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Macro Exam 2 practice
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Fragen in diesem Quiz (20)
1Which of the following is NOT an element of the basis for the analysis of Aggregate Expenditures (AE) and Aggregate Demand (AD)?
- AAE = Consumption + Investment + Government Purchases + Net Exports
- BAE = Real GDP
- CFirms invest based on expected rate of return and we assume their expectations are met
- DAs incomes increase consumption will increase
- EHigh prices, all else being equal, lead to lower consumption
2In performing the analysis in Chapter 9we, at times, apply a number of assumptions. Which of the following assumptions is realistic
- AAs income increases Investment does not change
- BAs income increases Government Purchases does not change
- CAs income increases Net Exports does not change
- DIn the short run, firms will not immediately increase production if they are selling more product than they are currently producing based on expectations
- EIn the long run, as production, incomes, and spending increase, the price level does not change
3If Planned Aggregate Expenditures fall short of Real GDP (the level of output), what would be the initial reaction in the long run?
- Ainventories will increase
- Binventories will decrease
- Cproduction will increase
- Dproduction will decrease
- Enothing - there is no reason to believe there will be any reaction
4What does the concept of a multiplier effect tell us?
- Athe price level will increase be some multiple of an increase in aggregate expenditures
- BAggregate expenditures will grow by some multiple of an increase in imports
- CReal GDP will grow by some multiple of an increase in Aggregate Expenditures
- DReal GDP will grow by some multiple of an increase in Aggregate Demand
- EAggregate Demand is downward sloping
5Which of the following considerations would NOT call into question the validity or accuracy of the simple spending multiplier
- Aas disposable income increase saving tends to increase
- Bas disposable income increase imports tend to increase
- Cas aggregate income increases taxes tend to increase
- Das incomes and production increase prices tend to increase
- Ethe production possibilities of an economy limit how much an economy can, in reality, grow without investment in capital goods
6Which of the following statements is NOT true (in each case assume all else being equal)?
- Athe larger the Marginal Propensity to Consume, the larger the multiplier effect
- Bthe steeper the slope of the Planned Aggregate Expenditure line, the larger the multiplier
- Cthe more responsive (elastic) consumers are with respect to how much they increase spending when their income increase, the larger the multiplier
- Dthe more people tend to buy imports the larger the multiplier
- Ethe actual multiplier in our economy is less than the simple spending multiplier
7In Chapter 9 we employ the Income-Expenditure Model to verify that the Aggregate Demand (AD) curve is downward sloping. How?
- Aby focusing on the reactions that occur when spending does not match production
- Binvestigating what happens to Planned Aggregate Expenditures (PAE) and Real GDP when the Price Level changes
- Cinvestigating what happens to the Price Level when PAE changes
- Dinvestigating what happens to the Price Level when Real GDP changes
- Einvestigating how AD shifts in response to changes in the Price Level
8Which component of Aggregate Expenditures will have the most positive impact on making growth in the economy sustainable?
- AConsumption
- BInvestment
- CGovernment Purchases
- DNet Exports
- Eit does not matter because changing any component of Aggregate Expenditures will make the economy grow and the multiplier effect applies equally to each and all components
9What of the following best describes the relationship between Aggregate Expenditures (AE) and Aggregate Demand (AD)?
- Aif AE increase, AD will increase by the same amount
- Bif AE increase, AD will decreases by the same amount
- Cif AE increases, AD will increase - most likely by more than the change in AE
- Dif AE increases, AD will decrease - most likely by more than the change in AE
- Ethere is no relationship - they are autonomous or independent
10Which component of Aggregate Expenditures is most likely to decrease if income increases?
- AConsumption
- BInvestment
- CGovernment Purchases
- DNet Exports
- Enone of the above - by definition when income increase all AE components increase
11Which of the following is NOT considered to be a problem with the current budget process in the United States?
- Ait takes too long, in particular with respect to implementing fiscal policy
- Bcontinuing resolutions allow spending to continue without justifying the need to continue spending on programs or departments
- Cthere is too much reliance on zero-based budgeting
- Da large percentage of federal spending is "non-discretionary"
- Ethere is too much detail in the budges, including very specific expenditure items called earmarks
12When was the last time the United States had a budget surplus?
- Alast year
- Baround the start of the current century
- Cin the 1970s, before stagflation
- Din the 1920s, before the Great Depression
- Eby definition we never run a surplus
13Which of the following is LEAST likely to contribute to a budget surplus?
- Aan increase in tax revenue
- Beconomic growth
- Ca reduction in government spending
- Dlower interest rates
- Ean aging population
14Which of the following would be the best rationale for a budget deficit?
- Ait would serve as a Keynesian stimulus to aggregate demand during a contraction
- Bit would serve as a Keynesian stimulus to aggregate supply when in an inflationary gap
- Cit would justify a supply side policy of increase taxes
- Dit would instill confidence in investors that the government has fiscal discipline
- Eit would help lower interest rates and thereby stimulate Investment
15Currently, how large is the annual United States federal government budget deficit?
- Aabout a billion dollars
- Babout $10 billion
- Cabout $100 billion
- Dabout 1 trillion dollars
- Eover $20 trillion
16Which of the following would be an argument against a balanced budget amendment?
- Aa structural deficit represents, or acts as a fiscal stimulus
- Ba structural surplus represents, or acts as a fiscal stimulus
- Ca cyclical deficit represents, or acts as a fiscal stimulus
- Da cyclical surplus represents, or acts as a fiscal stimulus
- Ea balanced budget would act as an automatic stabilizer that would help us avoid the need to implement discretionary fiscal policy
17Which of the following terms or phrases would be least likely to be used indiscussing how current U.S. budget policy affects investment decisions?
- Acrowding-out
- Bcrowding-in
- Cinvestor confidence in fiscal responsibility
- Dinterest rate sensitivity
- Elack of investment choice if the federal debt were to reach zero
18The United States national debt is measured in:
- A100s of billions of dollars
- Btrillions of dollars
- Croughly 10 trillion dollars
- Dover 20 trillion dollars
- Ewe currently do not have any debt
19Debt help by the public refers to:
- ATreasury securities owned by non-foreign entities
- BTreasury securities not owned by non-foreign entities
- CTreasury securities owned by the federal government
- DTreasury securities not owned by the federal government
- Ethe sum of all consumer credit card debt, mortgage debt, and student-loan debt
20Which of the following would not be considered a potential negative impact of our national debt?
- Adeclining investment in infrastructure
- Black of flexibility with respect to providing a fiscal stimulus during recessions
- Crisk due to very large foreign ownership of U.S. securities
- Dit leads to trade deficits, in particular in capital accounts
- E"generational irresponsibility" -- we are spending now, limiting the options of future generations
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- Beschreibung
- Business/Economics Quiz am Macro Exam 2 practice, erstellt von Isaiah Andrade am 30/03/2022.
- Autor
- Isaiah Andrade
- Sprache
- English
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- 1
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