1. Macroeconomics is a study about / seeks to understand A. economic growth, business cycles, and inflation. B. industry sales, marketing strategies and corporate growth. C. product demand, product cost, and profit maximization. D. public choices, private choices, and consumer maximization. Makroekonomi merupakan kajian tentang A. pertumbuhan ekonomi, kitaran niaga dan inflasi B. jualan dalam industry, strategi pemasaran dan pertumbuhan korporat C. permintaan
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CHAPTER 10 Aggregate Demand I Questions for Review 1. The Keynesian cross tells us that fiscal policy has a multiplied effect on income. The reason is that according to the consumption function, higher income causes higher consumption. For example, an increase in government purchases of ∆G raises expenditure and, therefore, income by ∆G. This increase in income causes consumption to rise by MPC × ∆G, where MPC is the marginal propensity to consume. This increase in consumption raises
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SECTION A: MULTIPLE CHOICE QUESTIONS (35%) Answer ALL questions in this section. Choose the one alternative that best completes the statement or answers the question. Please answer questions by shading the appropriate box on the MCQ form (Multiple Choice answer sheet). 1) hich of the following is not a consequence of hyperinflation? W A) he price level grows in excess of hundreds of percentage points T per year. B) oneyʹs function as a medium of exchange is enhanced. M C) t causes an economy to suffer slow growth
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Employment: AD 2 1 100 180 AD 2 1 100 180 Economic boom : :1 AD1 2 1 80 200 AD2 140 AD1 2 1 80 200 AD2 140 Recession: P Y AD1 2 1 80 200 AD2 140 P Y AD1 2 1 80 200 AD2 140 Short Run and Long Run Aggregate Supply Curves Full Employment YP=140 P 2 1 LRAS YP=140 P 2 1 LRAS Economic boom 2 1 AS YP=140 2 1 AS YP=140 Recession: P Y 1 SRAS1 YP = 140 SRAS2 LRAS1 200 P Y 1 SRAS1 YP =
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The Principles of Economics – Markets and the Economy * Explain how an increased federal budget deficit resulting from a recession can actually help stabilize an economy. Before I can explain how an increased federal budget deficit resulting from a recession can actually help stabilize an economy, I most first explain what a budget deficit is. Arthur O’Sullivan, Steven M. Sheffrin and Stephen J. Perez (2011), authors of Survey of Economics: Principles, Applications, and Tools explain that
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and output levels vis-à-vis the demand as per the forecasts and then determine how Mandexor can balance optimal output with demand using the right capacity planning and control strategies to achieve its production targets in the European Disk Drive Division. The methods to be employed in this paper include review of the current production data (Actual Vs. Forecast) in relation to the capacity of the plant, calculation of necessary variances between output and demand in relation to capacity and a coherent
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effect it has towards the productivity, innovation and competition for Australia. The 2013-14 Budget, which illustrates a reduction in taxes of about $ 17 billion and an increase in expenditures of $ 24 billion, is strongly coherent, increasing aggregate demand by about 3 per cent. This process of fiscal expansion has been possible given the low Australian government debt that allows restoring an even budget by 2015 – 2016. There are several fiscal challenges directed to the 2013 Federal Budget. One
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Explain how an increase in federal budget deficit due to recession can stabilize the economy. A deficit means that the government spends more than it receives in tax revenues in a given year (O’Sullivan, Sheffrin, & Perez 2010, p. 374). The total deficit is spending, plus all the interest payments on top of the original debt, minus the total tax revenue (http://www.blurtit.com). There are three factors, known as automatic stabilizers, that affect and stabilize the economy
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especially the government will buy for financing its activities (the ones from the public sector in this case). If we now look at the AS/AD framework, AD (Aggregate Demand) is: Consumption spending (C) plus Investment spending (I) plus Government spending (G) plus Net exports (difference of between exports -X- and imports -F- ) While AS (Aggregate Supply) describes the number of outputs that an economy, and more especially firms, is able to supply (resource prices -wages-, energy cost, productivity)
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expenditure plus the higher the government expenditure, it will reduce the private sector economic growth. Classical Theory believes the economy will get corrected by itself in the theory of invisible hand. Keynes theory is based on the aggregate demand which is influenced by the public and private sector. It is influenced and affected by fiscal policies which are changes in government expenditure and tax. Keynes believes prices are rigid which will only cause output to fluctuate when there
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