A basic purpose of macroeconomic theory is to:
a) Stop economic contractions from occurring.
b) Control the business cycle.
c) Cause GDP to grow.
d) Explain the business cycle.
Ans: d) Explain the business cycle.
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Macroeconomic equilibrium occurs when
A) there is no inflation. B) real GDP is equal to potential GDP. C) the aggregate quantity demanded is equal to the aggregate quantity supplied. D) the economy is fully employed. E) the price level equals the potential price level.
If the APS is .1 and the MPC is .85, the APC is
A. .1. B. .15. C. .85. D. .9.
Compared with a system of fixed exchange rates, currency unions are beneficial because they
A) restrict what countries can do with fiscal policy. B) allow exchange rates to float. C) allow every country to have an independent monetary policy. D) eliminate the possibility of speculative attacks.
An example of a service counted in this year's GDP is
a. buying shampoo to give your pet a bath b. cleaning your house c. trimming your own hair d. hiring a gardener to weed your garden e. polishing your friend's car as a friendly gesture