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ECON-1012-B-Introduction to Macroeconomics

ECON-1012-B-Introduction to Macroeconomics

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If the economy is in a business-cycle expansion, and the government has a budget deficit, how would a recession automatically impact the deficit?

A recession would decrease the deficit.

A recession would increase taxes.

A recession would increase government outlays.

A recession would increase the deficit.

Both C and D would occur.

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How does a tax cut influence aggregate demand?

The tax cut and an equivalent increase in government expenditure have equal effects.

The tax cut has little or no effect on aggregate demand.

The tax cut effect is larger than an equivalent increase in government expenditure.

The tax cut effect is smaller than an equivalent increase in government expenditure.

The tax cut has a large effect because it has no crowding-out consequences.

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If real GDP is less than potential GDP, which of the following fiscal policies would increase real GDP?

an automatic increase in transfer payments

a discretionary increase in taxes

an automatic increase in government expenditure

an automatic increase in income taxes

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As the economy enters a recession, which of the following events occur automatically?

Government outlays rise and tax revenues fall.

Government outlays tend to fall and tax revenues fall.

Interest payments on the debt rise and tax revenues fall.

Tax revenues and transfer payments rise.

Tax revenues rise and interest payments on the debt rise.

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If the government has a budget surplus of $10 billion and revenues of $120 billion, what is the government's outlays?

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Short Description: A set of four graph of price level versus real G D P. Long Description: The vertical axis of each graph is labelled, price level and the horizontal axis is labelled, real G D P. The graph are as follows.(a) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D right to their point of intersection.(b) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D at their point of intersection. (c) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.(d) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.

Refer to Figure 10.3.3, which shows the AS-AD model in which an economy is in four possible short-run macroeconomic equilibrium. In which of the graphs is the economy at full-employment equilibrium?

both graphs (c) and (d)

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Short Description: A set of four graph of price level versus real G D P. Long Description: The vertical axis of each graph is labelled, price level and the horizontal axis is labelled, real G D P. The graph are as follows.(a) The line for S A S0 slopes upward from the lower left corner to the upper right corner. The line for S A S1 slopes upward from the lower left corner to the upper right corner parallel to the line for S A S0 on the bottom. The line for A D0 slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S0 and S A S1.(b) The line for S A S0 slopes upward from the lower left corner to the upper right corner. The line for S A S1 slopes upward from the lower left corner to the upper right corner parallel to the line for S A S0 on the top. The line for A D0 slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S0 and S A S1.(c) The line for A D0 slopes down from the upper left corner to the lower right corner. The line for A D1 slopes downward from the upper left corner to the lower right corner parallel to the line for A D0 on the right. The line for S A S0 slopes upward from the lower left corner to the upper right corner, intersecting the lines for A D0 and A D1.(d) The line for A D0 slopes down from the upper left corner to the lower right corner. The line for A D1 slopes downward from the upper left corner to the lower right corner parallel to the line for A D0 on the right. The line for S A S0 slopes upward from the lower left corner to the upper right corner, intersecting the lines for A D0 and A D1.

Refer to Figure 10.2.1, which shows possible changes in aggregate supply and aggregate demand. Which graph illustrates the effect of a decrease in the quantity of money?

both graphs (b) and (d)

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The three columns of the table are titled Price level (2012 = 100), and real GDP demanded and real GDP supplied in billions of 2012 dollars. The rows display the data as follows: 100; 800; 300110; 700; 400120; 600; 500130; 500; 600140; 400; 700

Refer to Table 10.3.1, which shows the aggregate demand and aggregate supply schedules. At which pice level and real GDP does short-run macroeconomic equilibrium occur?

The price level is ________ and real GDP is ________ billion.

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Short Description: A set of four graph of price level versus real G D P. Long Description: The vertical axis of each graph is labelled, price level and the horizontal axis is labelled, real G D P. The graph are as follows.(a) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D right to their point of intersection.(b) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D at their point of intersection. (c) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.(d) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.

Refer to Figure 10.3.3, which shows the AS-AD model in which an economy is in four possible short-run macroeconomic equilibrium. In which of the graphs would we predict that eventually the price level will rise and real GDP will fall, everything else remaining the same?

both graphs (c) and (d)

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Short Description: A line graph of price level versus real G D P. Long Description: The vertical axis is labelled, price level (G D P deflator, 20 12 = 100) and ranges from 60 to 110 in increments of 10 with a kink near the origin. The horizontal axis is labelled, real G D P (billions of 20 12 dollars) and ranges from 450 to 700 in increments of 50 with a kink near the origin. The line for S A S is a concave up curve that slopes upward from the lower left corner to the upper right corner passing through the points (475, 60), (550, 70), and (600, 80). The line for A D slopes downward from the upper left corner to the lower right corner, passing through the points (550, 90), (600, 80), and (650, 70). The line for L A S is a vertical line from the point (550, 0) on the horizontal axis passing through the points (550, 70) and (550, 90).

Refer to Figure 10.3.2, which shows the AS-AD model, in which an economy is in short-run macroeconomic equilibrium. When this economy automatically adjusts to long-run equilibrium, which of the following events occur?

The LAS curve shifts rightward.

The SAS curve shifts rightward.

The SAS curve shifts leftward.

The AD curve shifts rightward.

The AD curve shifts leftward.

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