Macroeconomics final

Question 1

What could you compute given the annual percent change in M, V, and P?

Answer 1

the change in real per capita GDP

Question 2

As soon as the stock market goes down, you should

Answer 2

chill and see what happens next to to stuck prices and other leading economic indicators

Question 3

If you were given (or calculated) the percentage change in P, and the nominal interest rate, what else could you calculate?

Answer 3

real interest rate

Question 4

As aggregate demand shifts right or left…

Answer 4

the price level increases/decreases and short run output increases/decreases

Question 5

Positive supply shocks do what?

Answer 5

Increase Y (output) and decrease P (price)

Question 6

Examples of events that are likely to cause a supply shock recession

Answer 6

global pandemic, oil embargo, global war, global financial crisis, alien invasion

Question 7

___ ____ ____ would cause a bigger decrease in output because it will also cause the change rate to appreciate, thus causing NX to decrease

Answer 7

contractionary monetary policy

Question 8

If prompted by a graph of output going down and inflation going up, respond by…

Answer 8

the data is consistent with a negative supply shock

Question 9

If the Federal reserve ever decided to engage in CMP when Congress thought the US was in a recession, Congress could work with POTUS to

Answer 9

engage in Expansionary Fiscal policy by reducing taxes and raising deficits

Question 10

__ ___ are goods that people would pay for but and they don’t have to because quantity available > quantity demanded

Answer 10

free goods

Question 11

rationing/sharing mechanisms include

Answer 11

first come, first serve; most valuable person served first; strongest prevails; price

Question 12

College should/can not be free because

Answer 12

a) price ceiling would lead to a shortage of college education
b) it needs to be rationed b/c of high demand
c) “free” to students just means someone else should pay for it

Question 13

___ __ ends barter

Answer 13

commodity money

Question 14

Quantity theory of money equation

Answer 14

% change in money supply + %change in velocity = % change in price +% change in output

Question 15

1920s - Output up and price level down… what was most likely happening?

Answer 15

LRAS curve shifted right more quickly than usual due to peace and easy taxes

Question 16

_ _ _ helps explain the Great Depression

Answer 16

QTM