In the Solow model, saving determines growth, but

saving can not affect growth permanently

saving rate can increase over time

saving affects output permanently

Steady state capital stock per worker is....

the level of capital stock per worker which remains constant in the long run

the level of capital stock per worker when investment is greater than depreciation

the level of capital stock per worker when saving is equal to consumption

A balanced growth path is the growth of the economy when:

All inputs and output grow at the same rate.

All inputs grow at the same rate

Poor countries grow faster than rich countries

Poor countries grow at the same rate as rich countries

MPK of poor countries is smaller than than MPK of rich countries

What is the Golden Rule?

The capital stock in the economy is at the ideal level where steady-state is reached when consumption is maximum

The stock of capital in the economy is at an ideal level where a steady-state is reached when saving is a maximum

The capital stock in the economy is at an ideal level where a steady-state is reached when investment equals depreciation

W hat is the aggregate demand curve?

A curve which shows the relationship between the price level and the quantity of output demanded

A curve which shows the relationship between the interest rate and the quantity of output demanded

A curve which shows the relationship between the price level and the interest rate

In the long-run, the national output (GDP) is determined by the supply side: i.e. the supplies of capital, labor, and technology. In the short-run, GDP is determined by changes in demand for goods & services (aggregate demand). The closed economy aggregate demand consists of: ( Choose more than one answer)

household consumption expenditures

expenditures by foreign residents

The Quantity Theory of Money is one of the simpler models of AD-AS. The model is illustrated by the equation MV = PY, which can be written as (M/P) = kY where k = 1/V and (M/P) can be interpreted as the Demand for Money (where M = amount of money in circulation, V = velocity of money, P = aggregate price level, and Y = national output). If we refer to the Money Quantity equatio, we can explain why the AD curve has a negative slope. Which statement below is correct.

Assuming that k is constant and the amount of money (M) is also constant (assuming there is no change in nominal money supply), the prices (P) fall will be offset by an increase in national output (Y).

Assuming that k is constant and the amount of money (M) is also constant (assuming there is no change in the nominal money supply), then the prices (P) rise will be offset by the increase in national output (Y).

Assuming that k is constant and the amount of money (M) is also constant (assuming there is no change in the demand for nominal money), then the prices (P) fall will be offset by a decrease in national output (Y)

The AD curve illustrates the relationship between P and Y. If P increases, then Y decreases. Why is that? Please choose TWO correct answers below.

Because if the price level increases, the real money supply decreases. As a result, the real money supply is greater than the demand for money, so that the interest rate rises, investment falls, and thereby national output falls

Because if P increases, then the real money balances M / P falls. As a result interest rate rises, investment falls falls, and therefore output falls.

Because if the price level increases, the real money supply decreases. As a result, the real money supply is greater than the demand for money, so that the interest rate falls, investment falls and thereby national output increases

Suppose government decides to lower income taxes. What would be the effect in the short run?

Aggregate demand will increase and therefore GDP will increase

Aggregate supply will increase and therefore GDP will increase

Aggregate demand will decrease and therefore GDP will decrease

Suppose government issues a new regulation to reduce carbon emissions by imposing pollution taxes. What would be the effect in the short run?

There would be a supply shock in which firms would charge higher prices. As a result, production falls.

There would be a demand shock in which firms would charge higher prices. As a result, production rises.

There would be a supply shock in which firms would charge higher prices. As a result, production remains constant.

The AD curve illustrates the relationship between P and Y. If P increases, then Y decreases. Why is that? Please choose TWO correct answers below.

Because if P increases, then M / P decreases. As a result (M / P) <L, so that r increases, I falls, and finally Y falls.

Because if the price level increases, the real money supply decreases. As a result, the real money supply is greater than the demand for money, so that the interest rate rises, investment falls, and thereby national output falls

Because if the price level increases, the real money supply decreases. As a result, the real money supply is greater than the demand for money, so that the interest rate falls, investment falls and thereby national output increases

Which statement below is FALSE.

The long run supply curve is vertical because of the classical macroeconomic assumption that in the long run prices are flexible

The long run supply curve is vertical because of the classical macroeconomic assumption that in the short run prices are flexible

The short-run supply curve is horizontal because of the Keynesian assumption that in the short run prices are flexible

Based on the quantity theory of money, assuming k is constant, what will happen if the central bank increases the money supply?

Real money balances rise, real interest rate becomes lower, investment increases and therefore national output increases

Real money balances rise, real interest rate becomes higher, investment increases and therefore national output increases

Real money balances rise, real interest rate becomes lower, investment decreases and therefore national output decreases

Based on the quantity theory of money, assuming k is constant, what is the relationship between the aggregate price level (P) and the national output (Y)?

negative relationship: higher P, lower Y

positive relationship: higher P, higher Y

no relationship: P and Y are independent

Based on the quantity theory of money, assuming k is constant, what is the relationship between the aggregate price level (P) and the national output (Y)?

negative relationship: higher P, lower Y

positive relationship: higher P, higher Y

no relationship: P and Y are independent

Consider the graph and suppose the central bank increases the money supply. What will happen?

interest rate falls, investment rises, and GDP rises

interest rate rises, investment rises, and GDP rises

interest rate falls, investment falls, and GDP falls

Consider the graph and suppose the government increases government spending. What will happen?

interest rate rises, investment falls, but GDP rises

interest rate falls, investment rises, and GDP rises

interest rate falls, investment falls, and GDP falls

Consider the graph and suppose the government increases taxes. What will happen?

disposable income falls, GDP falls, and interest rate falls

disposable income rises, GDP rises, but interest rate increases

disposable income falls, GDP rises, but interest increases

Consider the graph and suppose the government increases spending and the central bank at the same time increases the money supply. What could happen?

interest rate may remain constant and GDP may rise

interest rate may remain constant, but GDP cannot rise

interest rate may lower but GDP cannot rise

Indonesian Minister of Finance Purbaya Yudhi Sadewa initiated a major liquidity boost to Indonesia’s economy in September 2025. Which statement below is FALSE?

He wants to help the banks so that they have enough fund to give loans

He wants to stimulate credit growth

He wants to support private sector spending

He attempts to increase Indonesia's economic growth

Midterm Test - Macroeconomics 2025 - IBEP class

Authored by Nazamuddin USK

Social Studies

University

Used 2+ times

Midterm Test - Macroeconomics 2025 - IBEP class

AI Actions

Add similar questions

Adjust reading levels

Convert to real-world scenario

Translate activity

More...

Content View

Student View

30 questions

Show all answers

MULTIPLE CHOICE QUESTION

1 min • 3 pts

A macroeconomic analysis would differ according to time horizons: the long-run and short-run. In the long run, prices are flexible. Why so?

Because in the long run, the price level can only change after adjustments in wages and costs of production

Because in the long run, the price level can only change due to technological progress

Because in the long run, the price level can only change after government issues fiscal policies

MULTIPLE CHOICE QUESTION

1 min • 3 pts

According to the classical economics, in the long run prices are flexible. Consequently,

Changes in aggregate demand (AD) can cause price changes

Only changes in fiscal policies can cause price changes

Only changes in monetary policies can cause price changes

MULTIPLE CHOICE QUESTION

1 min • 3 pts

According to Keynesian economics, in the short-run prices are sticky. Consequently,

A fiscal policy can cause changes in prices (P)

A fiscal policy can cause changes in national output (Y)

Only a monetary policy can cause changes in national output (Y)

MULTIPLE CHOICE QUESTION

1 min • 3 pts

What does 'constant returns to scale" mean in production function?

National output remain constant even if all inputs are increased

The relationship between input and output is proportional, that is the percentage change in output is the same as the percentage change in all inputs

The relationship between labor and capital is proportional, that is the percentage change in labor is the same as the percentage change in capital

MULTIPLE CHOICE QUESTION

1 min • 3 pts

Solow model explains how a country’s standard of living depends on two important determinants, namely:

Saving and Consumption

Saving and Investment

Saving and Population

MULTIPLE CHOICE QUESTION

1 min • 3 pts

A steady state capital stock is the level of capital stock when...

Investment equals saving

Saving equals investment

Saving equals depreciation

MULTIPLE CHOICE QUESTION

1 min • 3 pts

According to Solow model, when an economy has reached a steady-state condition, then

only changes in the saving rate, population growth, and efficiency of workers can change the output growth

only changes in the efficiency of workers can change the output growth

only changes in the saving ratecan change the output growth

Access all questions and much more by creating a free account

Create resources

Host any resource

Get auto-graded reports

Continue with Google

Continue with Email

Continue with Classlink

Continue with Clever

or continue with

Microsoft

Apple

Others

Already have an account?

Similar Resources on Wayground

25 questions

Beginner Vocabulary

Quiz

•

University

25 questions

Religions Class REview

Quiz

•

University

25 questions

Financial Literacy Review

Quiz

•

4th Grade - University

25 questions

Operation Torch

Quiz

•

9th Grade - University

25 questions

STAAR Reading Vocabulary

Quiz

•

9th Grade - University

25 questions

MANAJEMEN PUBLIK

Quiz

•

University

25 questions

PR Midterm Quiz

Quiz

•

University

25 questions

Responsible Consumption and Production

Quiz

•

10th Grade - University

Popular Resources on Wayground

15 questions

Fractions on a Number Line

Quiz

•

3rd Grade

20 questions

Equivalent Fractions

Quiz

•

3rd Grade

25 questions

Multiplication Facts

Quiz

•

5th Grade

54 questions

Analyzing Line Graphs & Tables

Quiz

•

4th Grade

$fractions$

22 questions

fractions

Quiz

•

3rd Grade

20 questions

Main Idea and Details

Quiz

•

5th Grade

20 questions

Context Clues

Quiz

•

6th Grade

15 questions

Equivalent Fractions

Quiz

•

4th Grade

Discover more resources for Social Studies

7 questions

How James Brown Invented Funk

Interactive video

•

10th Grade - University

5 questions

Helping Build the Internet: Valerie Thomas | Great Minds

Interactive video

•

11th Grade - University

12 questions

IREAD Week 4 - Review

Quiz

•

3rd Grade - University

23 questions

Subject Verb Agreement

Quiz

•

9th Grade - University

7 questions

Renewable and Nonrenewable Resources

Interactive video

•

4th Grade - University

19 questions

Review2-TEACHER

Quiz

•

University

15 questions

Pre2_STUDENT

Quiz

•

University

20 questions

Ch. 7 Quadrilateral Quiz Review

Quiz

•

KG - University