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Principles of Macroeconomics
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Principles of Macroeconomics
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25 Questions

1. Fiscal policy consists of
2. Kelly sells life insurance and is considering buying a $50000 Mercedes for business purposes (the expense will reduce her taxable income). If Kelly is in the 40 percent marginal tax bracket - how much after-tax income will she have to forgo in order to enjoy the Mercedes?
3. The inflation rate is defined as
4. In the long run - fiscal policy primarily affects
5. Money demand
6. The opportunity cost of any good or service is the
7. All else equal - if fiscal policy is expansionary which of the following is the correct monetary policy to follow?
8. The government reports that GDP "increased by 2 percent in the last quarter." This means that
9. In 1963 - government economists assumed that the MPC for the United States was approximately 0.90. If taxes were cut by $9 billion - consumer expenditu res would be expected to
10. If an economy operates in the short run at point a - restrictive fiscal policy will
11. Scarcity
12. If the long-run equilibrium of an economy is disrupted by an unanticipated increase in aggregate demand (such as might result from unexpectedly strong demand for exports due to the rapid growth of incomes abroad) -
13. If the output of the economy is Y1 - which of the following would a Keynesian economist be most likely to favor?
14. Which one of the following factors would reduce the quantity of money balances that households would want to hold?
15. The interest rate the Federal Reserve charges on loans it makes to banks is called
16. Within the AD/AS model - if consumers suddenly increase their savings and cut back on spending - the
17. According to rational expectations -
18. A decrease in the price level
19. Disposable personal income is
20. The main problem with accepting the national security argument as a valid reason to restrict international trade is that
21. The price index in 2001 is 120. In 2002 - it is 126. What is the inflation rate?
22. Economists observed the following growth rates in the fourth quarter of 1995: real GDP = 2.8 percent; M1 = 7.8 percent; GDP Deflator = 2.2 percent. Given this data - the growth of velocity was
23. The agency responsible for regulating the money supply in the United States is
24. Cyclical unemployment refers to
25. For an oil-importing country such as the United States - the immediate effect of a supply shock caused by an increase in the price of imported oil would tend to be a(n)

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