ECON 501 Exam 1 Questions and answers Newest 2025/2026

ECON 501 Exam 1 Questions and answers Newest
2025/2026
the amount of consumption expenditure that takes place when income is zero is - Correct
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Answers called autonomous consumption
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Il` due to the recession in 2008, firms decreased their profit expectations. as a result, there was
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Il` ______ a shift in the _____loanable funds curve - Correct Answers leftward; demand for
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Il` if the government's budget deficit increases and the Ricardo-Barro effect does not apply, -
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Il` Correct Answers the real interest rate rises and investment decreases Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`




Il` during the financial crisis in 2007 and 2008, financial institutions believed that default risks were
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Il` higher. as a result, there was _____in the supply of loanable funds a ______in the real interest
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Il` rate - Correct Answers a decrease; rise
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Il` which of the following events will decrease aggregate demand? - Correct Answers a decrease in
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Il` government expenditure Il`




Il` an inflationary gap occurs when - Correct Answers real GDP exceeds full employment RGDP
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Il` if exports are less than imports, then a country is running a - Correct Answers trade deficit
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Il` if we are dealing with an open economy, then GDP equals - Correct Answers C + I + G + (X-M)
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Il` in november 2012, U.S. lawmakers were faced with a "fiscal cliff:" if they did not agree on how to
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Il` reduce the federal deficit, automatic tax increases and drastic cuts in government spending would
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Il` take effect. what would happen if the fiscal cliff occurred? - Correct Answers the aggregate
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Il` demand curve shifts leftward, the price level falls and real GDP decreases Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`

, Il` the federal budget is decided upon by the - Correct Answers president of the United States and
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Il` the United States Congress
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Il` national debt increases in a given year when a country has - Correct Answers a budget deficit
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Il` disposable income equals aggregate income - Correct Answers minus taxes
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Il` the consumption equations shows the relationship between - Correct Answers consumption
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Il` expenditure and disposable income Il` Il` Il`




Il` MPC + MPS = - Correct Answers 1
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Il` the slope of the consumption function is - Correct Answers equal to the MPC and is less than 1
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Il` an example of an investment is the purchase of - Correct Answers a new van by a potter, who
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Il` packs it with his wares and travels to art shows
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Il` federal income taxes are - Correct Answers progressive
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Il` when an economy faces a recessionary gap, an appropriate fiscal policy is to - Correct Answers
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Il` decrease government expenditure Il` Il`




Il` consider the GDP determination model. an endogenous variable is - Correct Answers
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Il` who is responsible for issuing t-bills, t-notes, and t-bonds? - Correct Answers the treasury
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Il` department