ECN 211 : Final Exam Review UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Real GDP is commonly used for what? Short run changes.
, When real GDP falls, so does what? - Personal income
- Corporate profits
- Consumer spending
- Investment spending
- Industrial production
When the overall economy declines that is due to what? - Reduction in spending in factories
- Housing
- Inventory
When real GDP declines, what happens to the It increases.
unemployment rate?
What is the natural rate of unemployment? 5% or 6%.
In the short run, what can money supply do? It can temporarily push real GDP away from the long run.
Model of aggregate demand/supply Explains the short-run fluctuations around its long-run trend.
Aggregate demand The curve that shows the quantity of goods and services households, firms,
government, and customers from abroad want to buy at each price level.
Aggregate supply The curve that shows the quantity of goods and services firms choose to produce
or sell at each price level.
When there's a lower interest rate, what affect does that It increases.
have on the quantity demanded?
When the price level decreases, what affect does that - Interest rate decreases
have on the interest rate, spending, and quantity? - Spending increases
- Quantity increases
As the real exchange dollar value decreases... Quantity demanded increases.
When consumption (C), investment (I), government It shifts to the right.
purchases (G), and net exports (NX) increases, how does
the aggregate demand curve shift?
When the government cut taxes, how does the aggregate It shifts to the right.
demand curve shift?
When there is an increase in money supply how does the It shits to the right.
aggregate demand curve shift?
In the long run, the supply curve is ___ and in the short - Long run: Vertical
run, the supply cure is ___ - Short run: Slopes upward
Labor, capital, natural resources, and technology is the The price level.
same regardless of what?
ANSWERS
Real GDP is commonly used for what? Short run changes.
, When real GDP falls, so does what? - Personal income
- Corporate profits
- Consumer spending
- Investment spending
- Industrial production
When the overall economy declines that is due to what? - Reduction in spending in factories
- Housing
- Inventory
When real GDP declines, what happens to the It increases.
unemployment rate?
What is the natural rate of unemployment? 5% or 6%.
In the short run, what can money supply do? It can temporarily push real GDP away from the long run.
Model of aggregate demand/supply Explains the short-run fluctuations around its long-run trend.
Aggregate demand The curve that shows the quantity of goods and services households, firms,
government, and customers from abroad want to buy at each price level.
Aggregate supply The curve that shows the quantity of goods and services firms choose to produce
or sell at each price level.
When there's a lower interest rate, what affect does that It increases.
have on the quantity demanded?
When the price level decreases, what affect does that - Interest rate decreases
have on the interest rate, spending, and quantity? - Spending increases
- Quantity increases
As the real exchange dollar value decreases... Quantity demanded increases.
When consumption (C), investment (I), government It shifts to the right.
purchases (G), and net exports (NX) increases, how does
the aggregate demand curve shift?
When the government cut taxes, how does the aggregate It shifts to the right.
demand curve shift?
When there is an increase in money supply how does the It shits to the right.
aggregate demand curve shift?
In the long run, the supply curve is ___ and in the short - Long run: Vertical
run, the supply cure is ___ - Short run: Slopes upward
Labor, capital, natural resources, and technology is the The price level.
same regardless of what?
