- •The International College of Economic and Finance
- •Increase Decrease
- •It includes purchases of common stock
- •A consumer price index (cpi) value of 90 means that prices are
- •10 Percent lower than they were in the base year
- •Decrease Decrease
- •No change Decrease
- •A change in the general price level does not mean a change in relative domestic prices, so the substitutability of goods is different.
- •Total leakages equal total injections.
- •Unemployment
- •They have different lag times between implementation of a policy and the effects of implementation on aggregate demand.
- •A budget surplus and a decrease in public debt
- •A recent college graduate who has been interviewing for jobs but has not taken a job
- •An increase in labor productivity
- •Increase Not change
- •Increase Increase
- •If there is an increase in the money supply, the aggregate demand curve will shift to the right.
- •Consumption increases as income increases
- •Increase real gross domestic product if the economy is below full employment
- •Expect the interest rate to rise
- •Will not change investment
- •All of the above
- •Answers (b) and (c) are true
- •The gradual exhaustion of natural resources
- •Monetary policy becomes more effective at changing real gross domestic product.
- •Increase wage rates because labor becomes more productive
- •Prices, including wages, adjust quickly to bring about full employment.
- •All of the above
- •A simultaneous decision by the Federal Reserve to increase the money supply
- •All of the above
- •All of the above
- •All of the above
- •Elastic Inelastic Inelastic Elastic
The International College of Economic and Finance
MACROECONOMICS
Mock Exam – 1 April, 8, 2006
Name __________________________ group __________________
SECTION 1
Time – 70 minutes
A significant increase in the cost of health insurance provided by employers is most likely to cause the price and employment levels to change in the short run in which of the following ways?
Price Level Employment level
Decrease Decrease
Decrease Increase
Increase Decrease
Increase Increase
Increase Not change
All of the following statements about gross investment are accurate EXCEPT:
It includes the net change in inventory.
It includes the cost of constructing new homes and flats.
It affects economic growth.
It includes purchases of common stock
All the statements are true.
According to supply-side economists, if the federal government adopts a tax reform package that leaves the amount of total tax revenues unchanged but lowers the marginal tax rate for most taxpayers, the most likely long-run effect of such a policy will be to
decrease aggregate demand
decrease the supply of money
increase the real rate of interest
increase the price level
increase the supply of labor
Which of the following best describes typical consumer behavior?
As household income increases, the average propensity to save decreases.
As household income increases, the average propensity to consume increases.
As household income increases, the marginal propensity to consume increases
As household income decreases, the average propensity to save decreases.
As household income decreases, the average propensity to consume decreases
A reduction in inflation can best be achieved by which of the following combinations of fiscal and monetary policy?
Fiscal Policy Monetary Policy
Increase taxes Sell government bonds
Decrease taxes Buy government bonds
Decrease taxes Lower marginal requirements
Decrease government spending Lower discount rate
Increase government spending Raise discount rate
Which of the following describes how changes in exports and imports influence the effectiveness of fiscal policy?
A stimulative fiscal policy is weakened by an increase in imports and a decrease in exports.
A restrictive fiscal policy is weakened by an increase in imports and a decrease in exports.
Changes in imports and exports do not effect fiscal policy.
Only changes in exports affect fiscal policy.
Only changes in imports affect fiscal policy.
A consumer price index (cpi) value of 90 means that prices are
90 times higher than they were in the base year
9 times higher than they were in the base year
10 Percent lower than they were in the base year
10 percent lower than they were in the previous year
90 percent lower than they were in the previous year
If unemployed workers become discouraged and give up trying to find work, the number of workers employed and the unemployment rate would change in which of the following ways?
Number of Unemployment
Workers Employed Rate