ECON 104 Bille Goffe Final Exam 3 VERSIONS (NEW UPDATED VERSION) LATEST ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND ANSWERS) | GUARANTEED PASS A+ []

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Econ 104 Final Exam (NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS
AND ANSWERS) | GUARANTEED PASS A+ [2026-2027]




According to the aggregate demand curve, when the aggregate price level ____, the quantity of aggregate
output ____. - CORRECT ANSWER rises; demanded falls




QUESTION :The Interest Rate Effect is the tendency for changes in the price level to affect: -
CORRECT ANSWER Interest rates and thus the quantity of investment spending and
consumption



QUESTION :The aggregate demand curve is downward sloping because of: - CORRECT ANSWER
the wealth effect of a change in aggregate price level



QUESTION :If the price level rises by 10%, the purchasing power of $10,000 will: - CORRECT
ANSWER Decrease to $9,000



QUESTION :If the stock of physical capital increases, all other things unchanged, the aggregate demand
curve will: - CORRECT ANSWER Shift to the left



QUESTION :Suppose that a presidential candidate who promised large personal income tax cuts is
elected. Which of the following is most likely? - CORRECT ANSWER An increase in aggregate
demand




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QUESTION :All of the following are examples of fiscal policy EXCEPT: - CORRECT ANSWER
reducing the interest rate by increasing the money supply



QUESTION :Look at the figure Shift of the Aggregate Demand Curve. A movement from point A on
AD1 to point C on AD2 could have resulted from a(n): - CORRECT ANSWER increase in the
total quantity of consumer goods and services demanded



QUESTION :Look at the figure Shift of the Aggregate Demand Curve. A movement from AD1 to AD2
may have been the result of - CORRECT ANSWER an increase in government spending



QUESTION :The short-run aggregate supply curve slopes upward because a _____ aggregate price level
leads to _____. - CORRECT ANSWER higher; higher output, since most production costs are
fixed in the short run



QUESTION :When short-run aggregate supply decreases, it means that the short-run aggregate supply
curve shifts to the ____ and the quantity of aggregate out that producers are willing to supply ____. -
CORRECT ANSWER left; decreases




QUESTION :Look at the figure Aggregate Supply Movements. Which Statement is CORRECT? -
CORRECT ANSWER Short-run aggregate supply has increased



QUESTION :The short-run aggregate supply curve would shift to the left for all the following reasons
EXCEPT: - CORRECT ANSWER an increase in interest rates




QUESTION :Potential output is the level of real GDP that: - CORRECT ANSWER the economy
would produce if all prices, including nominal wages, were fully flexible



QUESTION :Look at the figure Aggregate Supply. If the economy is at point E: - CORRECT
ANSWER actual output is more than potential output




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QUESTION :Stagflation may result from - CORRECT ANSWER an increase in the price of oil



QUESTION :Look at the figure Inflationary and Recessionary Gaps. The intersection of SRAS with AD
in panel (a) indicates an economy: - CORRECT ANSWER in a recessionary gap



QUESTION :Look at the figure Inflationary and Recessionary Gaps. The intersection of AD with SRAS
in panel (b) indicates: - CORRECT ANSWER a short-run equilibrium



QUESTION :Look at the figure An Increase in Aggregate Demand. The short-run equilibrium at Y2 and
P2: - CORRECT ANSWER results in an inflationary gap



QUESTION :Look at the figure An Increase in Aggregate Demand. Because of the pressures at the short-
run equilibrium at Y2 and P2: - CORRECT ANSWER the SRAS curve will shift to the left



QUESTION :Look at the figure Policy Alternatives. Suppose that the initial equilibrium is at real GDP
level Y1 and price level P2 in panel (a). At real GDP level Y1 there is: - CORRECT ANSWER a
recessionary gap



QUESTION :Look at the figure Policy Alternatives. Assume that the economy depicted in panel (a) is in
short-run equilibrium at a real GDP level of Y1. The economy will correct itself: - CORRECT
ANSWER in the long run as wages fall



QUESTION :Look at the figure Policy Alternatives. The economy in panel (b) is initially in short-run
equilibrium at real GDP level Y1 and price level P2. At real GDP level Y1 there is: - CORRECT
ANSWER a recessionary gap



QUESTION :An inflationary gap will be eliminated because there is ____ pressure on wages, shifting the
____. - CORRECT ANSWER upward; short-run aggregate supply curve to the left



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QUESTION :A recessionary gap can be closed by ____ wages that shift the ____. - CORRECT
ANSWER falling; SRAS curve rightward



QUESTION :Look at the figure Inflationary and Recessionary Gaps. If the economy is in short-run
equilibrium at Y1 in panel (a), the economy is in: - CORRECT ANSWER a recessionary gap




QUESTION :A short run decrease in investment spending is illustrated by: - CORRECT ANSWER
panel b



QUESTION :A short run increase in net exports is illustrated by: - CORRECT ANSWER panel a




QUESTION :A decrease in wages in the short run is illustrated by: - CORRECT ANSWER panel
c




QUESTION :An increase in wages in the short run is illustrated by: - CORRECT ANSWER
panel d



QUESTION :If the economy is at point X, there is a(n) ____ gap with ____ unemployment -
CORRECT ANSWER recessionary; high




QUESTION :If the economy is at point X, the appropriate fiscal policy is to: - CORRECT
ANSWER decrease taxes and increase government spending



QUESTION :Look at the figure AD-AS Model II. If nominal wages fall, in the short run the ___ curve
will shift to the ____. - CORRECT ANSWER SRAS; right




2026 2027 GRADED A+