ECN 1500 Final Exam 2025 With 100%
Correct Answers
As with goods, when the supply of money increases faster than does the demand, - CORRECT
ANSWER✔✔the value of the money falls
Bank of North America - CORRECT ANSWER✔✔limited-liability corporation, and could be
viewed as the nation's first central bank
Commodity money - CORRECT ANSWER✔✔money which has value as a medium of exchange
equal to its value as a commodity- animal skins, whiskey, wheat, gold
Fiat money - CORRECT ANSWER✔✔money which has value as a medium of exchange greater
than its value as a commodity- paper money
Gresham's Law - CORRECT ANSWER✔✔"bad money drives out good money."
recession - CORRECT ANSWER✔✔a period of declining real incomes and rising unemployment
depression - CORRECT ANSWER✔✔a severe recession
model of aggregate demand and aggregate supply - CORRECT ANSWER✔✔the model that most
economists use to explain short-run fluctuations in economic activity around its long-run trend
aggregate-demand curve - CORRECT ANSWER✔✔a curve that shows the quantity of goods and
services that households, firms, the government, and customers abroad want to buy at each
price level
, aggregate-supply curve - CORRECT ANSWER✔✔a curve that shows the quantity of goods and
services that firms choose to produce and sell at each price level
natural level of output - CORRECT ANSWER✔✔the production of goods and services that an
economy achieves in the long run when unemployment is at its normal rate
stagflation - CORRECT ANSWER✔✔A period of falling output and rising prices
theory of liquidity preference - CORRECT ANSWER✔✔Keynes's theory that the interest rate
adjusts to bring money supply and money demand into balance
fiscal policy - CORRECT ANSWER✔✔the setting of the level of government spending and
taxation by government policymakers
multiplier effect - CORRECT ANSWER✔✔the additional shifts in aggregate demand that result
when expansionary fiscal policy increases income and thereby increases consumer spending
crowding-out effect - CORRECT ANSWER✔✔the offset in aggregate demand that results when
expansionary fiscal policy raises the interest rate and thereby reduces investment spending
automatic stabilizers - CORRECT ANSWER✔✔changes in fiscal policy that stimulate aggregate
demand when the economy goes into a recession without policymakers having to take any
deliberate action
money - CORRECT ANSWER✔✔the set of assets in an economy that people regularly use to buy
goods and services from other people
Correct Answers
As with goods, when the supply of money increases faster than does the demand, - CORRECT
ANSWER✔✔the value of the money falls
Bank of North America - CORRECT ANSWER✔✔limited-liability corporation, and could be
viewed as the nation's first central bank
Commodity money - CORRECT ANSWER✔✔money which has value as a medium of exchange
equal to its value as a commodity- animal skins, whiskey, wheat, gold
Fiat money - CORRECT ANSWER✔✔money which has value as a medium of exchange greater
than its value as a commodity- paper money
Gresham's Law - CORRECT ANSWER✔✔"bad money drives out good money."
recession - CORRECT ANSWER✔✔a period of declining real incomes and rising unemployment
depression - CORRECT ANSWER✔✔a severe recession
model of aggregate demand and aggregate supply - CORRECT ANSWER✔✔the model that most
economists use to explain short-run fluctuations in economic activity around its long-run trend
aggregate-demand curve - CORRECT ANSWER✔✔a curve that shows the quantity of goods and
services that households, firms, the government, and customers abroad want to buy at each
price level
, aggregate-supply curve - CORRECT ANSWER✔✔a curve that shows the quantity of goods and
services that firms choose to produce and sell at each price level
natural level of output - CORRECT ANSWER✔✔the production of goods and services that an
economy achieves in the long run when unemployment is at its normal rate
stagflation - CORRECT ANSWER✔✔A period of falling output and rising prices
theory of liquidity preference - CORRECT ANSWER✔✔Keynes's theory that the interest rate
adjusts to bring money supply and money demand into balance
fiscal policy - CORRECT ANSWER✔✔the setting of the level of government spending and
taxation by government policymakers
multiplier effect - CORRECT ANSWER✔✔the additional shifts in aggregate demand that result
when expansionary fiscal policy increases income and thereby increases consumer spending
crowding-out effect - CORRECT ANSWER✔✔the offset in aggregate demand that results when
expansionary fiscal policy raises the interest rate and thereby reduces investment spending
automatic stabilizers - CORRECT ANSWER✔✔changes in fiscal policy that stimulate aggregate
demand when the economy goes into a recession without policymakers having to take any
deliberate action
money - CORRECT ANSWER✔✔the set of assets in an economy that people regularly use to buy
goods and services from other people
