Pejenca

1. If a country is experiencing inflation, the change in national income will?

* Overstate the change in the real value of production.

2. Marginal Propensity to consume.

* DF/Y2Y3

3. Consider a simple macro model with a constant price level and demand-determined output. If the marginal propensity to spend in such a model is 0.6, the simple multiplier is?

* Z=11-MPC = 2.5

4. Income taxes in Canada can be considered to be automatic stabilizers because tax

* Revenues increase when income increases, thereby offsetting some of the increase in aggregate demand.

5. Suppose that the marginal propensity to consume out of disposable income is 0.6 and the marginal propensity to import is 0.14. If the net tax rate is 0.1, then what is the marginal propensity to spend in the economy?

* Z=MPC 1-t-m

* Z=0.6 (1 - 0.1) – 0.14

* Z=0.4

6. An exogenous fall in the domestic price level causes an increase in wealth and…

* A rise in desired consumption.

7. Other things being equal, as the price level rises exogenously, the aggregate expenditure function shifts…

* Down and the economy will move upward to the left along the AD curve.

8. Most economists believe that the single largest cause of rising material living standards over long period of time is?

* Productivity Growth.

9. The real interest rate must be?

* Positive if the nominal rate of interest is greater than the rate of inflation.

10. Workers with marketable skills sometimes quit a job and become unemployed, with the expectation of soon finding better job. This type of unemployment is called?

* Frictional Unemployment.

11. Which of the following provides the best explanation for why GDP may increase over long periods of time?

* Increase in capital stock.

12. Consider the basic AS/AD model. A rise in an input price like unit labour costs would be expected to create a new macroeconomic equilibrium, which in comparison to the original...