Macroeconomics Semester Exam Study Guide
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Questions and Answers

What are the potential unintended outcomes of fiscal policies?

  • Crowding out may occur, affecting private sector investment. (correct)
  • Inflation may decrease as government spending increases.
  • Increased taxes can lead to a decrease in consumer spending. (correct)
  • Government intervention always improves economic stability.

    • Which of the following best describes the relationship between nominal and real variables in economics?

  • Nominal variables are unadjusted measures while real variables account for inflation's effect. (correct)
  • Real variables only apply to production rates.
  • Nominal variables adjust for inflation, while real variables do not.
  • Real variables are always greater than nominal variables.

    • Which factor is typically NOT included in the determination of GDP?

  • Net exports, calculated as exports minus imports.
  • Household transactions without formal market exchange. (correct)
  • Government spending on public goods.
  • Business investment in physical capital.

    • What effect does a tariff have on a country's domestic market?

    <p>It protects domestic industries by raising the cost of imported goods.</p> Signup and view all the answers

    What is a significant characteristic of the Phillips Curve?

    <p>It demonstrates the inverse relationship between inflation and unemployment in the short run.</p> Signup and view all the answers

    Study Notes

    Macroeconomics Semester Exam Study Guide

    • Concepts: Transfer Payments, Factors of Production (all kinds), Supply/Demand issues, Borrowers benefit/Lenders lose, Properly labeled AD/AS Graph
    • Economic Indicators: Inflation, Deflation, Disinflation, Balance of Payments, Xn (Net Exports), Terms of Trade, Tariffs, Supply-Side Policy Measures, Nationalization, Exchange Rate Appreciation/Depreciation, Frictional/Structural/Cyclical Unemployment (including/excluding aspects)
    • Economic Policies: Fiscal/Monetary Policies (intentions, means, intended/unintended outcomes), Short-Run & Long-Run Phillips Curve, PPC (synonymous with LRAS) - principles, Business Cycles (Phases, Points, Causes for Change), Nominal vs. Real Variables, Cost-Push/Demand-Pull Inflation, Crowding Out (intentions/drawbacks)
    • Economic Formulas: MPS/MPC and Tax Formulas, Formula and Purpose of the CPI, Shifters of AD/AS/PPC
    • GDP and Output: What is and is not included in GDP, What each graph measures (e.g., Phillips Curve, AD/AS Model), Real Wages vs. Productivity, Standard of Living, Reasons for Demand Downward/Supply Upward Trends, Equilibrium, Contrary Fiscal/Monetary Policies, Reasons for Productivity Increases/Decreases, Wage/Price Spiral
    • Output Expenditures Model: C+I+G+(X-M) = GDP
    • Monetary Policy: OMO (Open Market Operations) - what it is, how it works, what it includes

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    Description

    Prepare for your Macroeconomics semester exam with this comprehensive study guide. It covers essential concepts like supply and demand, economic indicators, policies, and important formulas. Enhance your understanding of GDP, inflation, and unemployment classifications to ace your exam.

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