Term
| operating at full employment GDP, recession occurs, what happens to government budget? |
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Definition
| The budget will show a deficit |
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Term
| Which of the following does NOT explain...aggregate demand schedule...negatively sloped...domestic price level |
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Definition
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Term
| When profit maximizing businesses experience unplanned raises in production...what will occur in next production period? |
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Definition
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Term
| Which of the following "real world" circumstances...1970's...Keynesian theory |
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Definition
| the price level and the unemployment rate were both increasing |
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Term
| Which of the following explains the upward sloping segment of aggregate supply schedule? |
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Definition
| a higher domestic price level creates opportunities for additional profits because some costs of production are fixed will not immediately rise as more output is produced |
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Term
| calculate the value of the marginal propensity to CONSUME(MPC) |
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Definition
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Term
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Definition
| Supply creates its own demand |
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Term
| Which of the following statements about the effects of inflation is correct? |
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Definition
| If inflation rate exceeds the rate of interest charged by banks on fixed-rate loans, the "real" rate of interest received by the banks is negative |
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Term
| GDP equilibrium is $400 and full employment GDP is $600 with a 25% |
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Definition
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Term
| The fundamental conclusion Keynesian macroeconomic theory was |
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Definition
| A market economy can be in equilibrium at any level of GDP |
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Term
| Which of the following expenditure categories was NOT assumed autonomous in Keynesian theory? |
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Definition
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Term
| The fundamental conclusion of Classical macroeconomic theory was that |
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Definition
| A market economy can be in equilibrium only at the full employment level of GDP |
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Term
| Which demand-side, discretionary fiscal policy would shift the aggregate demand schedule is correct? |
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Definition
| A fall in the domestic price level will cause imports to rise and exports to fall |
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Term
| Automatic fiscal stabilizers |
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Definition
| Are generally thought to be more powerful that the discretionary fiscal policy tools |
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Term
| economy is operating in classical range of aggregate supply schedule. In this case, an increase in aggregate demand would |
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Definition
| Increase the price level and have no impact on real GDP |
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Term
| nominal price of gas is $1.00 in 1988, $2.00 in 2001 nd $6.00 in 2006. If CPI had a value of 100 in 88, 50 in 01, and 200 in 06, which year was the price calculated in 1988 dollars the highest? |
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Definition
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Term
| Suppose fixed market basket of goods upon which CPI is based consists of 40 units of X, 1 unit of Y, and 5 units of Z. In 2003: the P(x) was $2, the P(y) was $10, and the P(z) was $2. In 2004 the P(x) was $3, P(y) was $15 and the P(z) was $2. If 2003 is base year, what is CPI in 2004? |
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Definition
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Term
| Which of the following is NOT automatic fiscal stabilizer? |
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Definition
| The Unemployment Insurance Program |
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Term
| The Laffer Curve is a schedule that shows the relationship between which two economic variables? |
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Definition
| Income tax rates and total tax collections |
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Term
| Classical economic theory viewed the aggregate supply schedule for the economy to be: |
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Definition
| upward-sloping but not vertical as the economy approaches the full employment GDP |
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Term
| Which of the following statements about eh multiplier effects associated with demand-side discretionary fiscal policy is correct? |
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Definition
| The value of the tax multiplier is opposite in numerical sign to the multiplier for changes in government expenditures |
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Term
| suppose business firms are CURRENTLY producing a GDP that is smaller than what people wish to buy. Which of the following must be correct? |
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Definition
| The current level of GDP must be equal to the full employment level of GDP |
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Term
| The effect of a rightward shift of the AD schedule on real GDP and the domestic price level is correctly explained as |
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Definition
| causing an increase in real GDP and a reduction in the domestic price level in the "Classical range" of the aggregate supply schedule |
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Term
| Which of the following would NOT cause the aggregate supply schedule to shift to the right? |
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Definition
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