Macroeconomics Practice Exam #2 1 If a country's economy is currently operating 4 A decrease in which of the following is most inside of its production possibilities curve, likely to increase long run economic growth? what must be true? (A) The country's (A) Federal student loan programs resources are fully employed. (B) The money supply (B) The country's resources are fully (C) Interest rates employed, but the labor force participation (D) The marginal propensity to save rate is less than 100%. (E) Personal income tax rates (C) The country's resources are not fully 5 employed. If disposable income is $5,000 billion, personal (D) The country's natural and capital taxes are $1,000 billion, and the marginal resources are not fully employed, but propensity to consume (MPC) is 0.8, what is human resources are fully employed. personal income equal to? (E) Specialization and trade would not benefit (A) $6,000 billion the society. (B) $5,000 billion (C) $4,800 billion 2 When the U.S. Federal Reserve engages in (D) $3,200 billion open market operations it is (E) $2,200 billion (A) increasing or decreasing the discount rate (B) buying or selling government securities 2015 2016 2016 (C) increasing or decreasing reserve Prices Output Prices Pears $1.50 4 $2.50 requirements for member financial institutions Apples $2 5 $2 3 (D) buying or selling stocks Oranges $8 $10 6 (E) engaging in check clearing operations for Given the production and price information commercial banks listed in the table above, and assuming 2015 is the base year, calculate the Real Gross 3 A leftward shift in the short-run aggregate Domestic Product (RGDP) for 2016 and the supply curve could be the result of GDP deflator for 2016. (A) an increase in capital stock RGDP Deflator (B) a central bank sale of government securities (A) $24 60 100 C) tax credits for capital investments (B) $25 (D) a decrease in personal income taxes (C) $40 125 (E) an increase in input prices (D) $50 150 (E) $ 60 175