ASU ECON 211 FINAL EXAM
CERTIFICATION TEST SCRIPT FULL
QUESTIONS AND SOLUTIONS +
⩥ What are the two economic fluctuations. Answer: 1. In the short run,
shifts in the aggregate demand causes fluctuations in the economy's
output of goods and services
2. In the long run, shifts in the aggregate demand affects the overall
price level not output
⩥ What are the effects of aggregate supply shifting. Answer: It can cause
stagflation.
⩥ How and why does the aggregate supply curve shift upward. Answer:
If there's an increase in unit costs for any reason other than an increase
in real GDP.
⩥ Short run demand shock. Answer: Causes an increase in government
purchases which will also increase real GDP and price level.
⩥ When there's a demand shock how will it adjust to long run. Answer: -
In the short run input prices are sticky
,- In the long run input prices can adjust; if the output is higher than the
full employment then the wage rate will rise which will shift the
aggregate supply curve upward
⩥ What causes the long run aggregate supply to shift to the right?.
Answer: If there's an increase in labor, capital, natural resources, and
technology.
⩥ Specialization and exchange allows what?. Answer: - Enables us to
have greater production and higher living standards
- Develop expertise
- Minimize downtime
⩥ Absolute advantage. Answer: The ability to produce goods with fewer
inputs than another producer.
⩥ Comparative advantage. Answer: The ability to produce goods with a
lower opportunity cost than another producer.
⩥ Law of demand. Answer: When the price of good increases, quantity
demanded will fall.
⩥ What causes the demand curve to shift rightward?. Answer: - If
income increases
,- If the price of the substitute increases
- If the price of complement decreases
- If population increases
- If they expect that prices will increase in the future
- If tastes transfers toward the good
⩥ Law of supply. Answer: As the price of good increases, the quantity
supplied increases.
⩥ What causes the supply curve to shift to the right?. Answer: - If input
prices decreases
- If the price of alternative decreases
- If the number of firms increases
- If they expect that the price in the future will increase
- Technological advancement
- Favorable weather
⩥ What are the effects of an increase in demand?. Answer: - Increase in
price
- Increase in quantity
⩥ What are the effects of a decrease in supply?. Answer: - Higher prices
- Lower quantity
, ⩥ What are the effects of an increase in demand and decrease in supply?.
Answer: - Higher prices
- Quantity can rise, fall, or remain unchanged
⩥ GDP. Answer: Market value of all goods and services produced within
a country in a given period of time.
⩥ GDP measures what?. Answer: It measures the total income of
everyone in the economy and expenditure.
⩥ Nominal GDP. Answer: Measured without the adjustment to the
change in dollar value and not adjusted for inflation.
⩥ Real GDP. Answer: Adjusted for the change in dollar value and
corrected for inflation.
⩥ Unemployed. Answer: Those who are not working, were available to
work, tried searching for jobs in the past 4 weeks, or waiting to be called
back to a job in which they were laid off from.
⩥ CPI. Answer: Measures the consumer's cost of living.
⩥ Nominal wage. Answer: Number of dollars you earn.
CERTIFICATION TEST SCRIPT FULL
QUESTIONS AND SOLUTIONS +
⩥ What are the two economic fluctuations. Answer: 1. In the short run,
shifts in the aggregate demand causes fluctuations in the economy's
output of goods and services
2. In the long run, shifts in the aggregate demand affects the overall
price level not output
⩥ What are the effects of aggregate supply shifting. Answer: It can cause
stagflation.
⩥ How and why does the aggregate supply curve shift upward. Answer:
If there's an increase in unit costs for any reason other than an increase
in real GDP.
⩥ Short run demand shock. Answer: Causes an increase in government
purchases which will also increase real GDP and price level.
⩥ When there's a demand shock how will it adjust to long run. Answer: -
In the short run input prices are sticky
,- In the long run input prices can adjust; if the output is higher than the
full employment then the wage rate will rise which will shift the
aggregate supply curve upward
⩥ What causes the long run aggregate supply to shift to the right?.
Answer: If there's an increase in labor, capital, natural resources, and
technology.
⩥ Specialization and exchange allows what?. Answer: - Enables us to
have greater production and higher living standards
- Develop expertise
- Minimize downtime
⩥ Absolute advantage. Answer: The ability to produce goods with fewer
inputs than another producer.
⩥ Comparative advantage. Answer: The ability to produce goods with a
lower opportunity cost than another producer.
⩥ Law of demand. Answer: When the price of good increases, quantity
demanded will fall.
⩥ What causes the demand curve to shift rightward?. Answer: - If
income increases
,- If the price of the substitute increases
- If the price of complement decreases
- If population increases
- If they expect that prices will increase in the future
- If tastes transfers toward the good
⩥ Law of supply. Answer: As the price of good increases, the quantity
supplied increases.
⩥ What causes the supply curve to shift to the right?. Answer: - If input
prices decreases
- If the price of alternative decreases
- If the number of firms increases
- If they expect that the price in the future will increase
- Technological advancement
- Favorable weather
⩥ What are the effects of an increase in demand?. Answer: - Increase in
price
- Increase in quantity
⩥ What are the effects of a decrease in supply?. Answer: - Higher prices
- Lower quantity
, ⩥ What are the effects of an increase in demand and decrease in supply?.
Answer: - Higher prices
- Quantity can rise, fall, or remain unchanged
⩥ GDP. Answer: Market value of all goods and services produced within
a country in a given period of time.
⩥ GDP measures what?. Answer: It measures the total income of
everyone in the economy and expenditure.
⩥ Nominal GDP. Answer: Measured without the adjustment to the
change in dollar value and not adjusted for inflation.
⩥ Real GDP. Answer: Adjusted for the change in dollar value and
corrected for inflation.
⩥ Unemployed. Answer: Those who are not working, were available to
work, tried searching for jobs in the past 4 weeks, or waiting to be called
back to a job in which they were laid off from.
⩥ CPI. Answer: Measures the consumer's cost of living.
⩥ Nominal wage. Answer: Number of dollars you earn.
