ECON 104 Fall 2015 Dr. Adrienne Kearney REVIEW QUESTIONS FOR FINAL EXAM These review questions are taken from your notes and from any readings I have assigned that are not covered in class. The final is not cumulative. The exam will be on material starting with Ch. 12, Keynesian Cross, green handout (packet pages 114-A through 114 – E), and Ch. 13, 14, 15 and 16 (packet pages 115 through 181. Chapter 12, packet pages 114-A though 114-E (handout), text pages 372 – 403 5 th [376 – 407 4 th ] 1.What is AE equal to? 2.In the Keynesian Cross:a.What is the significance of the 45 degree line? b.What do we mean by autonomous expenditures? What expenditures in AE autonomous? c.Equilibrium output is where AE = Y. Explain. d.If C = 3 + 0.5 Y, what is breakeven income? 6 3.Are unplanned inventories increasing or decreasing when AE < Y? When AE > Y? Whenever AE ≠ Y how does this affect production and RGDP? 4.What is the multiplier effect?
6.True or False: The larger the MPC the greater the multiplier.
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