Sample Question Macro Economic
Exam Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Equilibrium in the goods market occurs where A) aggregate expenditure equals autonomous consumption. B) real GDP equals nominal GDP. C) aggregate expenditure equals real GDP. D) autonomous consumption equals induced consumption. 2) Other things equal, if planned investment spending is greater than actual investment spending, then aggregate expenditure will be ________ real GDP and inventories will ________. A) greater than; fall B) greater than; rise C) less than; fall D) less than; rise
Figure 9.1
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3) Refer to Figure 9.1. If the level of real GDP is initially Y 3 , spending is ________ production and there is an unexpected ________ in inventories. A) less than; increase B) greater than; decrease C) greater than; increase D) less than; decrease SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 4) Suppose the economy is initially in equilibrium at potential GDP = $100 billion and investment increases by $8 billion. If the MPC in this economy is 0.8, what will happen to real GDP? Draw an aggregate expenditure graph showing this change in investment and real GDP. 4)
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 5) What is the value of the MPC if $66 out of every $100 increase in disposable income is consumed? A) $166 B) $34 C) 0.34 D) 0.66 E) More information is needed to determine the MPC. 5)
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6) If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditure by $1.2 trillion. If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion. A) 0.6; 0.8 B) 1.67; 2.25 C) 1.2; 1.6 D) 6.0; 8.0 E) None of the above because a $2 trillion increase
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Equilibrium in the goods market occurs where A) aggregate expenditure equals autonomous consumption. B) real GDP equals nominal GDP. C) aggregate expenditure equals real GDP. D) autonomous consumption equals induced consumption. 2) Other things equal, if planned investment spending is greater than actual investment spending, then aggregate expenditure will be ________ real GDP and inventories will ________. A) greater than; fall B) greater than; rise C) less than; fall D) less than; rise
Figure 9.1
1)
2)
3) Refer to Figure 9.1. If the level of real GDP is initially Y 3 , spending is ________ production and there is an unexpected ________ in inventories. A) less than; increase B) greater than; decrease C) greater than; increase D) less than; decrease SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 4) Suppose the economy is initially in equilibrium at potential GDP = $100 billion and investment increases by $8 billion. If the MPC in this economy is 0.8, what will happen to real GDP? Draw an aggregate expenditure graph showing this change in investment and real GDP. 4)
3)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 5) What is the value of the MPC if $66 out of every $100 increase in disposable income is consumed? A) $166 B) $34 C) 0.34 D) 0.66 E) More information is needed to determine the MPC. 5)
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6) If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditure by $1.2 trillion. If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion. A) 0.6; 0.8 B) 1.67; 2.25 C) 1.2; 1.6 D) 6.0; 8.0 E) None of the above because a $2 trillion increase