Si Session

Question 1

What is the opportunity cost of butter

Answer 1

At point A low at point B high

Question 2

Las = sas = AD

Answer 2

Short run and long run equilibrium ?

Question 3

Classical economists just look at what

Answer 3

Long run with unemployment and inflation

Question 4

GDP =

Answer 4

C + I + G + Exports - Imports

Question 5

NDP =

Answer 5

GDP - depreciation

Question 6

GNP =

Answer 6

GDP + Income by citizens abroad - income by foreigners in this country

Question 7

A flow concept

Answer 7

Reflects an ongoing stream per period of time

Question 8

An example of a flow concept?

Answer 8

Income

Question 9

A stock concept

Answer 9

Something that has accumulated over time but is at a specific point of time

Question 10

Example of a stock concept

Answer 10

Wealth

Question 11

The value of intermediate goods is:

Answer 11

Exclude from both GDP and GNP

Question 12

Are expenditures a flow concept ?

Answer 12

Yes

Question 13

Is wealth body weight or gallons of water in a pool a flow concept ?

Answer 13

No

Question 14

In 2008, U.S. GNP exceeded U.S. GDP by approximately $133 billion. This implies that:

Answer 14

U.S. factor income earned abroad exceeded foreign factor income by $133 billion

Question 15

If the nominal interest rate is 2% and inflation is 3%, the real interest rate is:

Answer 15

-1%

Question 16

When someone stops mowing his lawn and hires a teen for cash that is unreported what happens to GDP?

Answer 16

It doesn’t change as production has shifted from non marketed to the underground economy and neither is counted

Question 17

Wealth effect

Answer 17

As prices fall, the amount people can buy with their accumulated wealth increases

Question 18

International effect

Answer 18

As domestic prices fall exports increase and imports decrease

Question 19

Multiplier effect

Answer 19

Initial increases in expenditures are magnified as the effects of the initial increases circulate through the economy

Question 20

Effect on AD curve: foreign income decreases

Answer 20

Shift to left

Question 21

Effect on AD curve: exchange rate value of dollar falls

Answer 21

Shift to right

Question 22

Effect on AD curve: consumers expect lower income in the future

Answer 22

Shift to the left

Question 23

Effect on AD curve: distribution of income shifts toward high income families who typically save more and also purchase more imported goods

Answer 23

Shift to left

Question 24

Effect on AD curve: home heating oil prides rise so people switch to natural gas

Answer 24

Not at all

Question 25

Effect on AD curve: U.S. price level rises as expected

Answer 25

Not at all

Question 26

In the AS/AD model, as prices fall people feel richer and buy more. This is what:

Answer 26

The wealth effect

Question 27

In the AS/AD model, a fall in a foreign country’s income will cause:

Answer 27

A reduction in U.S. exports so the U.S. aggregate demand curve shifts left

Question 28

A change in the distributed of income affects the AD curve because:

Answer 28

Workers are more likely than stockholders to spend the income they receive

Question 29

Govt expenditures decreased. In AS/AD model this change should have:

Answer 29

Shifted AD curve to the left

Question 30

At the intersection of the short run aggregate supply curve and the aggregate demand curve the economy is in:

Answer 30

A short run equilibrium but not necessarily a long. Run equilibrium

Question 31

If potential output is less than actual output eventually the short run aggregate supply curve will shift:

Answer 31

Up and eliminate the inflationary gap