ECN 211 Midterm 3 Exam Questions
and Answers 100% Pass
Nominal variable - CORRECT ANSWER-A variable measured in monetary units
Real variable - CORRECT ANSWER-A variable measured in physical units
Quantity theory of money - CORRECT ANSWER-Quantity of money determines
the price level; growth rate of money is proportionate to the inflation rate
Monetary neutrality - CORRECT ANSWER-Changes in the money supply do not
affect real variables
Classical dichotomy - CORRECT ANSWER-Nominal and real variables are
separate
Velocity of money - CORRECT ANSWER-How fast money changes hands
Quantity equation - CORRECT ANSWER-M x V = P x Y (Quantity of money
times velocity is the dollar value of the GDP)
Inflation tax - CORRECT ANSWER-the revenue the government raises by
creating money
, Fisher Effect - CORRECT ANSWER-Real interest rate = nominal interest rate -
inflation rate
Menu costs - CORRECT ANSWER-The cost to change prices, which is more
necessary in periods of inflation
Shoeleather cost - CORRECT ANSWER-The resources wasted when inflation
makes people spend more and save less
Recession - CORRECT ANSWER-Declining real incomes and rising
unemployment
Depression - CORRECT ANSWER-A severe recession
Aggregate demand - CORRECT ANSWER-The amount of goods and services
that households, firms, the government, and people abroad want to buy at each
price level
Aggregate supply - CORRECT ANSWER-The amount of goods and services
firms choose to produce at each price level
Natural level of output (Yn) - CORRECT ANSWER-The GDP an economy
achieves in the long run when unemployment is at its normal rate
Stagflation - CORRECT ANSWER-A period of falling GDP and rising prices
Multiplier effect - CORRECT ANSWER-Initial spending can increase the GDP by
several times the original amount through the changing of hands
and Answers 100% Pass
Nominal variable - CORRECT ANSWER-A variable measured in monetary units
Real variable - CORRECT ANSWER-A variable measured in physical units
Quantity theory of money - CORRECT ANSWER-Quantity of money determines
the price level; growth rate of money is proportionate to the inflation rate
Monetary neutrality - CORRECT ANSWER-Changes in the money supply do not
affect real variables
Classical dichotomy - CORRECT ANSWER-Nominal and real variables are
separate
Velocity of money - CORRECT ANSWER-How fast money changes hands
Quantity equation - CORRECT ANSWER-M x V = P x Y (Quantity of money
times velocity is the dollar value of the GDP)
Inflation tax - CORRECT ANSWER-the revenue the government raises by
creating money
, Fisher Effect - CORRECT ANSWER-Real interest rate = nominal interest rate -
inflation rate
Menu costs - CORRECT ANSWER-The cost to change prices, which is more
necessary in periods of inflation
Shoeleather cost - CORRECT ANSWER-The resources wasted when inflation
makes people spend more and save less
Recession - CORRECT ANSWER-Declining real incomes and rising
unemployment
Depression - CORRECT ANSWER-A severe recession
Aggregate demand - CORRECT ANSWER-The amount of goods and services
that households, firms, the government, and people abroad want to buy at each
price level
Aggregate supply - CORRECT ANSWER-The amount of goods and services
firms choose to produce at each price level
Natural level of output (Yn) - CORRECT ANSWER-The GDP an economy
achieves in the long run when unemployment is at its normal rate
Stagflation - CORRECT ANSWER-A period of falling GDP and rising prices
Multiplier effect - CORRECT ANSWER-Initial spending can increase the GDP by
several times the original amount through the changing of hands
