ECON 203 Study Guide - Midterm Guide: Potential Output, Macroeconomic Model, Aggregate Supply

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turquoisegnu128

26 Oct 2018

School

Concordia University

Department

Economics

Course

ECON 203

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Question # 1 gdp and inflation (total: 6 marks) (from lyryx) Suppose you are given the following data on incomes and expenditures for the economy of westland, in current prices for factors of production and outputs for the year 2008. 2,700: what is the value of nominal gdp measured by the expenditure approach? (2 marks) Suppose that the cpi for 2005=105 and the cpi for 2008=98. Find the real gdp for 2008 to 1 decimal place (2 marks). The gdp deflator is approximated by the cpi so the real gdp is (nominal gdp/cpi)*100=(4,100/98)*100=4,183. 67. Find the inflation rate between 2005 and 2008 to 1 decimal place. The inflation rate is [(cpi for 2008 cpi for 2005)/cpi for 2005]*100 = [(98-105)/105 ]*100 = -6. 7% Prices have decreased by 6. 7% from 2005 to 2008; this means the economy is experiencing deflation. Question # 2 unemployment (total: 6 marks) (from lyryx) Consider the following data collected from a country.

Related Questions

The question (Subject: Macro Economics):

Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?

(A) a reduction in business taxes
(B) production bottlenecks occurring when producers near full plant capacity
(C) an increase in the price of imported resources
(D) deregulation of industry

Can someone give me a hand to explain each option in this question? I cannot understand and I dont know how to analyze this question.

Thank you!

jadeshark356

Question 1

Which of the following describes the relationship between the change in inventories and aggregate expenditure?

A.	Aggregate expenditure equals the change in inventories minus GDP.
B.	The change in inventories equals GDP divided by aggregate expenditures.
C.	Aggregate expenditures equals GDP divided by the change in inventories.
D.	Aggregate expenditures equals GDP minus the change in inventories.
E.	The change in inventories equals GDP multiplied by aggregate expenditure.

1 points

Question 2

Suppose the marginal propensity to consume is 0.80 and taxes decrease by $10 billion. Which of the following is true?

A.	Disposable income and consumption fall by $10 billion
B.	Disposable income and consumption rise by $10 billion
C.	Disposable income rises by $10 billion and consumption rises by $8 billion
D.	Disposable income falls by $10 billion and consumption falls by $8 billion
E.	Disposable income rises by $10 billion and consumption falls by $8 billion

1 points

Question 3

If aggregate expenditure at a particular level of income is less than output,

A.	output will increase
B.	output will decrease
C.	output will remain the same
D.	output will rise slightly and then level off
E.	we cannot determine what will happen to output

1 points

Question 4

The consumption function

A.	illustrates the relationship between real disposable income and real consumption spending
B.	illustrates the relationship between the price level and real consumption spending
C.	is the relationship between productivity and real consumption spending
D.	shows how real consumption increases when real disposable income decreases
E.	illustrates the relationship between real consumption spending and employment

1 points

Question 5

The focus of the short-run macro model is on the role of

A.	spending in explaining economic fluctuations
B.	labor in explaining economic fluctuations
C.	financial markets in explaining economic fluctuations
D.	output in explaining economic fluctuations
E.	resources in explaining economic fluctuations.

1 points

Question 6

If the output level is such that the aggregate expenditure line lies below the 45-degree line, which of the following is true?

A.	Aggregate expenditure is greater than output, so inventories will increase and output will be raised.
B.	Aggregate expenditure is greater than output, so inventories will decrease and output will be increased.
C.	Aggregate expenditure is less than output, so inventories will decrease and output will be raised.
D.	Aggregate expenditure is less than output, so inventories will increase and output will be lowered.
E.	Aggregate expenditure is greater than output, so inventories will increase and output will be lowered.

1 points

Question 7

If the marginal propensity to consume is 0.7, the expenditure multiplier is

A.	7.0
B.	0.7
C.	3.0
D.	3.3
E.	not determinable without additional information.

1 points

Question 8

Aggregate expenditure is the sum of

A.	all types of spending by households and firms
B.	spending and savings by households
C.	spending by households and governments on final goods and services
D.	spending by households, government, firms, and foreigners on final goods and services
E.	all spending and saving by households, firms, and governments

1 points

Question 9

If the marginal propensity to consume is 0.5 and disposable income increases by $10,000, by how much will consumption spending increase?

A.	$10,000
B.	$500
C.	$50
D.	$5,000
E.	$9,524

1 points

Question 10

When real consumption expenditure is plotted against real disposable income the resulting relationship is

A.	very weak.
B.	virtually flat .
C.	positive and very close to linear.
D.	negative and very close to linear.

indigognu668

If aggregate expenditures fall short of real GDP in the Keynesian model, then

Question 2 options:

A) employment falls as the economy attains equilibrium.

B) the economy will have deflation.

C) firms are depleting their inventories.

D) the money supply will increase.

Which of the following conditions does not necessarily hold when the economy is in a Keynesian equilibrium?

Question 3 options:

A) There will be no tendency for real GDP to change.

B) The economy will be at full employment.

C) Firms will not have any unplanned inventory investment accumulation

D) Aggregate output will equal aggregate expenditures.

According to the Keynesian model, an economy will have persistent, high unemployment if

Question 4 options:

A) market operate freely.

B) the government runs a budget deficit.

C) firms make too many investments.

D) its total spending is low.

If firms are experiencing unplanned reductions in their inventories,

Question 5 options:

A) firms should reduce their production.

B) aggregate output exceeds aggregate expenditures.

C) firms will increase output and hire more workers.

D) the economy has attained equilibrium

amaranthelk637

ECON 203 Study Guide - Midterm Guide: Potential Output, Macroeconomic Model, Aggregate Supply

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