Macro test review

(Macro parts 1 & 2 only goes through #17)

1. Would John Maynard Keynes be considered a laissez-faire economist? Why or why not? 

2. What was John Maynard Keynes view on “deficit spending?” 

3. What measurement quantifies a nation’s annual output? 

4. Put these in order from greatest to smallest: PI, DI, NI, NDP, GDP 

5. (a) What’s the GDP formula and (b) what does each variable stand for? 

6. If you start with GDP and take out ____, you’ll have NDP. 

7. If you start with PI and take out _____, you’ll have DI. 

8. What’s the difference between GDP and “real GDP”? 

9. What’s “nominal GDP”? 

10. How does inflation skew GDP? 

11. What does CPI measure? 

12. List 4 items that might be in a college student’s “market basket”. 

13. The base year, say it’s 2007, is given a CPI of _____. 

14. If 2009 has a CPI of 119, what % increase has occurred over the base year? 

15. If the CPI goes up to 129 in 2010, what % increase occurred from 2009 to 2010? (hint: new minus old over old) 

16. Which come first, CPI or PPI? 

17. If CPI goes up, does purchasing power rise or fall? 

18. If CPI goes up, does the quantity of AD rise or fall? 

19. A change in any factor other than CPI results in a shift in AD, T/F? 

20. What does the business cycle look like when graphed? 

21. If foreign income goes up, will AD in the U.S. go up or down? 

22. If taxes in the U.S. go up, will AD go up or down? 

23. When graphed, what does an LRAS curve look like? 

24. When graphed, what does an SRAS curve look like? 

25. If there’s an increase in AD, companies will produce more for the short run, T/F? 

26. If there’s an increase in AD, production will eventually return back to the LRAS level (potential output), T/F? 

27. What are the 3 points of the “circular flow of money”? 

28. What’s the difference between fiscal and monetary policy? 

29. What are 3 things the Fed can do to “monkey around” with the economy? 

30. What makes up M1? 

31. What makes up M2? 

32. If the Fed wanted to jump-start the economy, they’d go to a loose or tight money policy? 

33. What bad thing will likely occur due to loose money policy? 

34. If the Fed lowered the Discount Rate, would local banks likely lend more or less money? 

35. Would the situation in #34 be a loose or tight money policy?