Exam Bank Questions and Answers for IB Macroeconomics Definitions 100% Pass
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Course
Macroeconomics
Institution
Macroeconomics
Exam Bank Questions and Answers for IB Macroeconomics Definitions 100% Pass
Macroeconomics - Answers The field of economics that studies the behaviour of the aggregate economy.
Economic Activity - Answers Any act that generates production, income, employment or expenditure
Transfer Payments - An...
Exam Bank Questions and Answers for IB Macroeconomics Definitions 100% Pass
Macroeconomics - Answers The field of economics that studies the behaviour of the aggregate
economy.
Economic Activity - Answers Any act that generates production, income, employment or expenditure
Transfer Payments - Answers A payment from the government that is received when there is no good or
service exchanged.
Gross Domestic Product (GDP) - Answers The total value of all final goods and services produced in an
economy during a given period of time, usually one year.
Gross National Product (GNP) or Gross National Income (GNI) - Answers The total money value of all
final goods and services produced in an economy in one year, plus net property income from abroad.
(GNI = GDP + property income from abroad - property income paid abroad).
Per Capita - Answers Divided by the population
Green GDP - Answers A measure of GDP that takes into account any environmental costs incurred from
the production of the goods and services included in GDP figures.
Real GDP - Answers GDP adjusted for inflation. Real GDP = (Nominal GDP/Deflator)X100
Business Cycle - Answers The aggregate of economic activity over a long period of time measured by a
correlation between GDP and time.
Recession - Answers When an economy experiences two consecutive quarters of negative GDP.
Aggregate Demand - Answers The total amount of goods and services demanded in the economy at a
given average price level and in a given time period. C+I+G+X-M
Aggregate Supply - Answers The total amount of goods and services that all industries in the economy
will produce at every given price level and in a given time period.
Macroeconomic Short Run - Answers That period of time where the prices of the factors of production
are fixed.
Inflation - Answers A sustained rise in the average price level.
Keynesian Multiplier - Answers A key component of Keynesian theory that shows the possibility of a
given change in injections and leakages either increasing or decreasing aggregate demand by more than
the value of the initial injection or leakage.
Unemployment - Answers The number of people of working age who are willing and able to work, are
actively seeking unemployment, but are unable to find a job.
, Full employment - Answers The level of employment where the demand for labour equals the supply of
labour on the aggregate labour market.
Disinflation - Answers A fall in the rate of inflation
Deflation - Answers A sustained fall in the average price level
Consumer Price Index (CPI) - Answers A current social and economic indicator that is constructed to
measure changes over time in the general level of prices of consumer goods and services that
households acquire, us or pay for consumption.
Inflation Rate - Answers [(Index X+1 - Index X)/Index X]x100
Demand Pull Inflation - Answers Inflation which is caused by excess aggregate demand in the economy
outpacing the available aggregate supply.
Cost Push Inflation - Answers Inflation caused by increases in the costs of production
Economic Growth - Answers An increase in real GDP of an economy over time.
Productivity - Answers outputs/inputs
Equity - Answers A normative concept of fairness in the distribution of wealth and income.
Equality - Answers Spreading wealth and income equally, regardless of one's income or position in
society.
Progressive Taxation - Answers A system of direct taxation where tax is levied at an increasing rate for
successive bands of income, such that the percentage rate of tax increases as income increases.
Proportional Taxation - Answers A system of direct taxation in which tax is levied at a constant rate as
income rises, such that the percentage rate of tax remains constant as income increases.
Regressive Taxation - Answers A system of direct taxation in which tax is levied at a decreasing average
rate as income rises, such that the percentage rate of tax falls as income increases.
Average Tax Rate - Answers (Total Tax Paid/Income)x100
Marginal Tax Rate - Answers (change in total tax paid/change in income)x100
Services in Kind - Answers Goods that are under-provided and under-consumed, such as public
transport, healthcare and educations, that are often provided directly or indirectly by the government,
due to these goods having highly positive effects on low income household and benefit proportionally
more than high income households.
Demand Side Policy - Answers The set of government policies designed to manage Aggregate Demand in
the macroeconomy.
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