ECN Final Exam Questions with
Complete Solutions6
Countries that engage in trade will tend to specialize in goods in which they have an
_____________ and will __________________ those goods - ANSWERS -comparative
advantage; export
In the figure, producer surplus without international trade would be areas - ANSWERS -X + Y
The graph represents the market for cheese in the United States. Identify the area(s) of
consumer surplus when there is a tariff - ANSWERS -A + B
When our interest rates are higher in country A than those in other countries, we expect that -
ANSWERS -Capital will flow into country A
The national debt_________ in years in which the federal government incurs a _______ -
ANSWERS -rises; deficit
Suppose the reserve ratio is 20%. If Holly deposits $1,000 of cash into her checking account and
her bank lends $600 to Freda, the money supply: - ANSWERS -increases by $600.
Expansionary monetary policy in the United States causes U.S. interest rates to fall and the
dollar to depreciate - ANSWERS -fall; depreciate
Which one of the following is NOT included in MI - ANSWERS -savings deposits
, Suppose the government increases taxes by more than is necessary to close to inflationary gap.
Which of the following would most likely result - ANSWERS -The economy could move into a
recession
If the country has a current account deficit it must have a - ANSWERS -Financial account surplus
(Scenario: Monetary Base and Money Supply) How much is MI - ANSWERS -$330
In 2011, consumption spending is $7,000, government purchasing is $2,000, and investment
spending is $1,500. If GDP for 2011 is $10,300, then - ANSWERS -Exports are $600 and imports
are $800
Aggregate demand will increase in all of the following cases except if - ANSWERS -Interest rates
increase
Suppose that the stock market crashes. Which of the following is most likely to occur -
ANSWERS -the aggregate demand curve shifts to the left
Which of the following would an economic policy maker rank as the least preferred type of
shock? - ANSWERS -Negative supply shock
Suppose the economy is in a short-run equilibrium where the actual output is greater than
potential output. The economy is - ANSWERS -An inflationary gap, nominal wages will increase
and SRAS will shift to the left until the actual GDP is equal to the potential GDP in the Kong run
A reduction in government transfers ________, therefore shifting the aggregate demand curve
to the ________. - ANSWERS -decreases disposable income and consumption; left
Suppose a fall in commodity prices causes a supply shock. The short-run Phillips curve will: -
ANSWERS -Shift down
Complete Solutions6
Countries that engage in trade will tend to specialize in goods in which they have an
_____________ and will __________________ those goods - ANSWERS -comparative
advantage; export
In the figure, producer surplus without international trade would be areas - ANSWERS -X + Y
The graph represents the market for cheese in the United States. Identify the area(s) of
consumer surplus when there is a tariff - ANSWERS -A + B
When our interest rates are higher in country A than those in other countries, we expect that -
ANSWERS -Capital will flow into country A
The national debt_________ in years in which the federal government incurs a _______ -
ANSWERS -rises; deficit
Suppose the reserve ratio is 20%. If Holly deposits $1,000 of cash into her checking account and
her bank lends $600 to Freda, the money supply: - ANSWERS -increases by $600.
Expansionary monetary policy in the United States causes U.S. interest rates to fall and the
dollar to depreciate - ANSWERS -fall; depreciate
Which one of the following is NOT included in MI - ANSWERS -savings deposits
, Suppose the government increases taxes by more than is necessary to close to inflationary gap.
Which of the following would most likely result - ANSWERS -The economy could move into a
recession
If the country has a current account deficit it must have a - ANSWERS -Financial account surplus
(Scenario: Monetary Base and Money Supply) How much is MI - ANSWERS -$330
In 2011, consumption spending is $7,000, government purchasing is $2,000, and investment
spending is $1,500. If GDP for 2011 is $10,300, then - ANSWERS -Exports are $600 and imports
are $800
Aggregate demand will increase in all of the following cases except if - ANSWERS -Interest rates
increase
Suppose that the stock market crashes. Which of the following is most likely to occur -
ANSWERS -the aggregate demand curve shifts to the left
Which of the following would an economic policy maker rank as the least preferred type of
shock? - ANSWERS -Negative supply shock
Suppose the economy is in a short-run equilibrium where the actual output is greater than
potential output. The economy is - ANSWERS -An inflationary gap, nominal wages will increase
and SRAS will shift to the left until the actual GDP is equal to the potential GDP in the Kong run
A reduction in government transfers ________, therefore shifting the aggregate demand curve
to the ________. - ANSWERS -decreases disposable income and consumption; left
Suppose a fall in commodity prices causes a supply shock. The short-run Phillips curve will: -
ANSWERS -Shift down
