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ECO2013 final Test

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5 Written Questions

5 Matching Questions

  1. Quantity theory of Money
  2. Supply Side Economics
  3. Fiscal Policy Problems
  4. Expenditure Approach
  5. Discount Rate
  1. a the belief that changes in the marginal tax rate will exert important effects on aggregate supply
  2. b change in money supply will cause a proportional change in the price level. PY=MV
    -Rate of Inflation + Growth rate of real output=Growth rate of money supply + growth rate of velocity
  3. c interest rate the Fed charges banking institutions to borrow funds
  4. d Personal consumption expenditures + gross investment + governemnt consumption and gross investment + net exports
  5. e -ability to forecast is extremely limited
    -change in fiscal policy requires legislaive action
    -Change will not have an immediate effect on the economy

5 Multiple Choice Questions

  1. difference between the maximum amount consumers would be willing to pay and the amount that they actually pay
    -below demand curve but above the price
  2. nominal interest rate-inflationary premium
    -price of loanable funds
    -Interest rate adjusted for inflation
  3. due to structural characteristics of the economy that prevent the matching of available jobs with available workers
  4. -Y goes up, PI goes up in short run
    -Y remains constant, PI goes up in long run
  5. Number of people age 16 or older who are employed or unemployed

5 True/False Questions

  1. Short run aggregate supply curveupward sloping because an increase in the price level will improve the profitability of the firms and cause them to increase output

          

  2. Transfer PaymentsChanges in quantity are sensitive to changes in price
    -elastic curves are flatter
    -perfect = horizontal

          

  3. Actual Inflation < Anticipated Inflationborrowers lose, lenders gain

          

  4. Natural Unemploymentthe combination of Structual unemployment and frictional unemployment and is not fixed but affected by the structure of labor force and public policy

          

  5. High interest rates cause-Consumption and investment to decrease
    -Net exports to decrease
    -Asset prices to decrease

          

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