EC 111 Final Exam || with Complete Solutions.
In 2008, the United States was in recession. Which of the following things would you expect to
have happened? correct answers - Increased layoffs/firing
- Higher bankruptcy rate
- Increased unemployment insurance claims
The Wealth Effect, Interest-Rate Effect, and Exchange-Rate Effect are all explanations for ____.
correct answers The slope of the aggregate-demand curve
If the rise in house value made homeowners feel wealthier, then it would have shifted ___.
correct answers aggregate demand right
When the Fed buys bonds... correct answers - Supply of money increases - Aggregate demand
shifts right
What would happen to the dollar if foreign political instability causes people to buy more US
assets? correct answers It would appreciate in foreign exchange markets making US goods more
expensive compared to foreign goods.
Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that
privately issued U.S. bonds were more likely to be defaulted on. U.S. net exports would ___.
correct answers rise which would increase aggregate demand
Determinants of long-run level of real GDP? correct answers - Price level
- Available stock of human capital
- Amount of capital used by firms
The natural level of output occurs at ___. correct answers Long-run Aggregate Supply (LRAS;
vertical line)
If technology increases, in the long run ___. correct answers output is higher and prices are lower
The sticky-price theory of the short-run aggregate supply curve says that if the price level rises
by 5% while firms were expecting it to rise by 2%, then some firms with high menu costs will
have ___. correct answers lower than desired prices, which leads to an increase in the aggregate
quantity of goods and services supplied
Sticky Price Theory correct answers the tendency of prices to remain constant despite changes in
supply and demand
Sticky Wage Theory correct answers when workers' earnings don't adjust quickly to changes in
labor market
A decrease in the money supply moves the economy ___. correct answers downwards on the
LRAS line
In 2008, the United States was in recession. Which of the following things would you expect to
have happened? correct answers - Increased layoffs/firing
- Higher bankruptcy rate
- Increased unemployment insurance claims
The Wealth Effect, Interest-Rate Effect, and Exchange-Rate Effect are all explanations for ____.
correct answers The slope of the aggregate-demand curve
If the rise in house value made homeowners feel wealthier, then it would have shifted ___.
correct answers aggregate demand right
When the Fed buys bonds... correct answers - Supply of money increases - Aggregate demand
shifts right
What would happen to the dollar if foreign political instability causes people to buy more US
assets? correct answers It would appreciate in foreign exchange markets making US goods more
expensive compared to foreign goods.
Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that
privately issued U.S. bonds were more likely to be defaulted on. U.S. net exports would ___.
correct answers rise which would increase aggregate demand
Determinants of long-run level of real GDP? correct answers - Price level
- Available stock of human capital
- Amount of capital used by firms
The natural level of output occurs at ___. correct answers Long-run Aggregate Supply (LRAS;
vertical line)
If technology increases, in the long run ___. correct answers output is higher and prices are lower
The sticky-price theory of the short-run aggregate supply curve says that if the price level rises
by 5% while firms were expecting it to rise by 2%, then some firms with high menu costs will
have ___. correct answers lower than desired prices, which leads to an increase in the aggregate
quantity of goods and services supplied
Sticky Price Theory correct answers the tendency of prices to remain constant despite changes in
supply and demand
Sticky Wage Theory correct answers when workers' earnings don't adjust quickly to changes in
labor market
A decrease in the money supply moves the economy ___. correct answers downwards on the
LRAS line
