Macroeconomic Questions

Macroeconomic Questions

1. Suppose MPC is 0.8 initially. Households then change their behavior so that the MPC falls to 0.75. What happens to aggregate expenditures?2. Explain what would cause the government purchases function to increase. Will a social security spending affect government purchases?3. For each of the following, explain whether it shifts the short-run aggregat supply curve, the long-run aggregate supply curve, or the aggregate demand curve (or more than one of these):Household decide to save a smaller share of their deposable income-There is an 8 week strike in the steel industry-A drought in the Midwest causes poor wheat harvest-The labor force participation rate increases-4. What problems are associated with the U.S. federal budget process? What solutions have been offered to these problems?5. Distinguish between crowding out and crowding in.6. In what ways can fiscal policy affect aggregate supply?7. It is often said that we are passing our national debt on to our children and grandchildren. Is this true? Explain.8. How do automatic stabilizers differ from discretionary fiscal policy tools?9. What is consumer function? Describe the graph of consumption function and explain its shape. If total spending is consumption plus investment spending, how does an increase in the rate affect total spending?10. How is an aggregate demand curve derived? What would cause the aggregate curve to shift to the right?


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