ECON 211
ECON 211 FINAL EXAM QUESTIONS
AND ANSWERS 2025
The Opportunity Cost of an item is -Correct Answer ✔What you give up to get that item
Total Output in an economy increases when each person specializes because -Correct
Answer ✔Each person spends more time producing that product in which he or she has
a comparative advantage
The producer that requires a smaller quantity of inputs to produce a certain amount of a
good, relative to the quantities of inputs required by other producers to produce the
same amount of that good -Correct Answer ✔Has an absolute advantage in the
production of that good
The quantity demanded of a good is the amount that buyers are -Correct Answer
✔Willing and able to purchase
The market demand curve -Correct Answer ✔Represents the sum of the quantities
demanded by all the buyers at each price of the good.
The quantity supplied of a good is -Correct Answer ✔The amount sellers are willing and
able to produce
What causes equilibrium price to fall -Correct Answer ✔Demand increase and Supply
decrease
Demand and supply both decrease
Demand decrease and Supply increase
Demand and supply both increase
Demand decrease and supply increase
GDP is defined by -Correct Answer ✔Value of all final goods and services produced
within a country in a given period of time
Changes in nominal GDP reflect -Correct Answer ✔Both changes in price and the
amount being produced
The unemployment rate is computed as the number of unemployed -Correct Answer
✔Divided by the labor force all times 100
Some persons are counted as out of the labor force because they have made no
serious attempt to find work. However some of these individuals may want to work even
though they are too discouraged to make a serious effort to look. If these individuals
ECON 211
,ECON 211
were counted as unemployed instead of out of the labor force, then -Correct Answer
✔Both unemployment rate and the labor- force participation rate would be higher
The CPI is used to -Correct Answer ✔Monitor changes in the cost of living over time
Which of the following statements about real and nominal interest rates is correct -
Correct Answer ✔When the inflation rate is positive, the nominal interest rate is
necessarily greater than the real interest rate
Sue was an accountant in 1944 and earned 12,000 That year
Her son Josh earns 210,000 in 2013
The Price index in 1944 was 17.6 and 218.4 in 2013
Sue's income amounts to what percentage of josh's -Correct Answer ✔70.9
During a certain year, the CPI increased from 120 to 132 and the purchasing power of a
bank account increased by 4% For that year -Correct Answer ✔Nominal interest rate
was 14 %
Productivity is defined as the quantity of -Correct Answer ✔Goods and services
produced from each unit of labor output
All else equal, If there are diminishing returns, then which of the following is true if a
country increases its capital by one unit -Correct Answer ✔Output will rise but by less
than it did when the previous unit was added
A Bond buyer is -Correct Answer ✔Saver. Long term bonds have more risk than short
term bonds
The source of the supply of loanable funds -Correct Answer ✔Is saving and the source
of demand for loanable funds is investment
Economist equate money with -Correct Answer ✔Assets people use regularly to buy
goods and services
Dollar bills, Paintings and emerald necklaces are -Correct Answer ✔Stores of value
An Open market purchase -Correct Answer ✔Increase the number of dollars in the
hands of the public and decreases the number of bonds in the hands of the public
The Fed Reserve -Correct Answer ✔Is responsible for conduction the nations monetary
policy and it plays a role in regulating banks
The classical dichotomy refers to the idea that the supply of money -Correct Answer
✔Determines nominal variables, But not real variables
ECON 211
,ECON 211
According to the quantity theory of money, a 3% increase in the money supply -Correct
Answer ✔Causes the price level to rise by 3%
The modelof aggregate demand and aggregate supply explains the relationship
between -Correct Answer ✔Real GDP and Price level
If the price level falls, the real value of a dollar -Correct Answer ✔Rises. SO people will
want to buy more
The long-run aggregate supply curve shifts right if -Correct Answer ✔The capital stock
increases
The sticky wage theory of the short run aggregate supply curve says that the quantity of
output firms supply will increase -Correct Answer ✔The price level is higher than
expected making production more profitable
An economic expansion is caused by a shift in aggregate demand causes prices to -
Correct Answer ✔Rise in the short run and rise even more in the long run
Which of the following would cause prices and real GDP to rise in the short run -Correct
Answer ✔Aggregate demand shifts right
In the short run an increase in the costs of production makes -Correct Answer ✔Output
fall and prices rise
Which of the following shifts aggregate demand to the left -Correct Answer ✔Stock
prices fall for some reason other than a change in the price level
Monetary policy is determined by -Correct Answer ✔The federal reserve and involves
changing money supply
Fiscal policy is determined by -Correct Answer ✔The president and congress and
involves changing gov spending and taxation
People choose to hold a larger quantity of money if -Correct Answer ✔The interest rate
falls,which causes the opportunity cost of holding money to fall
Which of the following events would shift money demand to the right -Correct Answer
✔an increase in the price level
When the Fed decreases the money supply we expect -Correct Answer ✔interest rates
to rise and stock prices to fall
ECON 211
, ECON 211
An increase in gov purchases will -Correct Answer ✔Shift aggregate demand to the
right
Suppose the MPS is 0.9
In the gov increases its spending by 30 billion
How much does the aggregated demand shift to the right?
If taxes decrease by 30 billion
How far does aggregate demand shift to the right? -Correct Answer ✔300 Billion and
270 billion
What does a production possibilities frontier display? -Correct Answer ✔Possible
combinations of output an economy can produce given available factors of production
and technology.
What is a normative statement? -Correct Answer ✔Policymakers should increase the
minimum wage to improve standard of living.
The opportunity cost of helping a friend move is... -Correct Answer ✔the next best use
of the time and energy spent helping your friend.
An entity has a comparative advantage if it can produce what? -Correct Answer ✔At a
lower opportunity cost than another entity.
T/F: Suppose the United States has an absolute advantage in the production of oil and
wheat. This means that the U.S. would not gain from trading these goods. -Correct
Answer ✔FALSE
The United States has a comparative advantage in the production of wheat and an
absolute advantage in the production of both apples and wheat relative to Canada. If
the U.S. and Canada specialize and trade, the U.S. should produce what? -Correct
Answer ✔Wheat
The law of the demand states that if price rises, quantity demanded does what? -
Correct Answer ✔Decreases
We would expect demand for cars to increase if... -Correct Answer ✔The price of
gasoline falls.
As income increases, consumers purchase more cars. Cars what type of good? -
Correct Answer ✔Normal goods
Supply curves show the relationship between price and quantity demanded. Assuming
the law of supply holds, supply curves are what? -Correct Answer ✔Upward sloping
ECON 211
ECON 211 FINAL EXAM QUESTIONS
AND ANSWERS 2025
The Opportunity Cost of an item is -Correct Answer ✔What you give up to get that item
Total Output in an economy increases when each person specializes because -Correct
Answer ✔Each person spends more time producing that product in which he or she has
a comparative advantage
The producer that requires a smaller quantity of inputs to produce a certain amount of a
good, relative to the quantities of inputs required by other producers to produce the
same amount of that good -Correct Answer ✔Has an absolute advantage in the
production of that good
The quantity demanded of a good is the amount that buyers are -Correct Answer
✔Willing and able to purchase
The market demand curve -Correct Answer ✔Represents the sum of the quantities
demanded by all the buyers at each price of the good.
The quantity supplied of a good is -Correct Answer ✔The amount sellers are willing and
able to produce
What causes equilibrium price to fall -Correct Answer ✔Demand increase and Supply
decrease
Demand and supply both decrease
Demand decrease and Supply increase
Demand and supply both increase
Demand decrease and supply increase
GDP is defined by -Correct Answer ✔Value of all final goods and services produced
within a country in a given period of time
Changes in nominal GDP reflect -Correct Answer ✔Both changes in price and the
amount being produced
The unemployment rate is computed as the number of unemployed -Correct Answer
✔Divided by the labor force all times 100
Some persons are counted as out of the labor force because they have made no
serious attempt to find work. However some of these individuals may want to work even
though they are too discouraged to make a serious effort to look. If these individuals
ECON 211
,ECON 211
were counted as unemployed instead of out of the labor force, then -Correct Answer
✔Both unemployment rate and the labor- force participation rate would be higher
The CPI is used to -Correct Answer ✔Monitor changes in the cost of living over time
Which of the following statements about real and nominal interest rates is correct -
Correct Answer ✔When the inflation rate is positive, the nominal interest rate is
necessarily greater than the real interest rate
Sue was an accountant in 1944 and earned 12,000 That year
Her son Josh earns 210,000 in 2013
The Price index in 1944 was 17.6 and 218.4 in 2013
Sue's income amounts to what percentage of josh's -Correct Answer ✔70.9
During a certain year, the CPI increased from 120 to 132 and the purchasing power of a
bank account increased by 4% For that year -Correct Answer ✔Nominal interest rate
was 14 %
Productivity is defined as the quantity of -Correct Answer ✔Goods and services
produced from each unit of labor output
All else equal, If there are diminishing returns, then which of the following is true if a
country increases its capital by one unit -Correct Answer ✔Output will rise but by less
than it did when the previous unit was added
A Bond buyer is -Correct Answer ✔Saver. Long term bonds have more risk than short
term bonds
The source of the supply of loanable funds -Correct Answer ✔Is saving and the source
of demand for loanable funds is investment
Economist equate money with -Correct Answer ✔Assets people use regularly to buy
goods and services
Dollar bills, Paintings and emerald necklaces are -Correct Answer ✔Stores of value
An Open market purchase -Correct Answer ✔Increase the number of dollars in the
hands of the public and decreases the number of bonds in the hands of the public
The Fed Reserve -Correct Answer ✔Is responsible for conduction the nations monetary
policy and it plays a role in regulating banks
The classical dichotomy refers to the idea that the supply of money -Correct Answer
✔Determines nominal variables, But not real variables
ECON 211
,ECON 211
According to the quantity theory of money, a 3% increase in the money supply -Correct
Answer ✔Causes the price level to rise by 3%
The modelof aggregate demand and aggregate supply explains the relationship
between -Correct Answer ✔Real GDP and Price level
If the price level falls, the real value of a dollar -Correct Answer ✔Rises. SO people will
want to buy more
The long-run aggregate supply curve shifts right if -Correct Answer ✔The capital stock
increases
The sticky wage theory of the short run aggregate supply curve says that the quantity of
output firms supply will increase -Correct Answer ✔The price level is higher than
expected making production more profitable
An economic expansion is caused by a shift in aggregate demand causes prices to -
Correct Answer ✔Rise in the short run and rise even more in the long run
Which of the following would cause prices and real GDP to rise in the short run -Correct
Answer ✔Aggregate demand shifts right
In the short run an increase in the costs of production makes -Correct Answer ✔Output
fall and prices rise
Which of the following shifts aggregate demand to the left -Correct Answer ✔Stock
prices fall for some reason other than a change in the price level
Monetary policy is determined by -Correct Answer ✔The federal reserve and involves
changing money supply
Fiscal policy is determined by -Correct Answer ✔The president and congress and
involves changing gov spending and taxation
People choose to hold a larger quantity of money if -Correct Answer ✔The interest rate
falls,which causes the opportunity cost of holding money to fall
Which of the following events would shift money demand to the right -Correct Answer
✔an increase in the price level
When the Fed decreases the money supply we expect -Correct Answer ✔interest rates
to rise and stock prices to fall
ECON 211
, ECON 211
An increase in gov purchases will -Correct Answer ✔Shift aggregate demand to the
right
Suppose the MPS is 0.9
In the gov increases its spending by 30 billion
How much does the aggregated demand shift to the right?
If taxes decrease by 30 billion
How far does aggregate demand shift to the right? -Correct Answer ✔300 Billion and
270 billion
What does a production possibilities frontier display? -Correct Answer ✔Possible
combinations of output an economy can produce given available factors of production
and technology.
What is a normative statement? -Correct Answer ✔Policymakers should increase the
minimum wage to improve standard of living.
The opportunity cost of helping a friend move is... -Correct Answer ✔the next best use
of the time and energy spent helping your friend.
An entity has a comparative advantage if it can produce what? -Correct Answer ✔At a
lower opportunity cost than another entity.
T/F: Suppose the United States has an absolute advantage in the production of oil and
wheat. This means that the U.S. would not gain from trading these goods. -Correct
Answer ✔FALSE
The United States has a comparative advantage in the production of wheat and an
absolute advantage in the production of both apples and wheat relative to Canada. If
the U.S. and Canada specialize and trade, the U.S. should produce what? -Correct
Answer ✔Wheat
The law of the demand states that if price rises, quantity demanded does what? -
Correct Answer ✔Decreases
We would expect demand for cars to increase if... -Correct Answer ✔The price of
gasoline falls.
As income increases, consumers purchase more cars. Cars what type of good? -
Correct Answer ✔Normal goods
Supply curves show the relationship between price and quantity demanded. Assuming
the law of supply holds, supply curves are what? -Correct Answer ✔Upward sloping
ECON 211
