Question 1

Which of the following is NOT measured by GDP according to the study materials?

Accepted Answer

The value of illegal goods sold in the black market

Question 2

In the short run, what determines year-to-year movements in output according to macroeconomic theory?

Accepted Answer

Demand for goods and services

Question 3

Which formula correctly expresses real GDP ($$Y) in $$terms of nominal GDP ($$\Y$) and the price index (P$)?

Accepted Answer

$$Y = \Y / P$

Question 4

If the propensity to consume ($$c_1) $$increases, what happens to the multiplier in the goods market equilibrium?

Accepted Answer

The multiplier increases

Question 5

Which of the following is considered autonomous spending in the goods market equilibrium?

Accepted Answer

Spending that does not depend on output

Question 6

Given the consumption function $$C = c_0$ + c_1$(Y - T)$$, what does $$c_1$$ represent?

Accepted Answer

Propensity to consume

Question 7

In a closed economy, which equation represents the equilibrium condition in the goods market?

Accepted Answer

$$Y = C + I + G$$

Question 8

If government spending ($$G) $$increases by $$1$$ billion and the propensity to consume ($$c_1) is$$ $$0.8$$, what is the total increase in equilibrium output ($$Y$$)?

Accepted Answer

$$5$$ billion

Question 9

Which of the following is a plausible effect of a decrease in autonomous consumption ($$c_0) in $$the short run?

Accepted Answer

Decrease in output and income

Question 10

What is the main difference between exogenous and endogenous variables in an economic model?

Accepted Answer

Exogenous variables do not change based on other parameters in the model, endogenous variables do

Question 11

Which of the following is NOT a component of GDP in the goods market?

Accepted Answer

Government transfers

Question 12

If net exports ($$NX) $$are negative, what does this indicate about a country's trade balance?

Accepted Answer

Trade deficit

Question 13

Which equation represents private saving ($$S) in $$the goods market?

Accepted Answer

$$S = Y - T - C$$

Question 14

In the IS relation for a closed economy, investment ($$I) $$equals:

Accepted Answer

Private saving ($$S) $$plus government saving ($$T - G)$$

Question 15

Which of the following would cause a shift of the demand curve for goods, rather than a movement along the curve?

Accepted Answer

A change in the propensity to consume ($$c_1)$$

Question 16

If the government runs a budget deficit, which of the following is true?

Accepted Answer

$$T - G \u003c 0$$

Question 17

Which country had the largest nominal GDP in 2019 according to the study materials?

Accepted Answer

USA

Question 18

What is the effect of an increase in government spending ($$G) on $$equilibrium output ($$Y) in $$the goods market?

Accepted Answer

Equilibrium output increases by more than the initial increase in $$G$$

Question 19

Which of the following is a reason why GDP may not accurately reflect the welfare of a country's population?

Accepted Answer

GDP excludes non-market activities such as housework

Question 20

If the price index ($$P) $$doubles while nominal GDP ($$\Y$) remains constant, what happens to real GDP (Y$)?

Accepted Answer

Real GDP is halved

Foundations of Macroeconomics: Introduction, GDP, and the Goods Market

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