Macroeconomics 101 Final Exam Answers

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Register to read the introduction… sell U.S. Govt. bonds d. buy U.S. Govt. bonds e. do nothing

12. Based on the data, the appropriate two fiscal policies for the President and the Congress to take would be: a. do nothing b. lower taxes and increase govt. spending c. raise taxes and reduce govt. spending d. lower interest rates and increase govt. spending e. lower interest rates and reduce govt. spending

13. Assume that 90 million people worked for pay last week, 10 million people did not work for pay but had been seeking a job, 10 million people did not work for pay and had not been seeking a job for the past several months, and an additional 50 million were under age 16. The unemployment rate, given these numbers, is: a. 0% b. 10% c. 12% d. 20% e. 50%

14. A type of unemployment in which the skills of the unemployed worker do not match the skill requirements of the vacant job is called: a. frictional b. seasonal c. cyclical d. structural

Assume that the base year for the CPI is 1982. There are three goods in the market basket: A, B and C. The numbers are as follows:

Base Year Quant. Base Year Prices Current Year Quant. Current Year
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The Equilibrium Real GDP is: a. $5,000 b. $8,000 c. $9,000 d. $6,000 e. $7,000

25. At the level of Real GDP of $3,000, aggregate demand is __________ Real GDP. This causes Real GDP to _________. a. less than; decrease b. less than; increase c. greater than; increase d. greater than; decrease

26. If Potential Real GDP is $8,000, there is a: a. recessionary gap of $2,000 b. gap of zero c. inflationary gap of $2,000 d. recessionary gap of $1,500

27. Assume that for some reason, investment spending increases by $3,000 (from $700 to $3,700) and the MPC equals 75 cents of every disposable dollar in income. What will the new Equilibrium Real GDP be? a. $12,000 b. $18,000 c. $6,000 d. $3,000 e. $9,000

Suppose the economy is operating at full-employment and the government cuts taxes for consumers. Show how this tax cut affects either the SRAS or the aggregate demand

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