ECON 103 EXAM 2 QUESTIONS & ANSWERS
Which technology most strongly affected the growth in U.S. productivity in recent
decades? - Answers -microcomputers
Which of these does NOT increase productivity? - Answers -an increase in the money
supply
Increases in ______ often lead to economic growth. - Answers -technology
Whispering Valley Furniture hires 5 employees working eight hours each to produce 80
rocking chairs. Rocky Gap Furniture hires 10 employees working eight hours each to
produce 100 rocking chairs. Which company's workers are more productive? - Answers
-Whispering Valley Furniture's workers are more productive
Which situation indicates that total output in a country has grown the most when the
starting output is the same in all situations? - Answers -Output per worker grows by
10% while labor force grows by 10%
If technology is held constant, an increase in capital concurrent with a decrease in labor
input causes output to - Answers -rise, fall, or stay the same
Increased taxes will shift the aggregate demand curve to the ______ and ______ output
demanded. - Answers -left; decrease
Aggregate supply shifts to the left when - Answers -input prices rise
Suppose the economy is at full employment, and energy prices spike. In the short run,
output will ______; in the long run, output will ______. - Answers -decrease; remain
unchanged
Increased consumer confidence will shift the aggregate demand curve to the ______
and ______ output demanded. - Answers -Right; increase
The ______ curve is vertical at full employment. - Answers -long-run aggregate supply
If oil prices decline, the short-run aggregate supply curve shifts ______ and output
supplied will ______. - Answers -right; increase
If national incomes of foreign countries fall at the same time the dollar appreciates, then
in the United States, the aggregate demand curve - Answers -shifts to the left
If the economy is below full employment and the government uses expansionary fiscal
policy in an attempt to reduce unemployment - Answers -output and the price level will
rise
, Which of these will result if the economy expands beyond the level of full employment? -
Answers -inflation
When the economy is underperforming and policymakers pursue expansionary fiscal
policy, they express a willingness to trade off ______ output for a ______ price level. -
Answers -higher; higher
When the economy is overheating and policymakers pursue contractionary fiscal policy,
they express a willingness to tradeoff ______ output for a ______ price level. -
Answers -lower; lower
If interest rates rise, the burden of a nation's public debt will ______ and it will be
______ difficult to service its debt. - Answers -rise; more
The federal government can finance its debt by all of these measures EXCEPT a(n) -
Answers -increase in the federal funds rate
When the economy is at fully employment, expansionary fiscal policy results in a new
long-run equilibrium at an output level ______ full employment and a ______ price
level. - Answers -equal to; higher
The solution to the simultaneous presence of inflation and unemployment is to
implement policies that shift the - Answers -short-run aggregate supply curve to the
right
Which strategy is an example of increasing the capital-to-labor ratio? - Answers -adding
more tractors in the corn fields
Capital productivity is a major determinant of - Answers -GDP per capita
Developing countries tend to have - Answers -low capital-to-labor ratios
Which of these will shift the aggregate supply curve to the right? - Answers -an
increase in the investment of human capital
Which of these would cause a movement along a country's aggregate demand curve,
but not a shift in its aggregate demand curve. - Answers -increase in a country's CPI,
meaning that household income does not buy as much
Which of these is NOT a source of productivity growth? - Answers -a decrease in the
capital-to-labor ratio
Assume initially the economy is at full employment. If aggregate demand increases, the
aggregate price level and costs will ______, and ultimately, the short run aggregate
supply curve shifts to the ______. - Answers -rise; left
Which technology most strongly affected the growth in U.S. productivity in recent
decades? - Answers -microcomputers
Which of these does NOT increase productivity? - Answers -an increase in the money
supply
Increases in ______ often lead to economic growth. - Answers -technology
Whispering Valley Furniture hires 5 employees working eight hours each to produce 80
rocking chairs. Rocky Gap Furniture hires 10 employees working eight hours each to
produce 100 rocking chairs. Which company's workers are more productive? - Answers
-Whispering Valley Furniture's workers are more productive
Which situation indicates that total output in a country has grown the most when the
starting output is the same in all situations? - Answers -Output per worker grows by
10% while labor force grows by 10%
If technology is held constant, an increase in capital concurrent with a decrease in labor
input causes output to - Answers -rise, fall, or stay the same
Increased taxes will shift the aggregate demand curve to the ______ and ______ output
demanded. - Answers -left; decrease
Aggregate supply shifts to the left when - Answers -input prices rise
Suppose the economy is at full employment, and energy prices spike. In the short run,
output will ______; in the long run, output will ______. - Answers -decrease; remain
unchanged
Increased consumer confidence will shift the aggregate demand curve to the ______
and ______ output demanded. - Answers -Right; increase
The ______ curve is vertical at full employment. - Answers -long-run aggregate supply
If oil prices decline, the short-run aggregate supply curve shifts ______ and output
supplied will ______. - Answers -right; increase
If national incomes of foreign countries fall at the same time the dollar appreciates, then
in the United States, the aggregate demand curve - Answers -shifts to the left
If the economy is below full employment and the government uses expansionary fiscal
policy in an attempt to reduce unemployment - Answers -output and the price level will
rise
, Which of these will result if the economy expands beyond the level of full employment? -
Answers -inflation
When the economy is underperforming and policymakers pursue expansionary fiscal
policy, they express a willingness to trade off ______ output for a ______ price level. -
Answers -higher; higher
When the economy is overheating and policymakers pursue contractionary fiscal policy,
they express a willingness to tradeoff ______ output for a ______ price level. -
Answers -lower; lower
If interest rates rise, the burden of a nation's public debt will ______ and it will be
______ difficult to service its debt. - Answers -rise; more
The federal government can finance its debt by all of these measures EXCEPT a(n) -
Answers -increase in the federal funds rate
When the economy is at fully employment, expansionary fiscal policy results in a new
long-run equilibrium at an output level ______ full employment and a ______ price
level. - Answers -equal to; higher
The solution to the simultaneous presence of inflation and unemployment is to
implement policies that shift the - Answers -short-run aggregate supply curve to the
right
Which strategy is an example of increasing the capital-to-labor ratio? - Answers -adding
more tractors in the corn fields
Capital productivity is a major determinant of - Answers -GDP per capita
Developing countries tend to have - Answers -low capital-to-labor ratios
Which of these will shift the aggregate supply curve to the right? - Answers -an
increase in the investment of human capital
Which of these would cause a movement along a country's aggregate demand curve,
but not a shift in its aggregate demand curve. - Answers -increase in a country's CPI,
meaning that household income does not buy as much
Which of these is NOT a source of productivity growth? - Answers -a decrease in the
capital-to-labor ratio
Assume initially the economy is at full employment. If aggregate demand increases, the
aggregate price level and costs will ______, and ultimately, the short run aggregate
supply curve shifts to the ______. - Answers -rise; left
