Exam
Name___________________________________
1) In macroeconomics, the term ʺnational incomeʺ refers to
A) all sales of both current production and used goods.
B) the value of the income generated by the production of total output.
C) only those sales of currently produced goods sold to other nations.
D) total current spending by all households.
E) the value of a nationʹs total wealth.
2) Consider a small economy with 3 individuals where each individual produces $1000 worth of final goods and
services. The national income for this economy is
A) more than $3000 if some of the income is invested.
B) less than $3000 if there are taxes in this economy.
C) more than $3000 if the individuals are earning profits.
D) $3000.
E) less than $3000 if some of the income is saved.
The table below provides macroeconomic data for a hypothetical economy. Dollar amounts are all in constant -dollar terms. Actual Output
(billions of $)
402
408
415
420
422
420
425
Year
2002
2003
2004
2005
2006
2007
2008
Potential Output
(billions of $)
404
411
415
418
420
423
425
Unemployment Rate
($ of labour force)
7.1
7.2
6.3
5.9
6.0
7.0
6.3
TABLE 19-1
3) Refer to Table 19-1. In which years was this economy experiencing a recessionary gap?
A) 2006, 2007, 2008
B) 2005, 2006
C) 2004, 2008
D) 2002, 2003, 2004
E) 2002, 2003, 2007
4) Suppose the city of Calgary has a population of 1 million, a labour force of 575 000, and employment equal to
545 000 . We can conclude that for legal and various other reasons ________ people are excluded from the
labour force.
A) 395 000
B) 420 000
C) 425 000
D) 445 000
E) 450 000
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5) Workers with marketable skills sometimes quit a job and become unemployed, with the expectation of soon
finding a better job. This type of unemployment is called
A) frictional unemployment.
B) structural unemployment.
C) overly-optimistic unemployment.
D) cyclical unemployment.
E) historical unemployment.
6) If the cyclical unemployment rate is negative, then the
A) economy is operating at less than full employment.
B) economy is operating beyond full employment.
C) frictional unemployment rate is negative.
D) frictional unemployment rate is greater than the structural unemployment rate.
E) real-wage unemployment rate is negative.
7) Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.
Which of the following is the best measure of labour productivity in this economy?
A) real GDP per employed worker = $200
B) real GDP per hour worked = $20
C) real GDP per employed worker = $20
D) real GDP per hour worked = $200
E) indeterminable from the information provided.
8) Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2 percent. But
suppose that the price level rises by 3 percent over the course of the contract. In this case,
A) the employeesʹ purchasing power will fall.
B) the employer will experience a greater fall in purchasing power than would have occurred if the price
level had held steady.
C) both employer and employees will experience a loss of purchasing power.
D) the employeesʹ purchasing power will rise.
E) both employer and employees will benefit from increased purchasing power.
9) The group that tends to be most hurt by unexpected inflation is
A) employers.
B) individuals with unindexed pensions.
C) banks.
D) fixed-income earners.
E) both B and D are correct.
10) Suppose that a price index for a certain basket of goods and services has a value of 150 in 2009 and a value of
156 in 2010. This index suggests that the cost of the market basket of goods and services
A) was approximately the same in 2010 and 2009.
B) was six percent lower in 2010 than in 2009.
C) was six percent higher in 2010 than in 2009.
D) was 156 percent higher in 2010 than in 2009.
E) was four percent higher in 2010 than in 2009.
11) If 0.75 U.S. dollars can be exchanged for one Canadian dollar, we say that the Canadian -U.S. exchange rate is
A) 1.25.
B) 0.75.
C) 1.33.
D) 1.0.
E) 75.
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12) Total value added in an economy is equal to the value of
A) all final goods produced.
B) all final and intermediate goods produced.
C) the sum of the value of primary, intermediate and final goods.
D) all profits of all firms in the economy.
E) all inputs and outputs in the economy.
13) Suppose a Canadian firm imports $5000 worth of frisbees from China and sells them for $10 000. The effect on
GDP would be
A) to decrease the value of GDP by $15 000.
B) to increase the value of GDP by $10 000.
C) to increase the value of GDP by $15 000.
D) to increase the value of GDP by $5000.
E) no effect on GDP since the frisbees were produced outside of Canada.
14) In Lumberville, the lumberjack cuts trees and sells them to the local mill for $500. The local mill processes these
trees into wood planks and sells them to the carpenter for $800. Finally, the carpenter uses these wood planks
to make tables which he sells for $1400 to Lumbervilleʹs residents. If we allowed double counting, the total
value of Lumbervilleʹs output would be calculated as ________. But if we correctly compute the total value
added, the value of the total output in Lumberville would be ________.
A) $2200; $4200
B) $1400; $1400
C) $2700; $1400
D) $4200; $2700
E) $2200; $2700
15) GDP from the expenditure side is equal to the sum of
A) Ca + Ia + net exports.
B) Ca + Ia + Ga .
C) Ca + Ia + Ga - net exports.
D) Ca + Ia + Ga + (Xa - IMa ).
E) Ca + Ia + Ga + (IM a - Xa ).
16) Which of the following statements regarding investment is correct?
A) Depreciation refers to funds used to increase the existing stock of capital.
B) The capital stock includes investment in stocks and bonds.
C) The accumulation of inventories does not count as current investment.
D) Rental payments are included as investment expenditures.
E) Housing construction is classified as investment expenditure rather than consumption expenditure.
17) Suppose that in 2008, ABC Corporation produced $6 million worth of natural gas pipes but was able to sell
only $5 million worth. Is the remaining $1 million of unsold pipes part of GDP for 2008?
A) No, since they are added to existing inventories.
B) Yes, since they are part of the economyʹs output in 2008.
C) Yes, since changes in inventories are part of consumption expenditures.
D) No, since they are part of the economyʹs output only when sold.
E) No, since changes in inventories are part of actual investment.
18) When calculating GDP from the expenditure side, how do net exports enter the equation?
A) They may or may not be included depending on whether they are for final or intermediate goods.
B) They are included only if it is a positive number.
C) They are included as a separate category.
D) They are included but as part of C, I, or G.
E) They are NOT included because they do not represent an expenditure by Canadians.
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19) If a firmʹs depreciation exceeds its gross investment, then its
A) capital stock will be shrinking.
B) capital stock will be growing.
C) depreciation cannot exceed gross investment.
D) gross investment will be negative.
E) net investment will be positive.
20) The principle difference between GDP and GNP is that GNP measures ________, while GDP measures
________.
A) the total amount of income received by Canadian residents; the value of total output produced in Canada.
B) total income generated by Canadians, both domestic and abroad; total income generated by Canadians,
domestic only.
C) wages and salaries, plus world-wide investment income received by Canadian residents; the value of
total output produced in Canada.
D) the value of total output produced by Canada; wages and salaries received by Canadian residents.
E) total factor incomes in the economy; total expenditure in the economy.
21) Real GDP is equivalent to
A) the money value of all goods and services produced in an economy per year plus imports.
B) the nominal value of GNP multiplied by the GDP deflator.
C) the market value of all goods and services produced in an economy per year.
D) personal disposable income plus depreciation.
E) the value of all goods and services produced in an economy per year adjusted for price changes.
22) If nominal GDP in some year is $3800 and the GDP deflator for the same year is 152, then the real GDP for that
year is
A) $3500.
B) $5776.
C) $3800.
D) $2500.
E) $2280.
23) Statistics Canada excludes from GDP the value of goods and services exchanged ʺunder the counterʺ because
A) satisfactory methods for their measurement have not been developed.
B) these goods are all intermediate goods.
C) their production has zero opportunity cost.
D) Statistics Canada is responsible for making an ethical decision about which activities to exclude from
national income measures.
E) these goods do not contribute to well-being.
24) With respect to consumption, investment, government purchases and net exports, the national -income and
product accounts measure
A) both actual and desired expenditures, since actual expenditure must equal desired expenditure in each
category.
B) the flow of saving at any income.
C) desired expenditures in each of the categories.
D) neither actual nor desired expenditures.
E) actual expenditures in each of the categories.
25) In a simple macro model, an increase in householdsʹ wealth is generally assumed to
A) cause an upward shift in the aggregate consumption function.
B) cause no change in desired consumption because consumption is a function of disposable income only.
C) cause a downward shift in the aggregate consumption function.
D) affect only desired saving, not desired consumption.
E) cause no change in desired consumption because the increase is always expected.
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26) The aggregate consumption function is based on the assumption that as real disposable income rises, aggregate
desired consumption
A) remains constant and desired saving will rise.
B) and desired saving will both rise.
C) will rise and desired saving will fall.
D) will fall and desired saving will rise.
E) remains constant and desired saving will fall.
FIGURE 21-2
27) Refer to Figure 21-2. If disposable income is $3000, desired consumption expenditure is equal to
A) $500.
B) $2000.
C) $1500.
D) $0.
E) $1000.
28) Refer to Figure 21-2. The APC will be equal to one (1.0) when disposable income is
A) $0.
B) $1000.
C) $3000.
D) $2000.
E) not enough information to determine.
29) Refer to Figure 21-2. Which of the following is the correct equation for the consumption function depicted in
the figure?
A) C = 500 + (0.5)YD
B) C = (0.5)YD
C) C = 2000 + (2/3)YD
D) C = 500 + (2/3)YD
E) C = 1000 + (2/3)YD
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30) Refer to Figure 21-2. The slope of the consumption function in the figure is equal to
A) the average propensity to consume.
B) the slope of the 45-degree line.
C) the marginal propensity to save.
D) the average propensity to save.
E) the marginal propensity to consume.
31) On a graph of a consumption function, what is the significance of the 45 -degree line?
A) It connects all points where desired consumption equals desired expenditure.
B) It shows the slope of the average consumption function, against which we measure other consumption
functions.
C) Desired consumption is zero at all points along the 45-degree line.
D) It connects all points where desired consumption equals desired saving.
E) It connects all points where desired consumption equals actual disposable income.
Disposable Income
0
30
70
130
Desired Consumption
10
34
66
114
TABLE 21-2
32) Refer to Table 21-2. The marginal propensity to save is equal to
A) 0.6.
B) 0.8.
C) 0.2.
D) 0.67.
E) 0.4.
33) Aggregate desired consumption divided by aggregate disposable income is called the
A) average propensity to save.
B) average propensity to spend.
C) average propensity to consume.
D) total propensity to save.
E) marginal propensity to save.
34) In a simple model of the economy, without government or taxes, a shock that causes an upward shift of the
aggregate consumption function also causes ________ shift of the saving function.
A) a less-than-equal upward
B) no
C) an equal downward
D) an equal upward
E) a less-than-equal downward
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FIGURE 21-3
35) Refer to Figure 21-3. If national income is Y1 and the aggregate expenditure function is AE1 , then desired
aggregate expenditure
A) exceeds income and income will rise.
B) exceeds income and income will fall.
C) is less than income and income will fall.
D) is equal to income and income will not change.
E) is less than income and income will rise.
36) Consider the simplest macro model with demand-determined output, where
AE = C + I. Suppose that actual national income is $900 billion and desired consumption plus desired
investment is $920 billion. We can expect that
A) firms will decrease autonomous investment by $20 billion until equilibrium national income is reached at
$900 billion.
B) firms will increase autonomous investment by $20 billion until equilibrium national income is reached at
$920 billion.
C) firms will see an increase in inventories, and they will respond by decreasing output, thereby decreasing
actual national income.
D) actual national income will decrease until equilibrium national income is reached at $900 billion.
E) firms will see a decrease in inventories, and they will respond by increasing output, thereby increasing
actual national income.
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Consider the following information describing a closed economy with no government and where aggregate output is demand determined:
1.
2.
3.
4.
the equilibrium condition is Y = C + I
the marginal propensity to save = 0.25
the autonomous part of C is $30
investment is autonomous and is $40
TABLE 21-3
37) Refer to Table 21-3. The equilibrium level of national income will be
A) $ 70.
B) $ 93.
C) $120.
D) $160.
E) $280.
38) Refer to Table 21-3. At the equilibrium level of national income, desired consumption expenditure will be
A) $ 30.
B) $ 70.
C) $110.
D) $240.
E) $280.
39) Consider a simple macro model with a constant price level and demand-determined output. Suppose the level
of actual national income is less than desired aggregate expenditure. In this case,
A) there will be no change in national income because only actual expenditure is relevant.
B) national income will fall, because desired expenditures are less than actual expenditures.
C) inventories will build up, causing national income to rise.
D) shortages of goods and reductions in inventories will cause producers to increase output and national
income to rise.
E) national income may increase or decrease, depending on the relative sizes of the average propensity to
consume and the average propensity to save.
40) The simple multiplier, which applies to short-run situations in which the price level is constant, describes
changes in
A) saving caused by changes in investment.
B) investment induced by changes in equilibrium income.
C) the equilibrium level of national income caused by changes in autonomous expenditure.
D) employment induced by changes in equilibrium income.
E) the rate of interest caused by increased demand for credit.
41) Consider a simple macro model with demand-determined output. In such a model, the smaller the marginal
propensity to spend, the
A) smaller the simple multiplier.
B) smaller the MPS.
C) larger is investment.
D) larger the simple multiplier.
E) larger the MPC.
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Consider the following information describing a closed economy with no government. Aggregate output is demand determined and the
price level is constant.
1.
2.
3.
Y = C + I
C = 100 + 0.6Y
I = 200
TABLE 21-5
42) Refer to Table 21-5. This economyʹs equilibrium level of national income is
A) 500.
B) 600.
C) 750.
D) 1000.
E) 1500.
43) In a simple macro model, it is generally assumed that a countryʹs exports
A) and imports are induced.
B) are autonomous whereas imports are induced.
C) are always equal to investment.
D) and imports are autonomous.
E) are induced whereas imports are autonomous.
44) The net export (NX) function crosses the horizontal axis at a level of national income where the
A) X curve reaches the horizontal axis.
B) IM curve reaches the horizontal axis.
C) X and IM curves are at their farthest distance apart.
D) X and IM curves intersect.
E) X curve reaches its maximum.
45) An increase in foreign income, other things being equal, is assumed to cause the net export (NX) function to
A) pivot downward.
B) remain stationary.
C) pivot upward.
D) shift parallel downward.
E) shift parallel upward.
The table below shows national income and imports. The level of exports is fixed at $300. All figures (in table and questions) are in
millions of dollars.
Income (Y)
2000
3000
4000
5000
Imports (IM)
150
250
350
450
Net Exports (NX)
a
b
c
d
TABLE 22-1
46) Refer to Table 22-1. What are the correct values for the level of net exports (a, b, c, and d) at each level of
national income?
A) a = -$150, b = -$50, c = $50, d = $150
B) a = $150, b = $250, c = $350, d = $450
C) a = $300, b = $300, c = $300, d = $300
D) a = $150, b = $50, c = -$50, d = -$150
E) not enough data to determine.
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47) The AE function for an open economy with government can be written as
A) AE = C + I + S + (X+IM).
B) AE = C + I + G + (X-IM).
C) AE = C + I + G - (X-IM).
D) AE = C + I - G - (X+IM).
E) AE = C + I - G + (X-IM).
48) Consider the simplest macro model with a constant price level and demand -determined output. The equations
of the model are: C = 60 + 0.43Y, I = 150, G = 260, T = 0, X = 90, IM = 0.06Y. The marginal propensity to spend
on national income, z, is ________.
A) 0.06
B) 0.37
C) 0.43
D) 0.49
E) 0.63
FIGURE 22-3
49) Refer to Figure 22-3. The rotation from AE0 to AE1 could be caused by
A) higher government purchases.
B) a balanced budget.
C) lower government purchases.
D) a lower net tax rate.
E) a higher net tax rate.
50) Consider a simple macro model with a constant price level and demand-determined output. The equations of
the model are: C = 150 + 0.84Y, I = 400, G = 700, T = 0, X = 130, IM = 0.08Y. Desired consumption expenditure at
equilibrium national income is ________.
A) 1675.44
B) 4060.04
C) 4830.00
D) 4980.00
E) 6815.40
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51) Consider the following news headline: ʺMinister of Defence announces $2 billion purchase of fighter aircraft.ʺ
Assuming that aggregate output is demand-determined, and that the aircraft are purchased domestically, what
will be the effect of this action, all other things equal, on the AE function and equilibrium national income?
A) the AE function will shift down parallel to itself and equilibrium national income will fall.
B) the AE function will shift up parallel to itself and equilibrium national income will rise.
C) the AE function will rotate upward (become steeper) and equilibrium national income will rise.
D) there will be no change in the AE function or in equilibrium national income.
E) the AE function will rotate downward (become flatter) and national income will fall.
52) A decrease in the value of the simple multiplier can be caused by
A) an increase in the marginal propensity to spend.
B) a decrease in the net tax rate.
C) a decrease in the marginal propensity to import.
D) an increase in the marginal propensity to consume.
E) an increase in the marginal propensity to save.
53) Suppose aggregate output is demand determined. If the marginal propensity to spend is 0.5, and the MPC is
0.7, a $1 billion reduction in government purchases will cause equilibrium national income to ________ by
________.
A) increase; $2.00 billion
B) decrease; $1.50 billion
C) decrease; $2.00 billion
D) increase; $3.33 billion
E) decrease; $3.33 billion
54) Consider a simple macro model with government and foreign trade and where the price level is taken as given.
The simple multiplier is equal to
A) 1/(1- MPS - t).
B) 1/MPC.
C) 1/(1- (MPS(1 - t)- m )).
D) 1/(1 - (MPC(1 - t)- m )).
E) 1/(1-MPC).
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FIGURE 22-4
55) Refer to Figure 22-4. Diagram 1 illustrates an economy that is experiencing a(n) ________ gap. The goal of
stabilization policy would be to ________ national income until it is equal to ________.
A) recessionary; increase; potential GDP.
B) inflationary; reduce; potential GDP.
C) inflationary; increase; potential GDP.
D) recessionary; increase; actual national income.
E) inflationary; reduce; actual national income.
56) Other things being equal, a rise in the domestic price level
A) lowers the real value of all assets denominated in money units.
B) makes domestic goods more attractive to foreigners.
C) makes foreign goods less attractive to domestic residents.
D) causes a decrease in real saving.
E) raises the real burden of repaying a fixed money value debt.
57) Other things being equal, a rise in the price level will imply ________ in wealth for the bondholder but
________ in the wealth of the issuer of the bond.
A) an increase; an increase
B) a decline; an increase
C) a decline; no change
D) an increase; a decline
E) a decline; a decline
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58) Which of the following would likely cause an upward parallel shift in the AE curve and a rightward shift in the
AD curve?
A) an increase in the business confidence of firms
B) a reduction in government purchases
C) an increase in the MPC
D) an increase in the price level
E) a decrease in the price level
FIGURE 23-1
59) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal
to real GDP at point V. The price level is P0 . The corresponding point on the aggregate demand curve is point
A) B.
B) C.
C) D.
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D) E.
E) A.
60) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal
to real GDP at point V. The price level is P0 . Other things being equal, exogenous changes in the price level
will cause
A) shifts of the AE curve and movement along the aggregate demand curve AD0 .
B) no change in either the AE curve or the AD curve.
C) movement along the aggregate expenditure curve AE0 and movement along the aggregate demand
curve AD0 .
D) shifts of the AE curve and shifts of the AD curve.
E) movement along the aggregate expenditure curve AE0 and shifts of the AD curve.
61) Consider a simple macro model with a given price level and demand -determined output. An exogenous
change in the price level causes a
A) movement along AE but does not affect the AD curve.
B) movement along the AE curve and a shift in the AD curve.
C) shift in the AE curve and a movement along the AD curve.
D) movement along both the AE and AD curves.
E) shift in both the AE and AD curves.
62) One reason why the aggregate demand (AD) curve slopes downward is that
A) increases in the price level cause consumers to substitute foreign goods for domestic goods.
B) when the price level falls consumers increase their saving rate.
C) aggregate expenditure increases as the price level rises.
D) when the price level falls firms must compete more when output increases.
E) increased production results in lower production costs.
63) Aggregate supply refers to the
A) total output firms wish to produce at each price level.
B) decisions of firms to decrease inputs in order to produce outputs.
C) effects of increases in input prices on output.
D) economyʹs potential output at each possible labour force.
E) supply of labour inputs in the economy.
64) In the short run, the aggregate supply curve has a positive slope because, as the price level rises, producers can
A) be compensated for the extra costs incurred to produce more output.
B) experience rising factor prices.
C) accumulate inventories.
D) produce the same output, but at higher prices.
E) produce less in response to falling profits.
65) A movement along the economyʹs AS curve could be caused by a change in
A) technology.
B) labour productivity.
C) the wage rate.
D) the cost of capital.
E) the price level, caused in turn by an AD shock.
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66) The economyʹs AS curve will shift upward in the short run if there is
A) a decrease in the cost of capital.
B) an increase in the price level.
C) an increase in labour productivity.
D) an improvement in technology.
E) an increase in the wage rate.
67) Consider the basic AD/AS model. If their unit costs rise as output increases, price-taking firms will be prepared
to produce ________ only if ________.
A) more; prices increase
B) more; the economy is in equilibrium
C) more; prices decrease
D) less; prices increase
E) their current output; prices increase
68) If the economyʹs AS curve is upward sloping, a negative shock to aggregate demand will result in
A) a decrease in both real GDP and prices.
B) a decrease in prices but no change in real GDP.
C) an increase in prices and no change in real GDP.
D) an increase in real GDP and no change in prices.
E) an increase in both real GDP and prices.
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FIGURE 23-5
69) Refer to Figure 23-5. Which of the following statements best describes the supply side of Economy A?
A) Firms are producing well below their capacity and are willing to produce more output with no increase in
price.
B) Firms are producing well below their capacity and are willing to produce more only if prices rise.
C) Unit costs are rising, but firms can produce more output by employing standby capacity and overtime
labour, for example, with no increase in the price level.
D) Unit costs are rising rapidly as firms are producing beyond their capacity. Firms will produce more only
if prices increase.
E) Unit costs are rising, but firms are able to produce more output because there is excess capacity in the
economy.
70) Refer to Figure 23-5. Which of the following statements best describes the supply side of Economy B?
A) Firms are producing well below their capacity and are willing to produce more output with no increase in
price.
B) Firms are producing well below their capacity and are willing to produce more only if prices rise.
C) Unit costs are rising rapidly, but firms can produce more output by employing standby capacity and
overtime labour, for example, with no increase in the price level.
D) Firms are not able to produce more output because there is no excess capacity in the economy.
E) Unit costs are rising rapidly as firms are producing beyond their capacity. Firms will produce more only
if prices increase.
71) Suppose firms are currently producing output at a level beyond their normal capacity. In this situation, the AS
curve will be relatively ________ and a positive AD shock will result in ________.
A) flat; a very small increase in prices but a large increase in real GDP.
B) flat; an equal increase in the price level and in real GDP.
C) steep; a decrease in the price level and a very small decrease in real GDP.
D) steep; an increase in the price level with a small increase in real GDP.
E) flat; a very small decrease in the price level and a decrease in real GDP.
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72) In the basic AD/AS model, the effect of an aggregate demand shock is divided between a change in output and
a change in the price level. How the effect is divided depends on the
A) amount of inflation in the economy.
B) position of the AE curve.
C) slope of the AD curve.
D) slope of the AS curve.
E) size of the simple multiplier.
73) Aggregate supply shocks cause the price level and real GDP to change in
A) opposite directions with price changing by less than output.
B) opposite directions but by the same amount.
C) the same direction with price changing by more than output.
D) the same direction and by the same amount.
E) opposite directions but not necessarily by the same amount.
FIGURE 23-4
74) Refer to Figure 23-4. Suppose that an increase in government purchases by 50 causes the AD curve to shift to
the right, as shown. The simple multiplier is ________ and the multiplier is ________.
A) 2.8; 1.2
B) 4; 2.8
C) 4; 1.2
D) 4; 3.2
E) 6; 1.2
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Answer Key
Testname: PRACTICEMTFALL10
1) B
Topic: 19.1b. national output/national income
2) D
Topic: 19.1b. national output/national income
3) E
Topic: 19.1c. potential output and output gaps
4) C
Topic: 19.1d. employment, unemployment and the labour force
5) A
Topic: 19.1e. frictional, structural and cyclical unemployment
6) B
Topic: 19.1e. frictional, structural and cyclical unemployment
7) D
Topic: 19.1f. productivity
8) A
Topic: 19.1g. inflation and the price level
9) E
Topic: 19.1g. inflation and the price level
10) E
Topic: 19.1g. inflation and the price level
11) C
Topic: 19.1i. the exchange rate and depreciation/appreciation
12) A
Topic: 20.1. national output and value added
13) D
Topic: 20.1. national output and value added
14) C
Topic: 20.1. national output and value added
15) D
Topic: 20.2a. GDP from the expenditure side
16) E
Topic: 20.2a. GDP from the expenditure side
17) B
Topic: 20.2a. GDP from the expenditure side
18) C
Topic: 20.2a. GDP from the expenditure side
19) A
Topic: 20.2a. GDP from the expenditure side
20) A
Topic: 20.3a. GDP and GNP
21) E
Topic: 20.3b. real/nominal GDP and the GDP deflator
22) D
Topic: 20.3b. real/nominal GDP and the GDP deflator
18
Answer Key
Testname: PRACTICEMTFALL10
23) A
Topic: 20.3c. omissions from GDP
24) E
Topic: 21.1a. desired vs. actual expenditures
25) A
Topic: 21.1b. the consumption function
26) B
Topic: 21.1b. the consumption function
27) B
Topic: 21.1b. the consumption function
28) B
Topic: 21.1b. the consumption function
29) A
Topic: 21.1b. the consumption function
30) E
Topic: 21.1b. the consumption function
31) E
Topic: 21.1b. the consumption function
32) C
Topic: 21.1c. average and marginal propensities to consume
33) C
Topic: 21.1c. average and marginal propensities to consume
34) C
Topic: 21.1d. the saving function
35) A
Topic: 21.1f. the aggregate expenditure function (AE)
36) E
Topic: 21.2. equilibrium national income
37) E
Topic: 21.2. equilibrium national income
38) D
Topic: 21.2. equilibrium national income
39) D
Topic: 21.2. equilibrium national income
40) C
Topic: 21.3b. the simple multiplier
41) A
Topic: 21.3b. the simple multiplier
42) C
Topic: 21.3b. the simple multiplier
43) B
Topic: 22.2. net export function
44) D
Topic: 22.2. net export function
19
Answer Key
Testname: PRACTICEMTFALL10
45) E
Topic: 22.2. net export function
46) D
Topic: 22.2. net export function
47) B
Topic: 22.3a. the AE function
48) B
Topic: 22.3a. the AE function
49) D
Topic: 22.3a. the AE function
50) D
Topic: 22.3b. equilibrium national income
51) B
Topic: 22.4a. changes in equilibrium national income
52) E
Topic: 22.4b. the simple multiplier with taxes (t) and imports (m)
53) C
Topic: 22.4b. the simple multiplier with taxes (t) and imports (m)
54) D
Topic: 22.4b. the simple multiplier with taxes (t) and imports (m)
55) B
Topic: 22.4c. fiscal policy
56) A
Topic: 23.1a. effects of an exogenous change in the price level
57) B
Topic: 23.1a. effects of an exogenous change in the price level
58) A
Topic: 23.1b. relationship between AE and AD curves
59) A
Topic: 23.1b. relationship between AE and AD curves
60) A
Topic: 23.1b. relationship between AE and AD curves
61) C
Topic: 23.1c. slope and shifts of the AD curve
62) A
Topic: 23.1c. slope and shifts of the AD curve
63) A
Topic: 23.2. slope and shifts of the AS curve
64) A
Topic: 23.2. slope and shifts of the AS curve
65) E
Topic: 23.2. slope and shifts of the AS curve
66) E
Topic: 23.2. slope and shifts of the AS curve
20
Answer Key
Testname: PRACTICEMTFALL10
67) A
Topic: 23.2. slope and shifts of the AS curve
68) A
Topic: 23.3a. macroeconomic equilibrium
69) D
Topic: 23.3a. macroeconomic equilibrium
70) A
Topic: 23.3a. macroeconomic equilibrium
71) D
Topic: 23.3b. AD shocks and AS shocks
72) D
Topic: 23.3b. AD shocks and AS shocks
73) E
Topic: 23.3b. AD shocks and AS shocks
74) C
Topic: 23.3c. the multiplier when the price level varies
21