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Friday, February 17, 2017

2012 Macro Multiple Choice (Fiscal Policy)

2012 Macro Multiple Choice (Fiscal Policy)


Fiscal Policy Cheat Sheet here.

Answer - (B)

From the cheat sheet.


Answer - (B)

From the cheat sheet


Answer - (C)

From the cheat sheet



Answer - (C) 

Understand that ann increase in Government Spending increases consumption which increases Aggregate Demand.

From the AD/AS cheat sheet here.



Answer - (A)

Post that answers this here.


Answer - (C)

If the budget deficit is increasing ,, it means that the government is spending and if the government is spending then the Real Interest Rate (RIR) is increasing.




2012 (Macro) Multiple Choice - Basic, PPC, Comp ADV

2012 (Macro) Multiple Choice  - Basic, PPC, Comp ADV


Answer - (A) Centralised planning

This is the main tenant of a command economy.

Answer - (C)


Answer - (B) 

So, easy to find who has an absolute advantage by drawing a PPC curve,, 
B can create both goods using less resources
Comparative advantage must be analysed using the math and then comparing the columns.
Looking for the country that shows the lowest opportunity cost.



Answer - (B) Involves higher costs for each transaction


Answer - (E) 
(A) Z = unemployment, idle resources, underutilisation of resources = True
(B) Y = unattainable given the amount of resources
(C) W & X - fully utilised resources
(D) Capital goods are goods that promote future growth
(E) X & W are both efficient, and only society can decide which is the best for society 

Answer - (D) 

Trade pushes out the PPC boundary/curve

Answer - (E)


The same thing that pushes out the PPC boundary is 
Population, resources, technology, trade, human capital – at least one of these must increase 
are the same things that shift the LRAS curve to the right...   



2012 Macro Multiple Choice - GDP

2012 Macro Multiple Choice - GDP



(A) An increase in real per capita gross domestic product

(B) nominal per capita GDP has more to due with inflation increase
(C) Price stability - all can be poor and prices stabile 
(D) A balanced budget - Taxes collected = government expenditures - doesn't really speak to standards of living.
(E) CPI - has to due with inflation,, and an increase might have made people worse off.



Answer - (D)



GDP = C + I + GS + XN

Consumption = $3000
Investment = $700
GS = $1,000
XN = Exports - Imports = 300 - 500 = -200

$3,000 + $700 + $1,000 + 300 - 500 = $4,500

Answer - (A) $4,500