Eco 2023-003 Final Exam Study Guide
Questions and All Actual Answers 2026-
2027 Updated.
a change in the quantity demanded - Answer a movement along the current demand curve
a change in the quantity supplied - Answer a change in the specific quantity of a good that
sellers are willing and able to sell.
a change in demand - Answer number of buyers, change in trends/fads, change in expectation
of future price
A change is supply - Answer when the suppliers of a given good or service have altered
production or output.
Factors of a change in supply - Answer new technologies, making production more efficient
and less expensive, or by a change in the number of competitors in the market
Factors of a change in demand - Answer Price, income levels, Consumer tastes and
preferences, Competition, Fashions/trends
Factor of a change in quantity demanded - Answer Price change
Factors of a change in quantity supplied - Answer Production cost and quantities supplied
How various changes in demand, supply, or both affect market equilibrium price (P) and output
(Q) - Answer When both the demand and supply curves decrease at the same time, both
curves are going to shift to the left, the quantity demanded goes down, and the new
equilibrium price is going to either increase, decrease, or stay the same, depending on how
much the curve shifted.
How the government interference in the markets cause surpluses/shortages? - Answer The
gov't sets price ceilings/floors.
price supports - Answer the minimum legal price a seller may charge, typically placed above
equilibrium.
, traditional minimum wage - Answer Lowest amount of pay given to an employee, $7.25
Rent control - Answer A price control that limits the amount a property owner can charge for
renting out a home, apartment or other real estate. Acts as a price ceiling by preventing rents
either from being charged above a certain level or from increasing at a rate higher than a
predetermined percentage.
Long run costs involving economies/diseconomies of scale - Answer The____ ___ cost curve
for most firms is assumed to be 'U' shaped, because of the impact of internal economies and
diseconomies of scale. However, economic theory suggests that average costs will eventually
rise because of diseconomies of scale.
Factors that determine exchange rates - Answer Investment flows, pattern of Trade (Imports &
exports), and Speculation
Speculation - Answer If a country's currency value is expected to rise, investors will demand
more of that currency in order to make a profit in the near future. As a result, the value of the
currency will rise due to the increase in demand. With this increase in currency value comes a
rise in the exchange rate as well.
Recession - Answer When a country experiences a recession, its interest rates are likely to fall,
decreasing its chances to acquire foreign capital. As a result, its currency weakens in comparison
to that of other countries, therefore lowering the exchange rate.
Political Stability & Performance - Answer A country's political state and economic
performance can affect its currency strength. A country with less risk for political turmoil is
more attractive to foreign investors, as a result, drawing investment away from other countries
with more political and economic stability. Increase in foreign capital, in turn, leads to an
appreciation in the value of its domestic currency. A country with sound financial and trade
policy does not give any room for uncertainty in value of its currency. But, a country prone to
political confusions may see a depreciation in exchange rates.
Terms of Trade - Answer Related to current accounts and balance of payments, the ______ of
trade is the ratio of export prices to import prices. A country's ______of trade improves if its
exports prices rise at a greater rate than its imports prices. This results in higher revenue, which
causes a higher demand for the country's currency and an increase in its currency's value. This
results in an appreciation of exchange rate.
Government Debt - Answer public debt or national debt owned by the central government. A
country with ____________debt is less likely to acquire foreign capital, leading to inflation.
Foreign investors will sell their bonds in the open market if the market predicts _____________
debt within a certain country. As a result, a decrease in the value of its exchange rate will follow.
Questions and All Actual Answers 2026-
2027 Updated.
a change in the quantity demanded - Answer a movement along the current demand curve
a change in the quantity supplied - Answer a change in the specific quantity of a good that
sellers are willing and able to sell.
a change in demand - Answer number of buyers, change in trends/fads, change in expectation
of future price
A change is supply - Answer when the suppliers of a given good or service have altered
production or output.
Factors of a change in supply - Answer new technologies, making production more efficient
and less expensive, or by a change in the number of competitors in the market
Factors of a change in demand - Answer Price, income levels, Consumer tastes and
preferences, Competition, Fashions/trends
Factor of a change in quantity demanded - Answer Price change
Factors of a change in quantity supplied - Answer Production cost and quantities supplied
How various changes in demand, supply, or both affect market equilibrium price (P) and output
(Q) - Answer When both the demand and supply curves decrease at the same time, both
curves are going to shift to the left, the quantity demanded goes down, and the new
equilibrium price is going to either increase, decrease, or stay the same, depending on how
much the curve shifted.
How the government interference in the markets cause surpluses/shortages? - Answer The
gov't sets price ceilings/floors.
price supports - Answer the minimum legal price a seller may charge, typically placed above
equilibrium.
, traditional minimum wage - Answer Lowest amount of pay given to an employee, $7.25
Rent control - Answer A price control that limits the amount a property owner can charge for
renting out a home, apartment or other real estate. Acts as a price ceiling by preventing rents
either from being charged above a certain level or from increasing at a rate higher than a
predetermined percentage.
Long run costs involving economies/diseconomies of scale - Answer The____ ___ cost curve
for most firms is assumed to be 'U' shaped, because of the impact of internal economies and
diseconomies of scale. However, economic theory suggests that average costs will eventually
rise because of diseconomies of scale.
Factors that determine exchange rates - Answer Investment flows, pattern of Trade (Imports &
exports), and Speculation
Speculation - Answer If a country's currency value is expected to rise, investors will demand
more of that currency in order to make a profit in the near future. As a result, the value of the
currency will rise due to the increase in demand. With this increase in currency value comes a
rise in the exchange rate as well.
Recession - Answer When a country experiences a recession, its interest rates are likely to fall,
decreasing its chances to acquire foreign capital. As a result, its currency weakens in comparison
to that of other countries, therefore lowering the exchange rate.
Political Stability & Performance - Answer A country's political state and economic
performance can affect its currency strength. A country with less risk for political turmoil is
more attractive to foreign investors, as a result, drawing investment away from other countries
with more political and economic stability. Increase in foreign capital, in turn, leads to an
appreciation in the value of its domestic currency. A country with sound financial and trade
policy does not give any room for uncertainty in value of its currency. But, a country prone to
political confusions may see a depreciation in exchange rates.
Terms of Trade - Answer Related to current accounts and balance of payments, the ______ of
trade is the ratio of export prices to import prices. A country's ______of trade improves if its
exports prices rise at a greater rate than its imports prices. This results in higher revenue, which
causes a higher demand for the country's currency and an increase in its currency's value. This
results in an appreciation of exchange rate.
Government Debt - Answer public debt or national debt owned by the central government. A
country with ____________debt is less likely to acquire foreign capital, leading to inflation.
Foreign investors will sell their bonds in the open market if the market predicts _____________
debt within a certain country. As a result, a decrease in the value of its exchange rate will follow.
