If we let represent autonomous expenditure and represent the induced expenditure from an extra dollar of income, then...

a)AE = + Y

b)AE = + Y

c)AE = - Y

d)AE = - Y

In 2019, the inflation rate was two percent, the output gap was two percent, there were no random shocks and the value of = 1. The inflation rate in 2020 should be ___ percent.

a)2.

b)5.

c)4.

d)3.

The government collects tax revenues of $5 million and spends $3 million. Private sector saving is $4 million and private investment is $6. The current account balance is...

a)$9 million.

b)$0.

c)-$4 million.

d)$4 million.

Aggregate demand is given by P = 100 - Y, aggregate supply is given by P = 10 + 2Y and potential GDP is 25. There is currently...

a)Sustainable growth.

b)A recessionary gap.

c)No output gap.

d)An inflationary gap.

In the last decade, nominal GDP grew by 40 percent, prices grew by 25 percent and the population grew by five percent. Over the decade, GDP per capita grew by...

a)8.4 percent.

b)6.7 percent.

c)3.2 percent.

d)12 percent.

The neoclassical growth model assumes that the standard of living of countries...

a.Diverges.

b.Improves for the rich and deteriorates for the poor.

c.Grows randomly.

d.Converges.

In equation BB = tY - G - iPD, the difference between G and iPD is...

a)G represents spending outside the government's primary budget balance and iPD represents spending inside the government's primary budget balance.

b)iPD represents programme spending and G represents interest paid on the government debt.

c)G represents spending by the federal government and iPD represents spending by interprovincial departments.

d)G represents programme spending and iPD represents interest paid on the government debt.

Hapolonia is running a current account deficit of $30 million and a financial account surplus of $20 million. If Hapolonia does not have a statistical discrepancy, then its official reserves...

a)Increased by $10 million.

b)Decreased by $50 million.

c)Decreased by $10 million.

d)Increased by $50 million.

Consider the following economy.

C = 1000 + 0.8YD

T = 0.25Y

I = 325

G = 225

X = 450

M = 0.1Y

The spending multiplier equals...

a)4

b)2

c)0.5

d)5

In the function, Y = A x F(K, N), A is often referred to as...

a)Total factor productivity.

b)The production function.

c)Potential output.

d)Full employment labour.

If the value of the GDP deflator in a particular year is 96, then we can conclude that...

a)There is a recession.

b)This particular year must be before the base year.

c)Prices are lower in this particular year compared to the base year.

d)Prices are falling.