BMAL 590 Macroeconomics 2023 with 100% correct questions and answers

An economic recession refers to: a period, typically two consecutive quarters, during which aggregate output declines Deflation refers to: a decrease in the overall price level. Macroeconomics is the branch of economics that deals with: the economy as a whole The school of economic thought that argues that price and wage rigidities do not provide the only reasoning for an active macroeconomic policy framework is referred to as: Neo-Kenesians The primary driver for the emergence of macroeconomics theory as we know it today was the failure of: the classical model to explain the prolonged existene of high unemployment during the great depression. The approach that uses monetary policy to stabilize the economy is known as: fine tuning of demand According to Keynesian theory, the level of unemployment is determined by: the level of aggregate demand for goods and services Assume you are an author and your book is priced at $9.95. The publisher expects to sell 5,000 copies at this price. Suppose the publisher decides to offer the book at $8.95, the publisher can expect to sell: more than 5,000 copies At a price of $99.95, the manufacturer of a popular herbal supplement is willing to produce 10,000 packed units of the supplement. At a price of $149.95, it is likely that he manufacturer would be willing to produce: more than 10,000 packed units If ultrabook manufacturers are producing ultrabooks faster than people want to buy them: there is an excess of supply and price may be expected to decrease Disposable income is that part of a household's income remaining after deduction of: income tax Total consumption divided by total income would give us: the average propensity to consume In which of the following situations would we be likely to observe an increase in the equilibrium price and decrease in the equilibrium quantity? If supply falls even as demand increases, and the fall in supply is greater than the increase in demand. In which one of the following situations would we be likely to observe and increase in both the equilibrium price and equilibrium quantity? When demand and supply rise and the rise in demand is more than the rise in supply. Consider the following situation. The price of a good increases and the quantity of the good exchanged in the market also increases. Which one of the following would be the most likely explanation? There has been an increase in demand. Assume that the demand for a particular good or service increases. Which one of the following would represent the most likely consequence? both the equilibrium price and the equilibrium quantity increase. In economics, we refer to the market as being in equilibrium when the market price: is at a level such that there is neither a surplus nor a shortage. Consider the following situation. The price of a goods fall and the quantity of good exchanged on market rises. Which on of the following would be the most likely explanation? there has been an increase in supply. Consider the following situation. The price of goods rises and the quantity of the good exchanged on the markets falls. Which one of the following would represent the most likely explanation? There has been a decrease in supply. Consider the following situation. A firm wishes to enhance its productivity by 8%. Careful analysis and negotiations reveal that the productivity enhancement could indeed be realized if the firm was willing to enhance wages and benefits that would increase labor costs to increase by 5%. The firm decides to go ahead. Which on of the following situations would most likely emerge from the decision? The supply should be expected to increase. Involuntary unemployment refers to a situation where: at the current wage rate, there are people who are willing to work but cannot find work. Which one of the following is not a cost voluntary unemployment? mental stress that the unemployment may undergo. Cyclical unemployment is the: unemployment that occurs during the recessionary and depressionary parts of the business cycle. The natural rate of unemployment can be described as: the sum of frictional unemployment and structural unemployment. According to Keynesian economist, those who are not working: are not able to find a job at the current wage rate. The index most often used to measure inflation is the: consumer price index Assume you at the owner of a firm manufacturing bicycles. Assume also that wage inflation is higher than price inflation. Would you be worried? Yes, because the cost of your input is growing faster than the revenue obtained from the output. In the long run, Phillips curve will be vertical and the natural rate of unemployment if: the long run aggregate supply curve is vertical at potential GDP. If input prices adjusted very slowly to output prices, the Phillips curve would be: horizontal or nearly horizontal Suppose the inflationary expectation in an economy increase, the short run Phillips curve would: Shift to the right Suppose the government reduces the corporate tax rate to encourage businesses to invest in development, this would be an example of: an expansionary supply side policy Which one of the following does real GDP measure? a country's physical output Suppose an economy registers and increase in nominal GDP of 5%. This may be explained by: a decrease in real GDP by 5% and an increase in prices by 10%. Which one of the following is not an example of transfer payment from the perspective of national income accounts? Divdends declared and paid by firms to shareholders. Which of the following is not a leakage from circular flow concept of income and expenditure? Purchases made by government If we deduct depreciation from gross national product, we get: net national product The value of net national product (NNP) at the consumer level is called: NNP at market price The value of the national income adjusted for inflation is called: real national income The average income of a country as calculated by the world bank is: per capita income Suppose in an economy, the national output increases. The economy can be said to be in a state of: expansion The total demand for goods and services in an economy is known as: Aggregate demand Which one of the following holds for every point on the aggregate demand curve? Y = C + I + G Consider the following situation: the Phillips curve is vertical in the long run. An increase in the money supply from year to year will likely _________ the unemployment rate and will likely _________ the inflation rate. not change; increase Suppose in an economy, the aggregate supply curve shifts from year to year, but the aggregate demand curve does not shift. The Phillips curve would then show: a positive relationship between inflation and unemployment. In the long run, deficit targeting will: have not effect on the unemployment rate Which on of the following would represent an automatic stabilizer in the economy? Changes in spending on unemployment compensation Suppose you buy the shares of a publicly listed firm. In the process, you are: sacrificing future consumption for current consumption. Consider the situation in an economy in which the wage rate increases. Assume that leisure is a normal good. Under these circumstances, the substitution effect __________ the hours worked and the income effect _________ hours. increases; decreases In an economy, a increase in the interest rate: reduces the opportunity cost of future consumption The aggregate demand and aggregate supply graph represents: the behavior of the economy as a whole