ASU econ 211 final exam (Questions + Answers) Solved

**(1)** are suppliers of loanable funds. The quantity supplied **(2)** when interest rates increase. - 1. Households 2. Government/Increases **BLANK 1** are demanders of loanable funds. Quantity demanded **BLANK 2** when interest rates increase. - 1. Firms 2. Decreases A bank is considered insolvent if - Capital (equity) is less than or equal to zero A budget surplus occurs when what happens? - Tax revenue exceeds government expenditures. A price ceiling on a coffee would likely cause what? - A shortage of coffee According to the classical dichotomy in the long-run... - Real GDP and price level are determined separately. According to the classical theory of inflation, what causes high rates of inflation? - Excessive money growth. Aggregate demand is best interpreted as what? - Expenditure components of GDP All are determinants of long-run aggregate supply except for what? - The interest rate All else constant if the government increases spending we should expect - An increase in interest ratesAll else constant, an increase in private saving leads to **(1)** in interest rates and a **(2)** in investment. - 1. Decrease 2. Increase An entity has a comparative advantage if it can produce what? - At a lower opportunity cost than another entity. An increase in the equilibrium price of coffee could be caused by - A decrease in supply of coffee. As income increases, consumers purchase more cars. Cars what type of good? - Normal goods Averaged over a long period of time, what happens? - Velocity is fairly stable. Expenditures of **WHAT** are classified as "investment"? - Firms