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Questions and Answers
How is the economy's output gap calculated?
How is the economy's output gap calculated?
What is the effect of fully anticipated inflation on debtors?
What is the effect of fully anticipated inflation on debtors?
If the unemployment rate is 8 percent and the natural rate of unemployment is 5 percent, what is the cyclical unemployment rate?
If the unemployment rate is 8 percent and the natural rate of unemployment is 5 percent, what is the cyclical unemployment rate?
What can be concluded if nominal national income increased by 10 percent while real national income increased by 20 percent?
What can be concluded if nominal national income increased by 10 percent while real national income increased by 20 percent?
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Which of the following statements about inflation is correct?
Which of the following statements about inflation is correct?
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If actual income is lower than potential national income, which situation describes the economy?
If actual income is lower than potential national income, which situation describes the economy?
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What happens to the purchasing power of money during inflation?
What happens to the purchasing power of money during inflation?
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What is the relationship between the unemployment rate and inflation rate when considering the output gap?
What is the relationship between the unemployment rate and inflation rate when considering the output gap?
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An individual who worked at least one hour as a paid worker outside their home during the survey week would be classified as what?
An individual who worked at least one hour as a paid worker outside their home during the survey week would be classified as what?
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How is the marginal propensity to consume represented?
How is the marginal propensity to consume represented?
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If current income is positioned to the left of equilibrium, what does the height of the 45-degree line above the AE line indicate?
If current income is positioned to the left of equilibrium, what does the height of the 45-degree line above the AE line indicate?
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An increase in the real interest rate will lead to what changes in desired consumption and investment?
An increase in the real interest rate will lead to what changes in desired consumption and investment?
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In the given macro model, what is the value of autonomous expenditure?
In the given macro model, what is the value of autonomous expenditure?
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What effect does a rise in the Canadian dollar price of foreign currencies have on Canada's net export curve?
What effect does a rise in the Canadian dollar price of foreign currencies have on Canada's net export curve?
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In a macro model with a marginal propensity to consume of 0, what is the expected value of the multiplier?
In a macro model with a marginal propensity to consume of 0, what is the expected value of the multiplier?
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What does it indicate if a country has an actual GDP less than its potential GDP?
What does it indicate if a country has an actual GDP less than its potential GDP?
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Study Notes
Exam Overview
- Examination consists of 25 multiple-choice questions.
- Each question is valued at 3 marks; total marks available is 75.
- Required details: name and student number on the answer sheet.
Calculation of Output Gap
- Calculation uses actual income subtracted from potential national income.
Understanding Inflation
- Fully anticipated inflation benefits debtors.
- Inflation negatively affects the purchasing power of money.
Unemployment Metrics
- If the unemployment rate is 8% and the natural rate is 5%, the cyclical unemployment rate is 3%.
Nominal vs Real National Income
- A 10% increase in nominal national income with a 20% increase in real national income indicates a decline in the price level.
Labour Force Classification
- An individual who worked at least one hour as a paid worker is classified as an employed worker.
Marginal Propensity to Consume (MPC)
- MPC is defined as the change in consumption divided by the change in disposable income.
Equilibrium Analysis
- If income is left of equilibrium, the gap reflects the amount desired expenditures exceed output.
Real Interest Rate Effects
- An increase in the real interest rate results in a decrease in desired consumption and a decrease in desired investment.
Autonomous Expenditure Calculation
- In the provided macro model, autonomous expenditure totals 1,350.
Net Export Curve Impact
- A rise in Canadian dollar price of foreign currencies shifts Canada's net export curve downward and becomes flatter.
Multiplier Effect
- In a macro model where the marginal propensity to consume, income tax, and import propensity are all zero, the multiplier equals 0.
GDP Context
- A country with an actual GDP less than potential GDP operates inside its production possibilities boundary.
Studying That Suits You
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Description
Test your understanding of Chapter 24: From the Short Run to the Long Run. This quiz consists of 25 multiple-choice questions, each worth 3 marks, covering key concepts related to the adjustment of factor prices. Choose the most appropriate answer from the provided options.
