Macro Unit 3 review

If the cost of production increases, the price and equilibrium quantity will most likely change in which of the following ways?

• P increases, Q decreases

• P increases, Q increases

• P decreases, Q increases

• P decreases, Q decreases

Which one can cause both a decrease in P & Q?

• D decreases, S decreases

• D decreases, S unchange

• D unchange, S increases

• D unchanged, S decreases

Along a demand curve from left to right, the elasticity changes from

• Inelastic, unit elastic, elastic

• Unit elastic, elastic, inelastic

• elastic, unit elastic, inelastic

• elastic, inelastic, unit elastic

If consumer spending increases, how will real GDP and price level be affected?

• rGDP increases, PL decreases

• rGDP increases, PL increases

• rGDP decreases, PL increases

• PL unchange, rGDP increases

The formula to calculate tax multiplier is

• 1-MPC

• 1/(1-MPC)

• MPC/MPS

• MPS/MPC

 If the government wants to close a recessionary gap, which policy is matched to the change in policy, output and price level?

• Decrease spending, PL&output increases

• Increases spending, PL decreases and output increases

• Increases taxes, PL decreases and output decreases

• Decrease taxes, PL increases and output increases

 If an increase in taxes of $100 billion decreases equilibrium output by a total of $400 billion, then the marginal propensity to consume must be at least

• 0.2

• 0.8

• 0.25

• 0.75

If US dollar appreciates...

• movement downward of AD

• movement upward of AD

• AD decreases

• AD increases

Interest rate decreases, how will that affect the amount of capital stock, and AD AS?

• Capital stock increases, AD, SRAS and LRAS increase

• Capital stock and SRAS increases

• Capital stock, SRAS and LRAS increases

• Only AD increases

The long run AS is NOT known as

• Potential GDP

• Natural rate of unemployment

• full employment

• Cyclical unemployment