ECON 102 QUIZ 3 | QUESTIONS
AND ANSWERS | 2026/27 UPDATED
| 100% CORRECT - AMU.
148 Questions with Answers and Detailed Rationales
100 PERCENT GUARANTEED PASS
INSTANT DOWNLOAD ANSWERS INCLUDED
IMPORTANCE OF THIS DOCUMENT
This comprehensive examination preparation guide has been meticulously developed to help you succeed in the
ECON 102 QUIZ 3 | QUESTIONS AND ANSWERS | 2026/27 UPDATED | 100% CORRECT - AMU.. It contains
148 carefully selected questions that reflect the most current exam content and testing strategies. Each question
is accompanied by a correct answer and a detailed rationale that explains the underlying pathophysiology,
pharmacology, or clinical reasoning.
Self-Assessment – Test your knowledge and Exam Preparation – Familiarize yourself with the
identify areas requiring further question format and content
study areas
Concept Reinforcement – Deepen your Confidence Building – Develop test-taking
understanding through strategies and reduce
evidence-based exam anxiety
rationales
Time Management – Practice answering
questions under simulated
exam conditions
Review Summary 148 Questions
Foundations - Application - ECON 102 3 AND 2026/27 Updated 100 Correct - AMU Economics ECON 102
Principles OF Macroeconomics Undergraduate YEAR 2 Sophomore Introductory Macroeconomics
All answers with rationales
,Table of Contents
Content Area Questions Key Topics
National Income Accounting 1-25 Supply, Rises, Money, Government, Model
AND GDP
Unemployment AND Inflation 26-50 Rises, Money, Supply, Government, Increase
Aggregate Demand AND 51-75 Money, Government, Supply, Million, Grows
Aggregate Supply
Fiscal Policy 76-100 Country S, Nominal, Billion, Interest RATE, Increase
Money Banking AND THE 101-125 Money, Increase, Supply, Output, Inflation
Federal Reserve
Monetary Policy 126-148 Increase, Million, Demand, Money, According
TOTAL 148 All questions include answers and detailed rationales
,Section A - National Income Accounting AND GDP
Q1.
A country's GDP is $12,000B, net factor income from abroad is $300B, and depreciation is
$1,200B. What is national income (NI)?
A. $10,500B B. $10,800B
C. $12,300B D. $11,700B
Correct: A - $10,500B
Rationale:GNP = GDP + NFIA = $12,000B " $300B = $11,700B. NNP = GNP " depreciation
= $11,700B $1,200B = $10,500B, which equals national income when statistical discrepancy
is ignored. The other options reflect omission of depreciation or NFIA.
Why the other answers are wrong:
B. This is NNP without subtracting the negative NFIA, i.e., it double-counts the foreign income
adjustment.
C. This adds NFIA rather than subtracting it, reversing the sign of the foreign income
adjustment.
D. This is GNP, not national income; it fails to subtract depreciation.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 2 (National Income Accounting).
Q2.
If the marginal propensity to consume is 0.75 and there are no income taxes or imports,
the government spending multiplier is:
A. 3.0 B. 4.0
C. 1.33 D. 0.75
Correct: B - 4.0
Rationale:The simple spending multiplier is 1/(1 " MPC) = 1/(1 " 0.75) = 4.0. This magnifies
the initial autonomous spending change through successive rounds of induced consumption.
Why the other answers are wrong:
A. 3.0 would correspond to MPC = 0.667, which is inconsistent with the given MPC.
C. 1.33 is the reciprocal of MPC, not the spending multiplier.
D. 0.75 is the MPC itself, not the multiplier.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 3 (The Keynesian Cross).
Page 3
, Section A - National Income Accounting AND GDP
Q3.
In a modern ample-reserves (floor) system, the Federal Reserve's primary tool for moving
the federal funds rate is:
A. Adjusting reserve requirements B. Open market purchases of Treasury bills
C. Setting the interest rate on reserve D. Changing the discount window primary
balances (IORB) credit rate
Correct: C - Setting the interest rate on reserve balances (IORB)
Rationale:Since 2008 and reaffirmed in the 2019–2026 framework, the Fed operates a floor
system where IORB anchors the federal funds rate. Open market operations adjust reserve
quantities but do not directly set the policy rate in an ample-reserves regime.
Why the other answers are wrong:
A. Reserve requirements have been set to zero since March 2020 and are not an active policy
tool.
B. Open market operations affect reserves but are not the primary rate-setting tool in a floor
system.
D. The discount rate is a ceiling tool and is typically set above the target range, not the primary
lever.
Reference: Board of Governors of the Federal Reserve System (2026). Monetary Policy Implementation
Framework.
Q4.
A negative supply shock (e.g., an oil price spike) in the AS-AD model will, in the short run,
cause:
A. Higher output and lower price level B. Lower output and higher price level
C. Higher output and higher price level D. No change in output but higher price level
Correct: B - Lower output and higher price level
Rationale:A negative supply shock shifts SRAS left, raising the price level and reducing real
output - the classic stagflation outcome. This contrasts with a demand shock, which moves
output and prices in the same direction.
Why the other answers are wrong:
A. This describes a positive supply shock (SRAS rightward shift), not a negative one.
C. This describes a positive demand shock, which raises both output and prices.
D. Output does change in the short run unless the SRAS is vertical, which it is not.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 14 (Aggregate Supply and the
Short-Run Tradeoff).
Page 4
AND ANSWERS | 2026/27 UPDATED
| 100% CORRECT - AMU.
148 Questions with Answers and Detailed Rationales
100 PERCENT GUARANTEED PASS
INSTANT DOWNLOAD ANSWERS INCLUDED
IMPORTANCE OF THIS DOCUMENT
This comprehensive examination preparation guide has been meticulously developed to help you succeed in the
ECON 102 QUIZ 3 | QUESTIONS AND ANSWERS | 2026/27 UPDATED | 100% CORRECT - AMU.. It contains
148 carefully selected questions that reflect the most current exam content and testing strategies. Each question
is accompanied by a correct answer and a detailed rationale that explains the underlying pathophysiology,
pharmacology, or clinical reasoning.
Self-Assessment – Test your knowledge and Exam Preparation – Familiarize yourself with the
identify areas requiring further question format and content
study areas
Concept Reinforcement – Deepen your Confidence Building – Develop test-taking
understanding through strategies and reduce
evidence-based exam anxiety
rationales
Time Management – Practice answering
questions under simulated
exam conditions
Review Summary 148 Questions
Foundations - Application - ECON 102 3 AND 2026/27 Updated 100 Correct - AMU Economics ECON 102
Principles OF Macroeconomics Undergraduate YEAR 2 Sophomore Introductory Macroeconomics
All answers with rationales
,Table of Contents
Content Area Questions Key Topics
National Income Accounting 1-25 Supply, Rises, Money, Government, Model
AND GDP
Unemployment AND Inflation 26-50 Rises, Money, Supply, Government, Increase
Aggregate Demand AND 51-75 Money, Government, Supply, Million, Grows
Aggregate Supply
Fiscal Policy 76-100 Country S, Nominal, Billion, Interest RATE, Increase
Money Banking AND THE 101-125 Money, Increase, Supply, Output, Inflation
Federal Reserve
Monetary Policy 126-148 Increase, Million, Demand, Money, According
TOTAL 148 All questions include answers and detailed rationales
,Section A - National Income Accounting AND GDP
Q1.
A country's GDP is $12,000B, net factor income from abroad is $300B, and depreciation is
$1,200B. What is national income (NI)?
A. $10,500B B. $10,800B
C. $12,300B D. $11,700B
Correct: A - $10,500B
Rationale:GNP = GDP + NFIA = $12,000B " $300B = $11,700B. NNP = GNP " depreciation
= $11,700B $1,200B = $10,500B, which equals national income when statistical discrepancy
is ignored. The other options reflect omission of depreciation or NFIA.
Why the other answers are wrong:
B. This is NNP without subtracting the negative NFIA, i.e., it double-counts the foreign income
adjustment.
C. This adds NFIA rather than subtracting it, reversing the sign of the foreign income
adjustment.
D. This is GNP, not national income; it fails to subtract depreciation.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 2 (National Income Accounting).
Q2.
If the marginal propensity to consume is 0.75 and there are no income taxes or imports,
the government spending multiplier is:
A. 3.0 B. 4.0
C. 1.33 D. 0.75
Correct: B - 4.0
Rationale:The simple spending multiplier is 1/(1 " MPC) = 1/(1 " 0.75) = 4.0. This magnifies
the initial autonomous spending change through successive rounds of induced consumption.
Why the other answers are wrong:
A. 3.0 would correspond to MPC = 0.667, which is inconsistent with the given MPC.
C. 1.33 is the reciprocal of MPC, not the spending multiplier.
D. 0.75 is the MPC itself, not the multiplier.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 3 (The Keynesian Cross).
Page 3
, Section A - National Income Accounting AND GDP
Q3.
In a modern ample-reserves (floor) system, the Federal Reserve's primary tool for moving
the federal funds rate is:
A. Adjusting reserve requirements B. Open market purchases of Treasury bills
C. Setting the interest rate on reserve D. Changing the discount window primary
balances (IORB) credit rate
Correct: C - Setting the interest rate on reserve balances (IORB)
Rationale:Since 2008 and reaffirmed in the 2019–2026 framework, the Fed operates a floor
system where IORB anchors the federal funds rate. Open market operations adjust reserve
quantities but do not directly set the policy rate in an ample-reserves regime.
Why the other answers are wrong:
A. Reserve requirements have been set to zero since March 2020 and are not an active policy
tool.
B. Open market operations affect reserves but are not the primary rate-setting tool in a floor
system.
D. The discount rate is a ceiling tool and is typically set above the target range, not the primary
lever.
Reference: Board of Governors of the Federal Reserve System (2026). Monetary Policy Implementation
Framework.
Q4.
A negative supply shock (e.g., an oil price spike) in the AS-AD model will, in the short run,
cause:
A. Higher output and lower price level B. Lower output and higher price level
C. Higher output and higher price level D. No change in output but higher price level
Correct: B - Lower output and higher price level
Rationale:A negative supply shock shifts SRAS left, raising the price level and reducing real
output - the classic stagflation outcome. This contrasts with a demand shock, which moves
output and prices in the same direction.
Why the other answers are wrong:
A. This describes a positive supply shock (SRAS rightward shift), not a negative one.
C. This describes a positive demand shock, which raises both output and prices.
D. Output does change in the short run unless the SRAS is vertical, which it is not.
Reference: Mankiw, N.G. (2026). Macroeconomics, 12th Ed., Ch. 14 (Aggregate Supply and the
Short-Run Tradeoff).
Page 4
