Module 4

Question 1

Macroeconomic equilibrium

Answer 1

What is produced equalswhat is purchased

Question 2

3 measures of economic performance

Answer 2

Output: GDP, GNP,
•Unemployment: NRU,
•Inflation: CPI, IPD

Question 3

MPC( marginal propensity to consume)

Answer 3

slope of theconsumption function

Question 4

MPS(marginal propensity to save)

Answer 4

slope of the saving function

Question 5

Spending in the economycomes from only 2 groups:

Answer 5

Consumption + Investment

Question 6

Total Expenditures formula =

Answer 6

= C+I

Question 7

Multiplier

Answer 7

shows the effect on equilibrium production from an exogenouschange in spending

Question 8

Fiscal policy

Answer 8

Government policiesinvolving taxation andspending

Question 9

2 kinds of taxes

Answer 9

1. Lump Sum Taxes

2. Proportional Taxes

Question 10

Lump sum tax

Answer 10

A tax which collects thesame dollar amount of revenue at all income levels.

Question 11

Proportional tax

Answer 11

A tax which collects the sameproportionof income asrevenue at all income levels

Question 12

Marginal tax rate system

Answer 12

A tax system where tax rates changeat different income levels

Question 13

Progressive Marginal Tax System:

Answer 13

tax rate increases at higher levels of income

Question 14

Regressive Marginal Tax System

Answer 14

:tax rate decreases at higher levels of income

Question 15

NET EXPORTS FORMULA

Answer 15

Net Exports = Exports - Imports

Question 16

exports determined by

Answer 16

• Foreign Income levels

* relative price of domestic goods

Question 17

imports determined by

Answer 17

Domestic Income levels

•relative price of domestic goods

Question 18

exchange rate

Answer 18

The amount of one currencyyou need to give up to get oneunit of a different currency

Question 19

Output

Answer 19

Gross Domestic Productwhich is calculated bylooking at spending byC, I, G, and NX

Question 20

expansionary fiscal policies

Answer 20

Government policies designedto cause the economy to expand

Question 21

Contractual fiscal policies

Answer 21

Government policies designedto cause the economy to contract