$$\frac{\text{Real GDP}_{\text{final}} - \text{Real GDP}_{\text{initial}}}{\text{Real GDP}_{\text{initial}}} \times 100$$

Question 1

Suppose the real GDP of a country grows from $$10,000 to$$ $$20,000 in 14 $$years. Using the rule of 70, what is the approximate annual growth rate?

Accepted Answer

$$7\%$$

Question 2

Which of the following would shift the supply curve for loanable funds to the right?

Accepted Answer

An increase in private savings due to higher income

Question 3

What is the formula for calculating the growth rate of real GDP between two years?

Accepted Answer

$$\frac{	ext{Real GDP}_{	ext{final}} - 	ext{Real GDP}_{	ext{initial}}}{	ext{Real GDP}_{	ext{initial}}} 	imes 100$$

Question 4

According to new growth theory, which of the following best fosters technological change?

Accepted Answer

Policies that encourage research and development

Question 5

Which of the following is NOT a component of aggregate expenditure?

Accepted Answer

Transfer Payments

Question 6

If the marginal propensity to consume (MPC) is $$0.8$$, what is the value of the multiplier?

Accepted Answer

$$5$$

Question 7

A movement along the aggregate demand curve is caused by:

Accepted Answer

A change in the price level

Question 8

Which of the following would cause a shift in the long-run aggregate supply (LRAS) curve?

Accepted Answer

An increase in the labor force

Question 9

What does the convergence theory predict about the growth rates of low-income and high-income countries?

Accepted Answer

Low-income countries will grow faster than high-income countries, eventually catching up

Question 10

If the marginal propensity to save (MPS) is $$0.25$$, what is the marginal propensity to consume (MPC)?

Accepted Answer

$$0.75$$

Question 11

Which of the following best describes a shift in the short-run aggregate supply (SRAS) curve?

Accepted Answer

A change in input prices, such as wages or oil

Question 12

What is the main reason for the negative slope of the aggregate demand curve?

Accepted Answer

The wealth effect, interest rate effect, and net export effect

Question 13

Which of the following would increase long-run economic growth according to Romer's new growth theory?

Accepted Answer

Investing in human capital and innovation

Question 14

If planned aggregate expenditure is less than real GDP, what will happen to inventories and output?

Accepted Answer

Inventories will rise and output will fall

Question 15

Which of the following is a policy that addresses failures in low-income countries?

Accepted Answer

Improving property rights and legal systems

Question 16

In the aggregate expenditure model, what does a point above the 45-degree line represent?

Accepted Answer

Planned spending is greater than output

Question 17

Which of the following would cause a movement along the per-worker production function?

Accepted Answer

An increase in capital per worker

Question 18

If the government increases its spending by $$100$$ and the MPC is $$0.6$$, what is the total increase in equilibrium GDP?

Accepted Answer

$$250$$

Question 19

Which of the following is a component of technological change?

Accepted Answer

Improving the quality of capital

Question 20

What does a vertical long-run aggregate supply (LRAS) curve indicate?

Accepted Answer

Output is independent of the price level

Macroeconomics Exam Study Guide: Key Concepts and Models

Study Guide - Practice Questions