ECN 211 ASU Exam 3 Questions with Correct
Answers
Recession |- |CORRECT |ANSWER✔✔--a |period |of |mildly |falling |incomes |and |rising |
unemployment |ex. |2007-2009
-caused |by |a |leftward |shift |in |aggregate |demand |and |a |leftward |shift |in |aggregate |supply
Depression |- |CORRECT |ANSWER✔✔-a |severe |period |of |falling |incomes |and |rising |
unemployment |ex. |Great |Depression
The |Business |Cycle |- |CORRECT |ANSWER✔✔-the |short-run |fluctuations |of |the |economy
Economic |Fluctuations |- |CORRECT |ANSWER✔✔--are |irregular |and |unpredictable |
-most |macroeconomic |variables |measuring |income, |spending, |or |production |move |in |the |same
|direction
When |Output |Falls, |Unemployment |Rises |- |CORRECT |ANSWER✔✔-when |real |GDP |declines |the
|rate |of |unemployment |rises |because |when |firms |produce |fewer |goods |and |services, |they |lay |
off |workers
Classical |Dichotomy |- |CORRECT |ANSWER✔✔--the |separation |of |economic |variables |into |real |
and |nominal
-monetary |neutrality |is |the |property |that |changes |money |supply |and |only |affects |nominal |
variables, |not |real |variables
-used |for |long-run |description |of |the |economy
Monetary |Neutrality |- |CORRECT |ANSWER✔✔-*if |the |money |supply |doubles
, -prices, |wages |and |all |dollar |values |double
-real |output, |employment, |real |interest |rates, |and |real |wages |remain |unchanged
-money |is |unlikely |to |be |neutral |in |the |short |run, |but |it |is |likely |to |be |neutral |in |the |long |run
Nominal |Variables |- |CORRECT |ANSWER✔✔--those |variables |measured |in |monetary |units
-effected |by |changes |in |th |emoney |supply
Real |Variables |- |CORRECT |ANSWER✔✔-those |variables |measured |in |physical |units
Short-run |Economy |- |CORRECT |ANSWER✔✔--changes |in |nominal |variables |such |as |money |and
|prices |impact |real |variables
-nominal |and |real |variables |are |not |independent |
-changes |in |money |can |temporarily |move |real |GDP |away |from |its |long-run |trend
Model |of |Aggregate |Supply |and |Aggregate |Demand |- |CORRECT |ANSWER✔✔--used |to |explain |
short-run |economic |fluctuations |around |the |economies |long-run |trend
-the |price |level |(measured |by |the |CPI/ |GDP |deflator) |is |graphed |on |the |vertical |axis |
-real |GDP |is |graphed |on |the |horizontal |axis
-the |price |level |and |output |adjust |to |balance |aggregate |supply |and |demand
Aggregate-Supply |Curve |- |CORRECT |ANSWER✔✔-shows |the |quantity |of |goods |and |services |
that |firms |are |willing |to |produce |and |sell |at |each |price |level
Aggregate-Supply |Curve |Short-Run |- |CORRECT |ANSWER✔✔-has |an |upward |(positive) |slope |
because |a |change |in |the |price |level |causes |output |to |deviate |from |its |long-run |level |for |a |short
|period |of |time
Answers
Recession |- |CORRECT |ANSWER✔✔--a |period |of |mildly |falling |incomes |and |rising |
unemployment |ex. |2007-2009
-caused |by |a |leftward |shift |in |aggregate |demand |and |a |leftward |shift |in |aggregate |supply
Depression |- |CORRECT |ANSWER✔✔-a |severe |period |of |falling |incomes |and |rising |
unemployment |ex. |Great |Depression
The |Business |Cycle |- |CORRECT |ANSWER✔✔-the |short-run |fluctuations |of |the |economy
Economic |Fluctuations |- |CORRECT |ANSWER✔✔--are |irregular |and |unpredictable |
-most |macroeconomic |variables |measuring |income, |spending, |or |production |move |in |the |same
|direction
When |Output |Falls, |Unemployment |Rises |- |CORRECT |ANSWER✔✔-when |real |GDP |declines |the
|rate |of |unemployment |rises |because |when |firms |produce |fewer |goods |and |services, |they |lay |
off |workers
Classical |Dichotomy |- |CORRECT |ANSWER✔✔--the |separation |of |economic |variables |into |real |
and |nominal
-monetary |neutrality |is |the |property |that |changes |money |supply |and |only |affects |nominal |
variables, |not |real |variables
-used |for |long-run |description |of |the |economy
Monetary |Neutrality |- |CORRECT |ANSWER✔✔-*if |the |money |supply |doubles
, -prices, |wages |and |all |dollar |values |double
-real |output, |employment, |real |interest |rates, |and |real |wages |remain |unchanged
-money |is |unlikely |to |be |neutral |in |the |short |run, |but |it |is |likely |to |be |neutral |in |the |long |run
Nominal |Variables |- |CORRECT |ANSWER✔✔--those |variables |measured |in |monetary |units
-effected |by |changes |in |th |emoney |supply
Real |Variables |- |CORRECT |ANSWER✔✔-those |variables |measured |in |physical |units
Short-run |Economy |- |CORRECT |ANSWER✔✔--changes |in |nominal |variables |such |as |money |and
|prices |impact |real |variables
-nominal |and |real |variables |are |not |independent |
-changes |in |money |can |temporarily |move |real |GDP |away |from |its |long-run |trend
Model |of |Aggregate |Supply |and |Aggregate |Demand |- |CORRECT |ANSWER✔✔--used |to |explain |
short-run |economic |fluctuations |around |the |economies |long-run |trend
-the |price |level |(measured |by |the |CPI/ |GDP |deflator) |is |graphed |on |the |vertical |axis |
-real |GDP |is |graphed |on |the |horizontal |axis
-the |price |level |and |output |adjust |to |balance |aggregate |supply |and |demand
Aggregate-Supply |Curve |- |CORRECT |ANSWER✔✔-shows |the |quantity |of |goods |and |services |
that |firms |are |willing |to |produce |and |sell |at |each |price |level
Aggregate-Supply |Curve |Short-Run |- |CORRECT |ANSWER✔✔-has |an |upward |(positive) |slope |
because |a |change |in |the |price |level |causes |output |to |deviate |from |its |long-run |level |for |a |short
|period |of |time
