ECON 104 Goffe Final Exam Questions with
Verified solutions LATEST EXAM VERSION
UPDATED 2026
Consumers act as _________blank factors of production in the _________blank
market.
A) sellers; product
B) sellers; factor
C) buyers; product
D) buyers; factor
B) Sellers; factor
If the marginal propensity to consume is 0.75, the marginal propensity to save is
_____
0.25
Consumption spending is $5 million, planned investment spending is $8 million,
unplanned investment spending (change in inventories) is -$2 million, government
purchases are $10 million, and net export spending is $2 million. GDP is $______
million
23
Suppose Bill Gates deposits $20 million into his checking account at Wells Fargo
Bank. If the required reserve ratio is 10 percent, what is the maximum change in
money supply? $________ million.
180
If GDP grows at a rate of 3% per year, approximately how long will it take for GDP to
double in size? ______ years
23
The quantity theory of money predicts that, in the long run, inflation results from the
________
Money supply growing at a faster rate than real GDP
,Scenario 14-2: Imagine that Kristy deposits $10,000 of currency into her checking
account deposit at Bank A and that the required reserve ratio is 20%. As a result of
Kristy's deposit, checking account deposits in the banking system as a whole
(including the original deposit) could eventually increase up to a maximum of
$___________
50,000
If an increase in autonomous spending of $25 million results in a $100 million
increase in equilibrium real GDP, then the marginal propensity to consume is
_________
0.75
In 2020 and 2021, Congress and the Trump and Biden administration enacted
policites to supplement state unemployment insurance payments, loans to small
businesses, etc. These actions were examples of ________ aimed at increasing real
GDP:
discretionary fiscal policy
A(n) __________ comes to an end with a business cycle _______.
Recession; trough
Which of the following is a Government expenditure, but is not a government
purchase?
The federal Government pays out unemployment insurance claims
A change in consumption spending caused by income change is _____ change in
spending, and a change in Government spending that occurs to improve roads and
bridges is _____ change in spending.
An induced; an autonomous
If the U.S. dollar decreases in value relative to other currencies, how does this affect
the aggregate demand curve?
This will shift the aggregate demand curve to the right
Macroeconomic equilibrium occurs when _________
Aggregate expenditure = GDP
,If real GDP in a closed economy is $40 billion, consumption is $20 billion, and
government purchases are $10 billion, investment $______ billion
10
Stagflation occurs when ______
inflation rises and GDP falls
The Fed can attempt to increase the federal funds rate by ______
Selling Treasury bills, which decrease bank reserves
Suppose the economy is at a short-run equilibrium GDP that lies below potential
GDP. Which of the following will occur because of the automatic mechanism
adjusting the economy back to potential GDP?
Short-run aggregate supply will shift to the right
To increase the money supply, the Federal Reserve could ________
Conduct an open market purchase of Treasury securities
If the bank of Waterloo receives a $10,000 deposit and the reserve requirement is 10
percent, how much can the bank loan out? (assume that before the deposit this bank
is just meeting its legal reserve requirement.) $________ .
9,000
The Federal Reserves System's four monetary policy goals are ________
Price stability, high employment, economic growth, and stability of financial markets and
institutions
A decrease in the reserve requirement ______ bank reserves and _______ the money
supply.
Increases; Increases
In a closed economy with no taxes, if the marginal propensity to consume is equal to
0.8, the government purchases multiplier is equal to ______.
5
The increase in government spending on unemployment insurance payments to
workers who lose their jobs during a recession and the decrease in government
, spending on unemployment insurance payments to workers during an expansion is
an example of _________.
Automatic stabilizers
Assume a closed economy with fixed taxes and the marginal propensity to consume
is equal to 0.9. The tax multiplier is $___________.
-9
Expansionary monetary policy refers to the _____________ to increase real GDP.
Federal reserve increasing the money supply and decreasing interest rates
If whole tomatoes were money, which of the following functions of money would be
the hardest for tomatoes to satisfy?
store of value
Which of the following is most likely to sustain economic growth in an economy?
technological change
Commodity money is a good ________________.
used as money that also has value independent of its use as money.
Which of the following would be classified as fiscal policy?
The federal government cuts taxes to stimulate the economy.
If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is
_________.
5
The economic growth model predicts that ____________
GDP per capita of poor countries will grow more rapidly than in rich countries.
Four of the monetary policy tools used by the Federal Reserve to manage the money
supply include ______________
open market operations, discount policy, reserve requirements, and interest on reserves.
Monetary policy refers to the actions the Federal Reserve takes to manage
_____________ .
Verified solutions LATEST EXAM VERSION
UPDATED 2026
Consumers act as _________blank factors of production in the _________blank
market.
A) sellers; product
B) sellers; factor
C) buyers; product
D) buyers; factor
B) Sellers; factor
If the marginal propensity to consume is 0.75, the marginal propensity to save is
_____
0.25
Consumption spending is $5 million, planned investment spending is $8 million,
unplanned investment spending (change in inventories) is -$2 million, government
purchases are $10 million, and net export spending is $2 million. GDP is $______
million
23
Suppose Bill Gates deposits $20 million into his checking account at Wells Fargo
Bank. If the required reserve ratio is 10 percent, what is the maximum change in
money supply? $________ million.
180
If GDP grows at a rate of 3% per year, approximately how long will it take for GDP to
double in size? ______ years
23
The quantity theory of money predicts that, in the long run, inflation results from the
________
Money supply growing at a faster rate than real GDP
,Scenario 14-2: Imagine that Kristy deposits $10,000 of currency into her checking
account deposit at Bank A and that the required reserve ratio is 20%. As a result of
Kristy's deposit, checking account deposits in the banking system as a whole
(including the original deposit) could eventually increase up to a maximum of
$___________
50,000
If an increase in autonomous spending of $25 million results in a $100 million
increase in equilibrium real GDP, then the marginal propensity to consume is
_________
0.75
In 2020 and 2021, Congress and the Trump and Biden administration enacted
policites to supplement state unemployment insurance payments, loans to small
businesses, etc. These actions were examples of ________ aimed at increasing real
GDP:
discretionary fiscal policy
A(n) __________ comes to an end with a business cycle _______.
Recession; trough
Which of the following is a Government expenditure, but is not a government
purchase?
The federal Government pays out unemployment insurance claims
A change in consumption spending caused by income change is _____ change in
spending, and a change in Government spending that occurs to improve roads and
bridges is _____ change in spending.
An induced; an autonomous
If the U.S. dollar decreases in value relative to other currencies, how does this affect
the aggregate demand curve?
This will shift the aggregate demand curve to the right
Macroeconomic equilibrium occurs when _________
Aggregate expenditure = GDP
,If real GDP in a closed economy is $40 billion, consumption is $20 billion, and
government purchases are $10 billion, investment $______ billion
10
Stagflation occurs when ______
inflation rises and GDP falls
The Fed can attempt to increase the federal funds rate by ______
Selling Treasury bills, which decrease bank reserves
Suppose the economy is at a short-run equilibrium GDP that lies below potential
GDP. Which of the following will occur because of the automatic mechanism
adjusting the economy back to potential GDP?
Short-run aggregate supply will shift to the right
To increase the money supply, the Federal Reserve could ________
Conduct an open market purchase of Treasury securities
If the bank of Waterloo receives a $10,000 deposit and the reserve requirement is 10
percent, how much can the bank loan out? (assume that before the deposit this bank
is just meeting its legal reserve requirement.) $________ .
9,000
The Federal Reserves System's four monetary policy goals are ________
Price stability, high employment, economic growth, and stability of financial markets and
institutions
A decrease in the reserve requirement ______ bank reserves and _______ the money
supply.
Increases; Increases
In a closed economy with no taxes, if the marginal propensity to consume is equal to
0.8, the government purchases multiplier is equal to ______.
5
The increase in government spending on unemployment insurance payments to
workers who lose their jobs during a recession and the decrease in government
, spending on unemployment insurance payments to workers during an expansion is
an example of _________.
Automatic stabilizers
Assume a closed economy with fixed taxes and the marginal propensity to consume
is equal to 0.9. The tax multiplier is $___________.
-9
Expansionary monetary policy refers to the _____________ to increase real GDP.
Federal reserve increasing the money supply and decreasing interest rates
If whole tomatoes were money, which of the following functions of money would be
the hardest for tomatoes to satisfy?
store of value
Which of the following is most likely to sustain economic growth in an economy?
technological change
Commodity money is a good ________________.
used as money that also has value independent of its use as money.
Which of the following would be classified as fiscal policy?
The federal government cuts taxes to stimulate the economy.
If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is
_________.
5
The economic growth model predicts that ____________
GDP per capita of poor countries will grow more rapidly than in rich countries.
Four of the monetary policy tools used by the Federal Reserve to manage the money
supply include ______________
open market operations, discount policy, reserve requirements, and interest on reserves.
Monetary policy refers to the actions the Federal Reserve takes to manage
_____________ .
