Macroeconomic Fundamentals and Equilibrium Analysis Quiz

GDP includes consumption, investment, government spending, and net exports.

Gross Domestic Product is the sum of consumption, investment, government spending, and net exports.

Real GDP accounts for inflation, providing a more accurate measure of economic output compared to nominal GDP.

The unemployment rate is calculated as the percentage of unemployed individuals in the labor force.

Recessions are marked by a significant decrease in consumer spending, leading to economic contraction.

Expansionary fiscal policy involves increasing government spending to stimulate economic growth.

Stagflation is a condition of high inflation rates combined with economic stagnation.

Central banks use monetary policy to influence the money supply and interest rates.

In a liquidity trap, conventional monetary policy tools lose effectiveness due to extremely low interest rates.

Aggregate demand includes consumption, investment, government spending, and net exports, excluding imports.

Fiscal policy is related to government revenue and spending, while monetary policy involves control over the money supply and interest rates.

Crowding out occurs when increased government spending leads to a decrease in private investment.

The Phillips curve depicts the trade-off between inflation and unemployment rates.

The multiplier effect quantifies the impact of an initial change in spending on overall economic activity.

In the short run, the aggregate supply curve is represented by the equation Y = AS.

The money multiplier illustrates the expansion of the money supply through the banking system.

The Laffer Curve demonstrates the correlation between tax rates and government tax revenue.

The unemployment rate can be calculated using the labor force participation rate to provide a more comprehensive measure.