ 5eaka!es are o""set *( investment an+ !overnment s#en+in! in the circular "lo. mo+el ____ 11 67uili*rium is the #oint .here total s#en+in! e7uals total out#ut) or 2D4 ____ 17 Total e3#en+itures can *e .ritten as C 8 I 8 2 8 9: - IM; ____ 1% & !iven income-e3#en+iture +ia!ram al.a(s assumes a varia*le #rice level ____ 1$ The a!!re!ate +eman+ curve has an u#.ar+ slo#e +ue to the #ositive relationshi# *et.een the #rice level an+ a!!re!ate 7uantit( +eman+e+ ____ 20 & chan!e in the #rice level .ill cause a shi"t in the e3#en+iture sche+ule ____ 21 The e7uili*rium level o" 2D4 is al.a(s accom#anie+ *( "ull em#lo(ment an+ sta*le #rices ____ 22 Inventor( re+uctions cause+ *( stron! +eman+ are si!nals to retailers to or+er more #ro+ucts ____ 23 In a ca#italist market econom() recessions an+ in"lation can occur *ecause o" coor+ination "ailures ____ 2, The late 1$$0s can *e accuratel( +escri*e+ as a +eca+e o" sta!"lation ____ 2/ In#ut #rices are "i3e+ "or a #erio+ o" time an+ this causes "irms to increase #ro+uction as #rices increase ____ 21 The a!!re!ate su##l( curve slo#es u#.ar+ *ecause as #rice rises the 7uantit( o" out#ut su##lie+ rises ____ 27 I" the sellin! #rice "alls an+ in#ut costs are "i3e+) #ro"it mar!ins .ill increase ____ 2% & #rice level lo.er than e7uili*rium .ill cause 7uantit( su##lie+ to e3cee+ 7uantit( +eman+e+ ____ 2$ In"lation re+uces the multi#lier e""ect *( re+ucin! consumers' .ealth an+ #urchasin! #o.er ____ 30 &n in"lationar( !a# e3ists .hen consumers an+ *usinesses are +eman+in! more out#ut than the econom( is ca#a*le o" #ro+ucin! at "ull em#lo(ment ____ 31 <ver time) a!!re!ate +eman+ an+ a!!re!ate su##l( !ro. *( the same amount ____ 32 2overnment s#en+in! in"luences s#en+in! in+irectl( ____ 33 2overnment #urchases an+ income ta3es have the same e""ect on the multi#lier ____ 3, Trans"er #a(ments e3actl( re#lace the income lost *ecause o" ta3es ____ 3/ &n increase in income ta3es .as #art o" 4resi+ent 2eor!e - =ush's #lan in 2001 to increase a!!re!ate +eman+ Multiple Choice 25% Identify the choice that best completes the statement or answers the question. ____ 31 In !eneral) as the amount o" la*or in#ut increases) the amount o" out#ut a increases * +ecreases c remains constant + increases onl( i" the ca#ital stock also increases ____ 37 Com#are+ to .orkers in richer countries) .orkers in +evelo#in! countries have a lo.er #ro+uctivit( an+ lo.er .a!es * hi!her #ro+uctivit( an+ hi!her .a!es c hi!her #ro+uctivit( *ut lo.er .a!es + the same #ro+uctivit( *ut lo.er .a!es ____ 3% <n-the->o* trainin! is the one area o" e+ucation in the 0nite+ States most in"luence+ *( the a *usiness sector * !overnment sector c househol+ sector + "orei!n sector ____ 3$ ?i!her rates o" investment s#en+in! contri*ute most to hi!her levels o" a #olitical #ro!ress * consum#tion s#en+in! c technolo!ical #ro!ress + !overnment +evelo#ment ____ ,0 2overnments can a""ect the level o" a!!re!ate +eman+ in a +irect .a( *( chan!in! a !overnment s#en+in! * e3#orts c ta3es + trans"er #a(ments ____ ,1 -hich o" the "ollo.in! is consi+ere+ to *e an investment in economists@ #oint o" vie.A a Serena *u(s *on+s issue+ *( Citi*ank * Bohn constructs a ne. house c Cenus invests hun+re+ thousan+ +ollars in =ear Stearns stock + &llen sells the ol+ truck he use+ "or trans#ortin! !oo+s ____ ,2 -hich o" the "ollo.in! .oul+ *e a++e+ to 0S national incomeA a an &merican consumer *u(in! French .ine * an &merican *usiness sellin! aircra"t to =ritish &ir.a(s c a S.e+ish "irm sellin! mo*ile #hones to &mericans + a French "irm *u(in! a S.e+ish cellular #hone ____ ,3 I" #ersonal ta3es are increase+ *( D10 *illion) .e can e3#ect that consumers .ill re+uce a s#en+in! *( D10 *illion * s#en+in! *( more than D10 *illion c s#en+in! *( less than D10 *illion + savin! *( D10 *illion e savin! *( more than D10 *illion ____ ,, In 1$13) !overnment economists assume+ that the M4C "or the 0nite+ States .as a##ro3imatel( 0$0 I" ta3es .ere cut *( D$ *illion) then consumer e3#en+itures .oul+ *e e3#ecte+ to a +ecrease *( D$0 *illion * increase *( D$0 *illion c +ecrease *( D%1 *illion + increase *( D%1 *illion ____ ,/ & movement u#.ar+ alon! the consum#tion "unction can *e cause+ onl( *( a9n; a increase in +is#osa*le income * +ecrease in +is#osa*le income c +ecrease in the #rice level + increase in the #rice level ____ ,1 Su##ose the stock market rises) causin! a ra#i+ increase in consumers' .ealth This .oul+ lea+ to a a +o.n.ar+ movement alon! the consum#tion "unction * a +o.n.ar+ shi"t o" the consum#tion "unction c an u#.ar+ movement alon! the consum#tion "unction + an u#.ar+ shi"t o" the consum#tion "unction ____ ,7 The lar!est income com#onent in the national income accounts is a .a!es * rents c cor#orate #ro"its + interest ____ ,% The e3#en+iture sche+ule .ill shi"t u#.ar+ .hen a net e3#orts +ecrease * net e3#orts increase c total im#orts increase + total e3#orts +ecrease ____ ,$ The #rice level e""ects consumer s#en+in! throu!h chan!es in real a +is#osa*le income * interest rates c .ealth + 2D4 ____ /0 The recessionar( !a# is the a amount o" unem#lo(ment com#ensation re7uire+ +urin! a recession * *u+!et +e"icit encountere+ +urin! a recession c amount o" !overnment s#en+in! nee+e+ to en+ a recession + +istance *et.een the e7uili*rium level o" out#ut an+ the "ull em#lo(ment level o" out#ut ____ /1 & recessionar( !a# e3ists .hen the e7uili*rium level o" 2D4 a "alls short o" #otential 2D4 * e7uals #otential 2D4 c e3cee+s #otential 2D4 + causes inventor( levels to "all Table 9-1 <ut#ut Consum#tion Investment Net 63#orts 1000 %00 /00 100 1/00 1200 /00 100 2000 1100 /00 100 2/00 2000 /00 100 3000 2,00 /00 100 3/00 2%00 /00 100 ,000 3200 /00 100 ____ /2 In Ta*le $-1) inventories .ill *e increasin! as lon! as out#ut is a*ove a 1)000 * 1)/00 c 2)000 + 3)000 ____ /3 I" the multi#lier is , an+ real 2D4 increases *( D/20 *illion) the increase in investment s#en+in! must have *een a D110 *illion * D120 *illion c D130 *illion + D1,0 *illion ____ /, In the stan+ar+ ,/-+e!ree line e3#en+iture mo+el) the C 8 I line an+ the C line are #arallel *ecause) a all I is assume+ to *e autonomous * all I is assume+ to *e in+uce+ c consum#tion +e#en+s on +is#osa*le income + I rises .ith 2D4 at the same rate as C ____ // The slo#e o" the a!!re!ate su##l( curve is a #er"ectl( vertical * #er"ectl( horiEontal c u#.ar+ + +o.n.ar+ ____ /1 The <46C #ro+uction cuts o" 1$$$-2000 increase+ ener!( #rices an+ cause+ the a!!re!ate su##l( curve to a shi"t out.ar+ * shi"t in.ar+ c *ecome "latter + *ecome stee#er ____ /7 In res#onse to the +eman+s o" environmentalists) lar!e sections o" tim*erlan+s are #ut o"" limits to lo!!in! -hat e""ect .ill this have on the a!!re!ate su##l( curveA a Shi"t it out.ar+ * Shi"t it in.ar+ c Move the econom( u# alon! the curve + Move the econom( +o.n alon! the curve ____ /% &s lon! as the a!!re!ate su##l( curve is u#.ar+ slo#in!) an increase in a!!re!ate +eman+ .ill increase a real .ealth * #rice levels c unem#lo(ment + net e3#orts ____ /$ ?o. is it #ossi*le "or the econom( to have a +e"lationar( !a#A a 67uili*rium is at a 2D4 level *elo. "ull em#lo(ment * 67uili*rium is at a 2D4 level e7ual to "ull em#lo(ment c 67uili*rium is at a 2D4 level a*ove "ull em#lo(ment + 2D4 is risin! at "ull em#lo(ment e 2D4 is "allin! at "ull em#lo(ment ____ 10 I" the #rice level +oes not "all or onl( "alls ver( slo.l() then the result .ill *e a #rolon!e+ #erio+ o" a in"lation .henever su##l( increases * #ro+uction *elo. #otential 2D4 c #ro+uction a*ove #otential 2D4 + ra#i+ #rice increases .hen +eman+ chan!es ____ 11 &n e7uili*rium #oint *e(on+ a #otential 2D4 is terme+ as a +e"lationar( !a# * recessionar( !a# c in"lationar( !a# + acceleration !a# ____ 12 &n in"lationar( !a# .ill e3ist .hen a a!!re!ate +eman+ !ro.s more slo.l( than a!!re!ate su##l( * there is +o.n.ar+ #ressure on #rices c e3#en+itures are not e7ual to a!!re!ate +eman+ + e7uili*rium 2D4 is !reater than "ull em#lo(ment 2D4 ____ 13 & #erio+ o" sta!"lation is the normal result o" a #erio+ o" a e3cess a!!re!ate su##l( * +e"icient a!!re!ate +eman+ c e3cess a!!re!ate +eman+ + hi!h unem#lo(ment rates ____ 1, Fiscal #olic( consists o" a ta3es an+ interest rates * !overnment #urchases an+ +e"ense s#en+in! c the mone( su##l( an+ ta3es + ta3es an+ !overnment s#en+in! ____ 1/ & chan!e in a "i3e+ ta3 .ill cause the consum#tion sche+ule to a *ecome stee#er * *ecome "latter c shi"t in a #arallel manner + remain "i3e+ as the econom( moves alon! the sche+ule Figure 1 ____ 11 In Fi!ure 1) to achieve e7uili*rium at #otential 2D4 the !overnment coul+ a increase ta3es * +ecrease trans"er #a(ments c increase !overnment #urchases + None o" the a*ove is correct ____ 17 The central i+ea o" su##l(-si+e ta3 cuts is that certain t(#es o" ta3 cuts .ill increase a a!!re!ate +eman+ * a!!re!ate su##l( c the su##l( o" im#orts + the su##l( o" mone( ____ 1% Fe+eral *u+!et +e"icits are o"ten increase+ *( su##l(-si+e #olicies *ecause o" their reliance on a income ta3 cuts * income ta3 increases c increase+ !overnment s#en+in! + +ecrease+ !overnment s#en+in! ____ 1$ Su##l(-si+e ta3 cuts are more likel( to have the inten+e+ *ene"icial e""ect on a *u+!et +e"icits * consumer s#en+in! c investment s#en+in! + net e3#orts Table 1 F G C 8 I 8 2 C G /00 8 %9F - T; I G 300 2 G 700 T G 2/F ____ 70 He"er to Ta*le 1 -hat is the level o" ta3 revenues in this mo+elA a 1)000 * $/0 c $,// + $37/ e ,37/ Study Guide for ssay !uestio" a"d #ocabularies to be tested i" class$ 25% 1 Dra. a #ro+uction "unction an+ illustrate the e""ects o" ca#ital investment an+ technolo!ical im#rovement on la*or #ro+uctivit( 2 -hat is conver!ence h(#othesisA -h( shoul+ .e e3#ect conver!ence in the lo! runA 3 Discuss that "actors that hel# e3#lain the ra#i+ #ro+uctivit( !ro.th in the 0nite+ States a"ter 1$$/ , -hat is the mar!inal #ro#ensit( to consume 9M4C; an+ .h( is it im#ortant in #re+ictin! consumer *ehaviorA / 63#lain .h( national income an+ +omestic #ro+uct must *e e7ual 1 -h( is investment s#en+in! a hi!hl( volatile com#onentA 7 Su##ose the econom( is su""erin! in a recessionar( #erio+ Firms are "acin! increasin! inventories an+ in+ivi+ual consumers are increasin! their savin! to #re#are "or har+ times ahea+ -hat is likel( to ha##en to the econom( an+ can it correct itsel" an+ !ro. to.ar+ "ull em#lo(ment in the short runA % -hat is a multi#lierA ?o. +oes the multi#lier e""ect occurA $ -hat is the a!!re!ate su##l( curveA -hat +oes it re#resentA Dra. the a##ro#riate !ra#h to illustrate (our ans.er =e sure an+ la*el all a3es an+ curves 10 0sin! a!!re!ate +eman+ an+ a!!re!ate su##l( anal(sis) e3#lain the ha##( coinci+ence o" *oth lo. in"lation an+ +ecreasin! unem#lo(ment in the 0nite+ States +urin! the Iroarin! ninetiesI 11 63#lain ho. a IconservativeI an+ a Ili*eralI mi!ht +i""er in the t(#es o" #olicies the( a+vocate counteractin! a recessionar( !a# 12 -hat are the #olicies usuall( a+vocate+ *( su##l( si+e economistsA ?o. +o the( >usti"( these #ro#osalsA Defne the following Economics terms: 25% 1. Human capital 2. Investment 3.Capital formation 4. Property rights 5. Consumer expenditures .Investment spending !."ational income #.$ransfer payments %. &xpenditure schedule 1'.(aving schedule 11.&)uili*rium +,P 12.-ea.ages schedule 13. In/ections schedule 14.0iscal policy 15.$ransfer payments 1.(upply1side tax cuts