ECON 2030 EXAM 3 QUESTIONS
AND 100% CORRECT ANSWERS!!
7. Answer true or false to the following statement. The Fisher Effect states that increases in
optminal interest rates will lead to increases real interest rates.
False
9. In which of the following situations is the expected rate of inflation the LOWEST?
The real interest rate is -2 percent and the nominal interest rate is 2 percent.
The real interest rate is 1 percent and the nominal interest rate is 6 percent.
The real interest rate is 5 percent and the nominal interest rate is 5 percent.
The real interest rate is 3 percent and the nominal interest rate is 2 percent.
The real interest rate is O percent and the nominal interest rate is 3 percent.
D
A decrease in foreign income will cause_____ in aggregate demand in the United States
and __ in real GDP in the United States in the short run, everything else held constant.
a decrease; a decrease
a decrease; an increase
an increase; an increase
,an increase; a decrease
an increase; no change
A
11. The aggregate demand curve of a country is negatively slop~ because~n increase in the
aggregate price level causes the real money supply in the country to __ and nominal
interest rates in the country to __ , everything else held constant.
Increase;increase
increase;decrease
decrease;increase
decrease;decrease
A
12. The inflation rate is a __ variable; the unemployment rate is a __ variable
. flow; flow
flow; stock
stock; stock
stock ; flow
C
14. The existence of people working in the underground economy and officially counted as
not
in the labor force will lead to an officially calculated unemployment rate which __ the
problem of unemployment.
understates
accurately states
overstates
C
15. Government subsidised loan programs for college students are most effective in
combating
unemployment.
, Structural
frictional
Seasonal
cyclical
A
16. Suppose Jordan is 15 years old, a math wiz, and a full-time student at LSU.
Suppose further that he works 20 hours per week, for pay, in the Mathematics
Department as a search assistant. According to the BLS household survey, Jordan
would be classified as not in the working-age population .
employed .
not in the labor force.
unemployed
A
A surplus in the the labor market is a feature of ___gap. The self-correcting ____
mechanism
operates in such a way that this gap will be eliminated, over time, by____labor costs.
an inflationary; increases
a recessionary; decreases
an inflationary; decreases
a recessionary; increases
B
18. Suppose Blair agrees to lend Rory $1000 for one year at a fixed nominal interest rate of
5
percent. Suppose further that they both expect the inflation rate to be 3% over the
course of the year. If the actual inflation rate turns out to be 2 percent, Blair will __ and
Rory will __ , everything else held constant.
be unaffected; be unaffected
gain; lose
lose; gain
AND 100% CORRECT ANSWERS!!
7. Answer true or false to the following statement. The Fisher Effect states that increases in
optminal interest rates will lead to increases real interest rates.
False
9. In which of the following situations is the expected rate of inflation the LOWEST?
The real interest rate is -2 percent and the nominal interest rate is 2 percent.
The real interest rate is 1 percent and the nominal interest rate is 6 percent.
The real interest rate is 5 percent and the nominal interest rate is 5 percent.
The real interest rate is 3 percent and the nominal interest rate is 2 percent.
The real interest rate is O percent and the nominal interest rate is 3 percent.
D
A decrease in foreign income will cause_____ in aggregate demand in the United States
and __ in real GDP in the United States in the short run, everything else held constant.
a decrease; a decrease
a decrease; an increase
an increase; an increase
,an increase; a decrease
an increase; no change
A
11. The aggregate demand curve of a country is negatively slop~ because~n increase in the
aggregate price level causes the real money supply in the country to __ and nominal
interest rates in the country to __ , everything else held constant.
Increase;increase
increase;decrease
decrease;increase
decrease;decrease
A
12. The inflation rate is a __ variable; the unemployment rate is a __ variable
. flow; flow
flow; stock
stock; stock
stock ; flow
C
14. The existence of people working in the underground economy and officially counted as
not
in the labor force will lead to an officially calculated unemployment rate which __ the
problem of unemployment.
understates
accurately states
overstates
C
15. Government subsidised loan programs for college students are most effective in
combating
unemployment.
, Structural
frictional
Seasonal
cyclical
A
16. Suppose Jordan is 15 years old, a math wiz, and a full-time student at LSU.
Suppose further that he works 20 hours per week, for pay, in the Mathematics
Department as a search assistant. According to the BLS household survey, Jordan
would be classified as not in the working-age population .
employed .
not in the labor force.
unemployed
A
A surplus in the the labor market is a feature of ___gap. The self-correcting ____
mechanism
operates in such a way that this gap will be eliminated, over time, by____labor costs.
an inflationary; increases
a recessionary; decreases
an inflationary; decreases
a recessionary; increases
B
18. Suppose Blair agrees to lend Rory $1000 for one year at a fixed nominal interest rate of
5
percent. Suppose further that they both expect the inflation rate to be 3% over the
course of the year. If the actual inflation rate turns out to be 2 percent, Blair will __ and
Rory will __ , everything else held constant.
be unaffected; be unaffected
gain; lose
lose; gain
