ECPI EXAM 2 REVIEW CHAPTERS 4 5
6 7 PRACTICE SOLUTION PACK 2026
COMPLETE TESTED QUESTIONS
AND CORRECT ANSWERS GRADED
A+
◉ An inferior good is a product people buy more of when their income
goes down and less of when their income goes up.. Answer: buying
ramen noodle cus my income went down
◉ price of substitute goods. Answer: if price of a samsung doubled then
demand for apple would shift right
◉ supply curve. Answer: relationship between the price and the quantity
supplied
◉ law of supply. Answer: the higher the price of goods the higher
quantity supplied per period
◉ Only the price changes -> a change in quality supplied. Answer: some
other variable changes-> change in supply
◉ some supply shift variables. Answer: - production tech - prices of
inputs
, ◉ if an input price falls the x supply curve will shift out/right. Answer:
if an input price falls the x supply curve will shift out/right
◉ equilibrium is where quantities supplied and demanded are the same
at current price. Answer: equilibrium is where quantities supplied and
demanded are the same at current price
◉ what if price falls, ceteris paribus. Answer: demanders will move
right on a fixed demand curve
◉ equilibrium is also called market clearing. Answer: equilibrium is also
called market clearing
◉ what happens to the equillibrium when a curve shifts. Answer: goes
up, price goes up and so does the supply side
◉ Business cycle. Answer: is a short term fluctuate in economic activity
◉ Countercyclical Policy stabilizes. Answer: Good for buisness cycles
◉ Procyclical Policy makes fluctuations longer. Answer: Procyclical
Policy makes fluctuations longer
◉ reasons procyclical policy happens. Answer: can't act fast enough,
have to act fast
6 7 PRACTICE SOLUTION PACK 2026
COMPLETE TESTED QUESTIONS
AND CORRECT ANSWERS GRADED
A+
◉ An inferior good is a product people buy more of when their income
goes down and less of when their income goes up.. Answer: buying
ramen noodle cus my income went down
◉ price of substitute goods. Answer: if price of a samsung doubled then
demand for apple would shift right
◉ supply curve. Answer: relationship between the price and the quantity
supplied
◉ law of supply. Answer: the higher the price of goods the higher
quantity supplied per period
◉ Only the price changes -> a change in quality supplied. Answer: some
other variable changes-> change in supply
◉ some supply shift variables. Answer: - production tech - prices of
inputs
, ◉ if an input price falls the x supply curve will shift out/right. Answer:
if an input price falls the x supply curve will shift out/right
◉ equilibrium is where quantities supplied and demanded are the same
at current price. Answer: equilibrium is where quantities supplied and
demanded are the same at current price
◉ what if price falls, ceteris paribus. Answer: demanders will move
right on a fixed demand curve
◉ equilibrium is also called market clearing. Answer: equilibrium is also
called market clearing
◉ what happens to the equillibrium when a curve shifts. Answer: goes
up, price goes up and so does the supply side
◉ Business cycle. Answer: is a short term fluctuate in economic activity
◉ Countercyclical Policy stabilizes. Answer: Good for buisness cycles
◉ Procyclical Policy makes fluctuations longer. Answer: Procyclical
Policy makes fluctuations longer
◉ reasons procyclical policy happens. Answer: can't act fast enough,
have to act fast
