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BMAL-590 Macroeconomics Exam Questions Correct Answers Current Update (Verified A+ Pass)
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BMAL-590 Macroeconomics Exam Questions Correct Answers Current Update (Verified A+ Pass) Macroeconomics - examines the economy as a whole. When all the individuals, households, firms, governments and foreign countries act together and make decisions, the entire economy is affected. Thus, Macro...

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  • December 27, 2024
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BMAL-590 Macroeconomics Exam
Questions Correct Answers Current
Update (Verified A+ Pass)

Macroeconomics - ✔✔examines the economy as a whole. When all the individuals, households, firms,

governments and foreign countries act together and make decisions, the entire economy is affected.




Thus, Macroeconomics explores the determinants of aggregate income, investment, consumption,

growth, interest rates, and overall level of prices.




Macroeconomics posits that the notion of perfect markets and equilibrium do not hold for all goods and

services, and certainly not at all times.




In fact, the impetus for the growth of Macroeconomics was the great depression as classical

macroeconomic theories could not explain why high levels of unemployment persisted.


Keynesian economics - ✔✔The central theme is the role of government in the economy.




Keynes argued that government intervention could be an effective toolin addressing the problems of

unemployment and sluggishness output. Thus, government becomes a facilitator in stimulating




Katelyn Whitman© 2025, All Rights Reserved.

,2|Page


aggregate demand and lifting the economy out of a recession. The definition of people not working

according to Keynes are those not able to find a job at the current wage rate.




Keynesian economics was deemed to be the answer until the events of the 1970s and 1980s demonstrated

the limitations of government intervention and led to considerable disillusionment.


Walter Heller - ✔✔used the term "Fine-tuning" to explain the role of government in regulating

unemployment and inflation.


The law of demand states that - ✔✔price and quantity demanded are inversely related




The law of demand states that the quantity demanded of goods falls when the price of the goods rises,

and vice versa, provided all other factors that affect buyers' decisions are unchanged.




The quantity demanded of a consumer good such as ice cream depends on:


- The price of ice cream


- The prices of related goods


- Consumers' incomes


- Consumers' tastes


- Consumers' expectations about future prices and incomes


- Number of buyers, etc.




Katelyn Whitman© 2025, All Rights Reserved.

,3|Page


The law of demand says that the quantity demanded of a good is inversely related to its price, provided

all other factors are unchanged.




Shifts in demand are caused by changes in the factors of demand:


- Economics (the economy, consumer income, GDP, xfc etc.)


- Prices of related goods


- Consumer tastes and preferences


- Legal/Government


- Expectations about future prices and prospects


- Technology


- Number of buyers


examples of how factors can shift an entire demand curve include: - ✔✔Consumer Income:


- As income increases, the demand for a normal good will increase.


- As income increases, the demand for an inferior good will decrease.




Prices of Related Goods:


- When a fall in the price of one good reduces the demand for another good, the two goods are called

substitutes.


- When a fall in the price of one good increases the demand for another good, the two goods are called

complements.




Katelyn Whitman© 2025, All Rights Reserved.

, 4|Page


When considering the factors involved one should be able to understand how changes in the factors

cause changes in demand, with an entire shift not a movement along the demand curve.


Quantity supplied - ✔✔the amount of a good that sellers are willing and able to sell.


Supply - ✔✔a full description of how the quantity supplied of a commodity responds to changes in its

price.


The law of supply states: - ✔✔the quantity supplied of a good rises when the price of the good rises, as

long as all other factors that affect suppliers' decisions are unchanged


Market Supply - ✔✔the combined supply of everyone willing and able to sell a good in a market. Market

supply is graphically represented by a positively-sloped market supply curve (remember previous slide),

which can be derived by combining, or adding, the individual supplies of every seller in the market.


Stagflation - ✔✔a period of slow economic growth and high unemployment (stagnation) while prices rise

(inflation)




a phenomenon that has baffled economists. Stagflation is often caused by a supply side shock. For

example, rising commodity prices, such as oil prices, will cause a rise in business costs (transport more

expensive) and short run aggregate supply will shift to the left. This causes a higher inflation rate and

lower GDP output.




An economy is said to be in stagflation when overall price levels increase rapidly (inflation) even as the

economy itself is in a recession or high levels of unemployment (stagnation).




Katelyn Whitman© 2025, All Rights Reserved.

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