ECON 203 FINAL EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

ECON 203 FINAL EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 Macroeconomists study? - Answers Economy Wide phenomena Which of the following statistics is the best single measure of an economy's well being? - Answers GDP The 3 main concerns of Macro are? - Answers Inflation, Unemployment and output growth According to the Classical Model, excessive unemployment - Answers could not persist because wages would fall to eliminate the excess supply of labor According to the Keynesian model, excessive unemployment - Answers is caused by sticky wages that do not adjust as fast as prices. Which of these is a quote by John Maynard Keyes - Answers We are all dead in the long run Which of the following is counted in GDP? - Answers None of the above Expenditures equal income because - Answers for every sale there is a buyer and a seller Over the last few decades Americans have chosen to cook less at home and eat more at resturants. This change in behavior, by itself, - Answers increased measured in GDP Darla, a Canadian citizen, only works in the US. The value added to production from her employment is - Answers included in US GDP, but not US GNP Grapes are - Answers counted as an intermediate good only if they are used to produce another good like wine A period during which aggregate output falls is known as a(n) - Answers recession The single largest expenditure component in GDP is - Answers consumption Using year 1 as the base year, what is real GDP in year 3 - Answers $183.00 Using year 1 as the base year, the real GDP growth rate in year 3 was - Answers 2.81% Using year 1 as the base year, the GDP deflator in year 3 was - Answers 115.85 Using year 1 as the base year, the rate of inflation in year 3 was - Answers 6.05% Which US gov agency estimates GDP - Answers BEA US GNP is calculated from US GDP by - Answers including income earned by US citizens abroad and excluding income earned by foreigners in the US Real GDP - Answers evaluates current production at the prices that prevailed in some specific year in the past Which of the following statements about GDP is most accurate - Answers Nominal GDP values production at current prices, while real GDP values production at constant prices When economists talk about growth in the economy, they measure that growth with the - Answers percentage change in real GDP Inflation is a(n) - Answers increase in the overall price level From a historical perspective, since 1987, inflation has been - Answers low and steady Which of the following is a cost of anticipated high inflation - Answers the menu cost of inflation and the shoe leather of inflation both A and B Which US government agency calculates the CPI - Answers BLS The CPI stands for - Answers the Consumer Price Index An unanticipated increase in inflation will - Answers benefit debtors The natural rate of unemployment is generally thought of as the - Answers sum of frictional unemployment and structural unemployment Some workers are unemployed because the manufacturing sector is shrinking and the health care sector is growing. This is an example of - Answers structural unemployment Which of the following will lead to a long-run growth - Answers Increases in capital stock and increases in the level of technology both A and B Which of the following will lead to long-run growth in the productivity of labor (Y/L) - Answers Increases in capital stock and Increases in level of technology both A and B Using year 1 as the base year, find CPI in year 2 - Answers 108 Using year 1 as the base year, find the rate of inflation in year 3 - Answers 3.70% In the consumption function C=100+0.8Yd, 100 represents? - Answers The autonomous level of consumption In the consumption function C=100+0.8Yd, .08 represents? - Answers The MPC The difference between planned investment and actual investment is - Answers are unplanned changes in inventories 45 line on a graph with AE and Y is where - Answers planned Aggregate Expenditure is equal to output If planned aggregate expenditure is equal to output then - Answers inventories will shrink causing firms to increase output At equilibrium output (Y*), which of the following must be true - Answers S+T=I+G The government buys a bridge. The owner of the company that builds the bridge pays her workers. The workers increase their spending. Firms that the workers buy goods from increase their output. This type of effect on spending illustrates - Answers the multiplier effect The MPC is defined as the fraction of - Answers additional income that a household consumes rather than saves Assume the MPC is 0.75. Assuming only the multiplier effect matters, an increase in government purchases of $200 billion will - Answers increase the equilibrium output by $800 billion Assume that the MPC is 0.75. Assuming only the multiplier effect matters, an increase in taxes of $100 billion will - Answers None of the above During recessions, automatic stabilizers tend to make the governments budget - Answers move toward cyclical deficit If the federal government is currently running a budget surplus, the federal debt is - Answers decreasing Fiscal policy involves - Answers government purchases of new goods and services , and tax policies (Figure)The equilibrium output (Y*) is - Answers 175 (Figure)At the equilibrium output, disposable income is - Answers 170 At the equilibrium output, household consumption is - Answers 163 At the equilibrium output, household saving is - Answers 7 Current US currency is - Answers fiat money with no intrinsic value Which of the following is included in M2 but not in M1 - Answers Savings deposits The agency responsible for regulating the money supply in the United States is - Answers The Federal Reserve The Fed does all except - Answers Convert Federal Reserve Notes into gold The Fed can increase the money supply by conducting open market - Answers purchases of T-Bills and lowering the discount rate Suppose a bank has 10 percent reserve ratio, $5,000 in deposits, and it loans out all it can given the reserve requirement - Answers it has $500 in reserves and $4,500 in loans If the required reserve ratio is 20 percent, the money multiplier is - Answers 5 Which list contains only actions that decrease the money supply - Answers Raise the discount rate, and make open market sales of T-Bills When the Fed conducts open market purchases of T-BIlls, bank reserves - Answers increase and banks can increase lending The interest rate the Fed charges on overnight loans of reserves to banks who fall below their required reserves is called - Answers the discount rate Monetary policy is determined by - Answers the FOMC