12 Questions
What is the primary lesson conveyed by the circular flow diagram in macroeconomics?
Total income in the economy must always equal total spending.
If real GDP in 2010 using 2009 prices is higher than nominal GDP of 2010, what can be inferred about prices in 2010 compared to the base year?
Prices in 2010 are lower than prices in the base year.
In the context of the private saving function, what is the relationship between household consumption and income?
C = 200 + 0.2Y.
How does an increase in income affect consumption, given a constant marginal propensity to save?
Consumption increases, but by a smaller amount than the increase in income.
What is the role of net taxes in determining the aggregate consumption function?
Net taxes reduce disposable income, which in turn affects consumption.
How does the aggregate demand function relate to the equilibrium GDP in a macroeconomic model?
The aggregate demand function determines the equilibrium GDP, where the demand for goods and services equals the supply.
What is the implication of the circular flow diagram in a macroeconomic model?
Total income in the economy must always equal total spending.
If nominal GDP in 2010 is lower than real GDP in 2010 using 2009 prices, what can be inferred about prices in 2010?
Prices in 2010 are lower than prices in the base year.
What is the household's consumption function if the private saving function is represented in Figure 8.1?
C = 200 + 0.2Y
If the MPS equals 0.25, and consumption is $60,000 when income is $90,000, what is consumption when income increases to $100,000?
$67,500
What is the aggregate consumption function if C = 100 + 0.6Yd, and income is $1,000 with net taxes of $300?
$580
What is the equilibrium GDP for the Italian economy with the given data: C = 300 + 0.8Yd, G = 400, T = 200, and I = 200?
$1,000
Test your understanding of macroeconomics concepts with this sample exam from Tel Aviv University's Coller School of Management. Questions cover topics like the circular flow diagram, GDP, and more.
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