MACROECONOMICS FINAL EXAM QUESTIONS AND ANSWERS
Total income households have after paying taxes and receiving government transfers - CORRECT
ANSWER✅✅disposable income
Market failure may occur because - CORRECT ANSWER✅✅individual actions have side effects that are
not properly taken into account by the market
A graphical representation of the relationship between the total quantity of goods and services
demanded and the price level - CORRECT ANSWER✅✅aggregate demand curve
If banks were required to keep 100% of deposits in reserves, they could - CORRECT ANSWER✅✅make
no loans
The point on a business cycle when real GDP stops falling and begins rising - CORRECT
ANSWER✅✅business cycle trough
In the long run, changes in the money supply - CORRECT ANSWER✅✅affect only the price level but they
do not change aggregate output
The double coincidence of wants problem can be solved by - CORRECT ANSWER✅✅money
An inflationary gap can be closed with - CORRECT ANSWER✅✅a decrease in government purchases
Monetary policy affects GDP and the price level by - CORRECT ANSWER✅✅changing aggregate demand
The short-run aggregate supply curve is positively sloped because - CORRECT ANSWER✅✅wages are
sticky or don't readily adjust to changes in economic conditions in the short run
nominal GDP - CORRECT ANSWER✅✅that year's output times same year price
, real GDP - CORRECT ANSWER✅✅base year price times that year's output
The money spent on domestically produced final goods and services - CORRECT ANSWER✅✅is the GDP,
appears as income to someone, and appears in the circular flow model
Diminishing returns to physical capital means that as more and more physical capital is combined with a
fixed amount of human capital with a fixed technology, eventually - CORRECT ANSWER✅✅additions to
aggregate output or real GDP declines
The most important factor affecting a household's consumer spending is - CORRECT
ANSWER✅✅current disposable income
A contractionary fiscal policy is a policy that - CORRECT ANSWER✅✅reduces aggregate demand by
decreasing government purchases
The CPI is used for calculating payments from the U.S. government to individuals. To the extent it is
biased upward, this index - CORRECT ANSWER✅✅raises government expenditures
Physical capital would include - CORRECT ANSWER✅✅the tools a worker has to work with
In the "paradox of thrift" - CORRECT ANSWER✅✅increased saving by individuals increases their
chances of becoming unemployed
Long-run growth is the sustained upward trend in - CORRECT ANSWER✅✅aggregate output per person
over several decades
When the value of a nation's imports exceeds the value of that nation's exports, the nation is said to
have - CORRECT ANSWER✅✅a trade deficit
Deflation - CORRECT ANSWER✅✅can cause decreases in output
Total income households have after paying taxes and receiving government transfers - CORRECT
ANSWER✅✅disposable income
Market failure may occur because - CORRECT ANSWER✅✅individual actions have side effects that are
not properly taken into account by the market
A graphical representation of the relationship between the total quantity of goods and services
demanded and the price level - CORRECT ANSWER✅✅aggregate demand curve
If banks were required to keep 100% of deposits in reserves, they could - CORRECT ANSWER✅✅make
no loans
The point on a business cycle when real GDP stops falling and begins rising - CORRECT
ANSWER✅✅business cycle trough
In the long run, changes in the money supply - CORRECT ANSWER✅✅affect only the price level but they
do not change aggregate output
The double coincidence of wants problem can be solved by - CORRECT ANSWER✅✅money
An inflationary gap can be closed with - CORRECT ANSWER✅✅a decrease in government purchases
Monetary policy affects GDP and the price level by - CORRECT ANSWER✅✅changing aggregate demand
The short-run aggregate supply curve is positively sloped because - CORRECT ANSWER✅✅wages are
sticky or don't readily adjust to changes in economic conditions in the short run
nominal GDP - CORRECT ANSWER✅✅that year's output times same year price
, real GDP - CORRECT ANSWER✅✅base year price times that year's output
The money spent on domestically produced final goods and services - CORRECT ANSWER✅✅is the GDP,
appears as income to someone, and appears in the circular flow model
Diminishing returns to physical capital means that as more and more physical capital is combined with a
fixed amount of human capital with a fixed technology, eventually - CORRECT ANSWER✅✅additions to
aggregate output or real GDP declines
The most important factor affecting a household's consumer spending is - CORRECT
ANSWER✅✅current disposable income
A contractionary fiscal policy is a policy that - CORRECT ANSWER✅✅reduces aggregate demand by
decreasing government purchases
The CPI is used for calculating payments from the U.S. government to individuals. To the extent it is
biased upward, this index - CORRECT ANSWER✅✅raises government expenditures
Physical capital would include - CORRECT ANSWER✅✅the tools a worker has to work with
In the "paradox of thrift" - CORRECT ANSWER✅✅increased saving by individuals increases their
chances of becoming unemployed
Long-run growth is the sustained upward trend in - CORRECT ANSWER✅✅aggregate output per person
over several decades
When the value of a nation's imports exceeds the value of that nation's exports, the nation is said to
have - CORRECT ANSWER✅✅a trade deficit
Deflation - CORRECT ANSWER✅✅can cause decreases in output
