https://uopcourses.com/category/eco-372/ ECO/372 Principles of Macroeconomics

1. ECO/372
Principles of Macroeconomics
The Latest Version A+ Study Guide
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ECO 372 Week 1 Ten Principles of Economics and the Data of
Macroeconomics
Purpose of Assignment
The purpose of this is assignment is for students to review the basic principles of
economics and the concepts of the circular flow model, showing the connectivity of
society's economic players and the flow of goods and money within an economy.
Students will learn how society allocates its scarce resources and how economists are
both scientists and policymakers. Students will define GDP and CPI and how they are
calculated.
Assignment Steps
Resources: National Bureau of Economic Research; Principles of Macroeconomics: Ch.
1, 2, 3, 4, 5, 6, and 7
Scenario: Your organization's CEO is concerned that members of the strategic planning
committee are not familiar with current economic thought and principles.
Prepare a 1,000-word worksheet (worksheet is attached) for the members of the strategic
planning committee explaining the following information:
 How economists are both scientists and policymakers and what principles society
uses to allocate its scarce resources.
 Using the circular flow model, explain the flow of money and goods in an
economy.
 How the economy coordinates society's independent economic actors.

2.  A country's gross domestic product (GDP) and how it is defined and calculated.
 How the consumer price index (CPI) is constructed and why it is an imperfect
measurement of the cost of living.
Fill-in the attached worksheet. Make sure your final submission is formatted according to
APA guidelines with an APA title page, APA citations within the text and a final page
with APA formatted references.
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 2 Learning Team Charter
Overview
In this course, your team will work together to complete a few assignments. This
chartering assignment is designed to help you apply your project management skills to
understand the scope of your project, then break the project into goals, tasks,
responsibilities, resources, and milestones. The assignment also asks you to discuss and
answer some questions that will lay the foundation for developing your project.
Beyond the Standard Charter
You will notice that this chartering process goes beyond your standard University of
Phoenix Charter by helping your team create a project plan for team success by providing
you with opportunities to define your deliverables, recognize the connections between the
deliverables and other classroom activities, determine your timelines and milestones,
identify each team member's expected contribution, and answer questions that lay the
foundation for building your projects.
Putting "I" in "Team"
Important to note is the section for defining learning team expectations related to
participation, collaboration, communication, team contributions, assignment deadlines,
and other considerations. Please take the time to discuss and document how your team
will address each area and any challenges that may arise. It is important to understand
that we are "Putting 'I' in 'Team'". In short, we will recognize and reward individuals
according to their contributions to team output, not according to their team membership.
This means that individual grades may be different from the team grade depending on
each individual's contribution to each team deliverable.
Completing This Assignment
To complete this assignment, do the following:
 Review the Charter and Project plan.

3.  Review the weekly Learning Team deliverables.
 Complete the provided Learning Team Charter and Project Plan, including the
following: team member contact information, project by week, learning team
expectations, team discussion questions.
 The Learning Team charter must clearly identify a Team Leader for each
week of the course that a team assignment is due.
Please make sure that your team charter clearly outlines deadlines for
submitting individual portions of the team assignments as well as the
penalties for those who do not meet these deadlines. This is what will be
used as when making decisions about lack of participation in the team
forums. So it is in your interest to have this as clearly stated as
possible. My decision will be based on what you have written in your team
charter since this must be a team decision
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 2 The Real Economy in the Long Run
Purpose of Assignment
Students examine the long-run determinants of both the level and the growth rate of real
GDP per person and the factors that determine the productivity of workers and what
governments might do to improve the productivity of their citizens. Students will learn how
saving and investment are coordinated by the loanable funds market and will see the
effects of taxes and government deficits on saving, investment, the accumulation of
capital, and ultimately, the growth rate of output. Students will be introduced to tools that
people use when they participate in financial markets. Students will see how people
compare different sums of money at different points in time, how they manage risk, and
how these concepts combine to help determine the value of a financial asset, such as a
share of stock. Students will be introduced to the labor market and how economists
measure the performance of the labor market using unemployment statistics. Students will
address a number of sources of unemployment and some policies that the government
might use to lower certain types of unemployment.
Assignment Steps
Resources: National Bureau of Economic Research
Scenario: Select an organization your team is familiar with whose strategic plan calls
for an aggressive growth plan, requiring investment in facilities and equipment, growth in
productivity, and labor over the next five years. It is your team's task to determine where,
outside the United States, your organization should locate its new manufacturing plant.

4. Develop a 12- to 15-slide Microsoft® PowerPoint® presentation recommending an
off-shore country and support your choice with the following data:
 The factors determining the country's productivity
 How the country's policies influence its productivity growth
 How the country's financial system is related to key macroeconomic variables
 How your organization can reduce the risk they would face in relocating
 The current and projected unemployment over the next five years
Make use of Speaker Notes for explanations.
Cite a minimum of three peer-reviewed sources not including your textbook.
Format the assignment consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 3 Money and the Prices in the Long Run and Open
Economies
Purpose of Assignment
Week 3 will help students develop an understanding of what money is, what forms money
takes, how the banking system helps create money, and how the Federal Reserve
controls the quantity of money. Students will learn how the quantity of money affects
inflation and interest rates in the long run, and production and employment in the short run.
Students will find that, in the long run, there is a strong relationship between the growth
rate of money and inflation. Students will review the basic concepts macroeconomists use
to study open economies and will address why a nation's net exports must equal its net
capital outflow. Students will demonstrate the relationship between the prices and
quantities in the market for loanable funds and the prices and quantities in the market for
foreign-currency exchange. Student will learn to analyze the impact of a variety of
government policies on an economy's exchange rate and trade balance.
Assignment Steps
Resources: National Bureau of Economic Research
Develop a 12- to 15-slide Microsoft® PowerPoint® presentation for economic outlook
forecast that includes the following:
 Analyze the history of changes in GDP, savings, investment, real interest rates,
and unemployment and compare to forecast for the next five years.
 Discuss how government policies can influence economic growth.

5.  Analyze how monetary policy could influence the long-run behavior of price levels,
inflation rates, costs, and other real or nominal variables.
 Describe how trade deficits or surpluses can influence the growth of productivity
and GDP.
 Discuss the importance of the market for loanable funds and the market for
foreign-currency exchange to the achievement of the strategic plan.
 Recommend, based on your above findings, whether the strategic plan you talked
about in your week 2 presentation can be achieved and provide support.
Make use of Speaker Notes for explanations.
Use a minimum of three peer-reviewed sources from the University Library.
Format your presentation consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 4 Short-Run Economic Fluctuations
Purpose of Assignment
Students will example the model economists use to analyze the economy's short-run
fluctuations--the model of aggregate demand and aggregate supply. Students will learn
about some of the sources for shifts in the aggregate-demand curve and the
aggregate-supply curve and howthese shifts can cause fluctuations in output. Students
will be introduced to actions policymakers might undertake to offset such fluctuations.
Students will see why there is a temporary trade-off between inflation and unemployment,
and why there is no permanent trade-off.
Assignment Steps
Resources: National Bureau of Economic Research
Select an organization your team is familiar with or an organization where a team member
currently works.
Create a 15- to 20-slide Microsoft® PowerPoint® presentation to present to the
organization's Executive Committee.
Include the following items:
 Identify the three key facts about short-run economic fluctuations and how the
economy in the short run differs from the economy in the long run.
 Explain economic fluctuations and how shifts in either aggregate demand or
aggregate supply can cause booms and recessions using the model of aggregate

6. demand and aggregate supply. (Explain the theory behind the concept and
then address how it can be applied to the case of your selected organization
-- how is your organization affected by these shifts in AD and AS?)
 Explain how monetary policy affects interest rates and aggregate demand.
(Explain the theory behind the concept and then address how it can be
applied to the case of your selected organization -- how does monetary
policy affect your organization?)
 Analyze how fiscal policy affects interest rates and aggregate demand. (Explain
the theory behind the concept and then address how it can be applied to the
case of your selected organization -- how does fiscal policy affect your
organization?)
 Evaluate why policymakers face a short-run trade-off between inflation and
unemployment. (How does your organization deal with this trade off?)
 Evaluate why the inflation-unemployment trade-off disappears in the long run.
Make use of Speaker Notes for explanations.
Format your presentation consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 5 Major Debates over Macroeconomic Policy
Purpose of Assignment
This week requires the student to address six unresolved issues in macroeconomics,
each of which is central to current political debates. Students are required to use
information and tools that they have accumulated in their study of the text and evaluate
both sides of those issues, determine which side they can support for each issue, and
defend their positions.
Assignment Steps
Select two subjects from the following list of topics and develop a 12- to 15-slide
Microsoft® PowerPoint® presentation analyzing:
 Active monetary and fiscal policy
 Increased government spending to fight recessions
 Reducing federal government's discretionary powers
 Zero-inflation target
 Balanced government budget
 Tax incentives for saving
Evaluate both the advocates' position and the critics' position.

7. Determine which position you support and defend your position.
Make use of Speaker Notes for explanations.
Cite a minimum of three peer-reviewed sources not including your textbook.
Format consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
ECO 372 Week 5 Final Examination
1
There is an increase in human capital when _____.

Samantha receives training in quality management after joining a new firm

Shiroh persuades the management of her company to offer more perks to
employees

Sue rents a laser printer to teach her employees how to fix it

Susie puts in more than 8 hours of work at her workplace every day
2
In the long run, a higher saving rate:

does not lead to a higher level of income because of deterioration in labor

8. productivity.

always leads to a higher level of productivity because of increasing returns to scale.

always leads to a higher growth rate of output because of improvement in the stock
of human capital.

does not always lead to a higher growth rate of output because of diminishing
returns to capital.
3
The Marions purchased a Persian rug worth $5,000 from an Iranian textile mill. Everything
else remaining unchanged, this will:

increase the gross domestic product of the domestic country by $5,000.

decrease the consumption expenditure in the domestic country by $5,000.

decrease the net imports of the domestic country by $5,000.

reduce the net exports of the domestic country by $5,000.
4
Suppose the net capital outflow from Zenovia is negative. This implies that:


9. the citizens of Zenovia are investing more in foreign assets than foreigners are
investing in assets in Zenovia.

the real interest rate in foreign countries is higher than in Zenovia.

foreigners are not interested in buying assets in Zenovia.

the real interest rate in Zenovia is high.
5
The exhibit given below shows the short-run aggregate demand and supply curves in an
economy, AD1 and AS1, and the long-run aggregate supply curve, LRAS. The economy was
initially in equilibrium when there was a decrease in aggregate demand, causing a shift of the
aggregate demand curve from AD1 to AD2. Which of the following is true in this case?


10. The economy will move from point D to point A in the short run and then to point C in
the long run.

The economy will move from point B to point A in the short run and then to point C in
the long run.

The economy will move from point C to point B in the short run and then eventually
to point A.

The economy will move from point D to point C in the long run.
6
If the price level in an economy is 120 and the equilibrium price level is 100, _____.

the supply of money is likely to exceed the demand for money

people will want to hold more money than is supplied by the central bank

the purchasing power of money will increase

the demand for money curve will shift to the left
7
Keynesian economists believe that when an economy is in a recession, the government
should:


11. increase the money supply in the economy so that interest rates decline, reducing
the cost of borrowing to finance new investment projects.

decrease tax rates rather than increase government spending because households
always view such tax cuts as permanent and increase their current consumption.

increase its purchases rather than decrease taxes because households save a part
of the increase in their income as a result of tax cuts.

increase the money supply in the economy so that an excess supply of money can
induce households to increase their consumption expenditure.
8
The buyers and sellers in the country of Perylia use corn as a medium of exchange. This
means that:

Perylia uses commodity money.

Perylia uses fiat money.

corn cannot be used as a store of value or as a unit of account in Perylia.

corn can be used as a store of value but not as a unit of account in Perylia.
9

12. After retirement, Molly deposits $500,000 in a local bank in Merrina. At an interest rate of 4
percent, she will receive approximately _____ after 3 years.

$662,345

$750,000

$562,432

$608,326
10
The Phillips curve shows:

the positive relationship between the price level and aggregate supply.

the positive relationship between the interest rate and the supply of money.

the negative relationship between inflation and unemployment.

the negative relationship between the interest rate and the demand for money.
11
A decrease in the tax rates in an economy will cause a:

13. 
rightward shift of the aggregate demand curve if the crowding-out effect is larger
than the size of the tax multiplier.

leftward shift of the aggregate demand curve if the crowding-out effect is larger than
the size of the tax multiplier.

rightward shift of the aggregate demand curve if the crowding-out effect is equal to
the size of the tax multiplier.

leftward shift of the aggregate demand curve if the crowding-out effect is smaller
than the size of the tax multiplier.
12
Which of the following is true according to the circular-flow diagram?

Households receive wages, rent, and profit from firms.

Firms receive income from households.

Firms receive wages, rent, and profit from the government.

Households receive revenue from the government.
13

14. In the country of Platonia, firms make the economic decisions of what to produce, how to
produce, and for whom to produce. Households decide where to work and how to spend their
income. Based on this information, it can be concluded that Platonia has a:

command economy.

mercantile economy.

market economy.

closed economy.
14
Ruth wants to calculate the present value of a sum of money that she will receive after the
demise of her grandparents. To calculate the present value, she should use the:

compounding method.

discounting method.

expenditure method.

value-added method.
15

15. Amelia decides to buy 10 shares each of 5 companies instead of investing in 50 shares of a
big company. This is an attempt to:

discount the present value of the income from the stocks.

eliminate firm-specific risk though diversification.

discount the future value of the income from the stocks.

eliminate market risk though diversification.
16
The natural rate of unemployment in a country is 4 percent. This implies that:

4 percent of the labor force is unemployed at any given point of time.

the country has an unemployment rate of 4 percent in the short run.

the unemployment rate is constant at 4 percent over time.

the country has a 4 percent unemployment rate when the labor market is in
equilibrium.
17

16. A recent survey showed the health benefits of cranberry juice for treating heart and other
respiratory disorders. The exhibit below shows that the initial demand curve for cranberry
juice is D1. Which of the following is likely to be a consequence of the publication of the survey?

There will be a movement from point A to point B on D1.

The demand curve will shift from D1 to D2.

There will be a movement from point A to point C on D1.

The demand curve will shift from D1 to D3.
18
Following the unexpected good performance of Leathex, all its employees were given a
one-time bonus. This consequently led to a rightward shift of the demand curve for shoes
manufactured by the company and a leftward shift of the demand curve for socks. This shows
that shoes are:


17. substitutes.

complementary goods.

inferior goods.

normal goods.
19
Ephlon Inc., an Italian bike manufacturer, opens a factory in the United States. This is an
example of:

the catch-up effect.

a foreign portfolio investment.

the accumulation of human capital.

a foreign direct investment.
20
The circular-flow diagram shows that:

firms supply labor and other resources to the government in the factor market.

18. 
firms receive wages and profits from households in the products market.

households sell the factors of production to firms in the inputs market.

households supply resources to firms in the products market.
21
Scarcity occurs because of:

overutilization of labor.

the limited supply of resources.

the excess of quantity supplied over quantity demanded.

limited human needs and wants.
22
Suppose an economy is in long-run equilibrium. An increase in consumption expenditure will:

increase the price level in the long run but have no effect on real gross domestic
product.


19. shift the aggregate demand curve rightward and increase the real output in the long
run.

shift the short-run aggregate supply curve rightward and increase both the price
level and real output in the long run.

decrease both the price level and real gross domestic product in the long run.
23
If the real exchange rate in the United States is below the equilibrium level, _____.

the quantity of dollars supplied will exceed the quantity of dollars demanded

there will be a shortage of dollars

the value of dollar will fall

the demand for dollars by foreigners will balance the supply of dollars from
Americans
24
A difference between commodity money and fiat money is that:


20. fiat money cannot be used as a unit of account.

commodity money cannot be used as a unit of account.

commodity money is used in a barter economy.

fiat money does not have any intrinsic value.
25
A higher interest rate in a country:

encourages citizens to buy foreign assets.

lowers saving in the country and decreases the quantity of loanable funds supplied.

makes domestic bonds less attractive to foreigners.

discourages investment and decreases the quantity of loanable funds demanded.
26
Martha lends $200 to a friend who promises to return it after a year. Instead of lending it to her
friend, Martha could have put the money in a bank where she could have earned an interest
rate of 2 percent per annum. Martha’s opportunity cost of lending the money is _____.


21. $204

$4

$2

$200
27
The table given below shows the total amount of spending in the country of Mesodonia.
Mesodonia’s gross domestic product is:

$4,560 million.

$5,660 million.

$4,710 million.


22. $4,160 million.
28
Jack is an out-of-work sculptor. He has been looking for a job for the last two years. Unable to
find any, he has given up his job search. Which of the following is true in this case?

This is an example of frictional unemployment.

He is a discouraged worker and will not be included in the calculation of the
unemployment rate.

This is an example of structural unemployment.

He is a part of the unemployed labor force.
29
The country of Merilya exported goods and services worth $1.2 million and imported goods
and services worth $2.7 million. The net exports of the country was _____.

$2 million, and it had a trade surplus

−$1.5 million, and it had a trade deficit

$3.9 million, and it had a trade surplus

23. 
−$3.9 million, and it had a trade deficit
30
Suppose the net foreign investment in Italy is positive. This implies that:

foreign direct investment in Italy is higher than foreign portfolio investment in the
country.

foreigners are buying relatively more Italian assets.

Italians are buying more foreign assets than foreigners are buying Italian assets.

Italy is experiencing a net capital inflow.
31
Suppose the Fed purchases government bonds through open-market operations. All other
things remaining equal, this is likely to:

decrease the price level and increase the real wealth of consumers.

decrease the price level and make domestic goods less expensive relative to foreign
goods.


24. increase the price level and eventually decrease the interest rate and investment
spending.

increase the price level and eventually decrease the demand for money as well as
goods and services.
32
A rise in the price of bacon from $14 per pound to $16 per pound will reduce the purchasing
power of the dollar by:

0.55 pounds of bacons.

0.06 pounds of bacon.

5 pounds of bacon.

2 pounds of bacon.
33
Suppose the central bank of a country undertakes an expansionary monetary policy. Which of
the following is most likely to be the effect of such a policy, all other things remaining
unchanged?

An increase in the price level that reduces the real value of households’ money
holdings and stimulates consumer spending

25. 
An increase in the price level that stimulates spending on net exports and increases
the demand for money

A decrease in the price level that reduces the amount of money that peo ple want to
hold and decreases the interest rate.

A decrease in the price level that reduces the interest rate and lowers the real value
of the domestic currency foreign-exchange market.
34
As more capital is used in the production process, the amount of other inputs being fixed, the
production function becomes:

flat because the extra output produced from an additional unit of capital decreases.

steep because the extra output produced from an additional unit of capital
decreases.

steep because the extra output produced from an additional unit of capital increases.

flat because the extra output produced from an additional unit of capital increases.