26 Questions
What is the average annual GDP growth over the long run?
5%
Which tends to be less volatile during fluctuations, consumption or investment?
Consumption
During which economic phase does unemployment rise?
Recessions
What is Okun's law related to?
Negative relationship between GDP and unemployment
What are Leading Economic Indicators used for by businesses and government?
Forecast changes in economic activity into the future
In the context of leading economic indicators, which of the following is considered a lagging indicator?
Consumer Price Index (CPI)
In the AS-AD model, what does an increase in the price level cause in terms of real money balances and the demand for goods and services?
A decrease in real money balances and a decrease in the demand for goods and services
What does the long-run aggregate supply (LRAS) curve look like?
It is vertical
What does 'full employment' mean in the context of long-run aggregate supply (LRAS)?
Unemployment equal to its natural rate
Which time horizon in macroeconomics assumes complete price flexibility?
Long run
What is the average annual GDP growth over the long run?
X percent
During which economic phase does unemployment rise?
Recession
What does Okun’s law describe?
The negative relationship between GDP and unemployment
What do Leading Economic Indicators aim to forecast?
Changes in economic activity next few years into the future
What does the quantity theory of money equation 𝑴𝑽 =𝑷𝒀 imply?
An inverse relationship between the price level and the quantity of output demanded
In the context of leading economic indicators, which of the following is considered a lagging indicator?
Hotel Occupancy Rate (HOTOCC)
What does 'full employment' mean in the context of long-run aggregate supply (LRAS)?
Unemployment equals its natural rate
What is the relationship between the price level and aggregate output in the long run?
The price level has no effect on aggregate output in the long run
What does an increase in the price level cause in terms of real money balances and the demand for goods and services according to the AS-AD model?
A decrease in real money balances and a decrease in the demand for goods and services
Which factor determines output in the long run according to aggregate supply?
Factor supplies and technology
What is assumed to be sticky at a predetermined level in the short run?
$\text{Many prices}$
Which economic phase does unemployment rise?
$\text{Short run}$
What is affected by fiscal policy (𝐺 and 𝑇) according to the short run model of aggregate demand and supply?
Output and employment
Which of the following is used to forecast future economic trends according to leading economic indicators?
Number of New Business Incorporations (NEWBUS)
What does the aggregate demand curve show in relation to the price level according to the AS-AD model?
The relationship between the price level and quantity of output demanded
What is determined by supply side factors such as supplies of capital, labor, and technology in macroeconomics?
Aggregate output in long run
Test your knowledge about economic fluctuations, business cycles, time horizon in macroeconomics, and aggregate demand and supply in the short run. Understand changes in equilibrium, some facts about business cycles, and GDP growth fluctuations.
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