MACRO THRY SUMMER -25 ECON 362 FINAL EXAM QUESTIONS AND ANSWERS.

MACRO THRY SUMMER '25 ECON 362 FINAL EXAM QUESTIONS AND
ANSWERS
IS curve - CORRECT ANSWER✅✅Goods market equilibrium; all combos of Y & r where Y=C(Y−T)+I(r)+G



IS curve shifts - CORRECT ANSWER✅✅Fiscal policy: ↑G or ↓T shifts right; ↓G or ↑T shifts left



LM curve - CORRECT ANSWER✅✅Money market equilibrium: M/P=L(r,Y)



LM curve shifts - CORRECT ANSWER✅✅Monetary policy: ↑M shifts right; ↓M shifts left



AD curve slope - CORRECT ANSWER✅✅Downward because ↓P → ↑real money balances (M/P) → LM
shifts right → ↑Y



Government spending multiplier - CORRECT ANSWER✅✅1/1−MPC



Tax multiplier - CORRECT ANSWER✅✅-MPC/1-MPC



Reason tax multiplier < G multiplier - CORRECT ANSWER✅✅Tax change affects C indirectly through
disposable income, so impact on Y is smaller



Expansionary fiscal policy (IS-LM) - CORRECT ANSWER✅✅IS right shift → ↑Y, ↑r in short run



Expansionary monetary policy (IS-LM) - CORRECT ANSWER✅✅LM right shift → ↑Y, ↓r in short run



Fed offsetting negative supply shock - CORRECT ANSWER✅✅↑M shifts AD right, restoring Y but raising
P permanently



Planned expenditure (Keynesian Cross) - CORRECT ANSWER✅✅PE=C(Y−T)+I+G