Macro___120111 - Practice questions for Final Exam...

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Practice questions for Final Exam (13,14,15) 1. a. (answer) C 2. Actual gDP/ potential GDP … government wants to bring economy down since it’s so high, bring down aggregate spending …. B 3. A . intervene market , increase government spending or decrease tax (solution) 4. You can’t find similar point b/w all 3 lines. Y1 is greater than potentional output = inflationary gap . need contractionary fiscal policy . . which is decrease government spending or raise tax. D.. why not decrease gov spending?? 5. Cut in taxes= disposable income increases and consumption will increase so AD shifts right B 6. Reducing money supplies = monetary policy, money & interest changes = money target. Fiscal is government transfer & govt spending B 7. (SKIP) 8. Spending is w/in tax revenue(?) when budget deficit means govt increases spending and transfer (expansionary) raise tax = contractionary fiscal policy. B public needs to borrow money from money market 9. B govt spending is > tax revenue so it’s budget deficit 10. 4000 billion is actual . actual is lower than potential output… difference is 1000 billion=we are in recession (graph: lines sras & ad, y1 is lower than p.output) needs expansionary fiscal policy. We need to increase real gdp by 1000 using e.fiscal policy. Mpc
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This note was uploaded on 12/07/2011 for the course ECON 2105 taught by Professor Staff during the Fall '08 term at Georgia State University, Atlanta.

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Macro___120111 - Practice questions for Final Exam...

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