ECO 202 UPDATED ACTUAL Questions and CORRECT Answers
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Course
ECO202
Institution
ECO202
ECO 202 UPDATED ACTUAL Questions
and CORRECT Answers
The AD-AS supply model considers _____ of the economy. - CORRECT ANSWER-
both the producer (supply) side and the spending (demand) of the economy
The AD-AS model seek to explain: - CORRECT ANSWER- the business cycle and the
inflation rate
...
ECO 202 UPDATED ACTUAL Questions
and CORRECT Answers
The AD-AS supply model considers _____ of the economy. - CORRECT ANSWER-
✔✔both the producer (supply) side and the spending (demand) of the economy
The AD-AS model seek to explain: - CORRECT ANSWER- ✔✔the business cycle and the
inflation rate
The level of AS in the long run is NOT affected by - CORRECT ANSWER- ✔✔changes in
the price level
The level of AS in the long run is affected by - CORRECT ANSWER- ✔✔changes in
technology
changes in the number of workers
changes in the capitol stock
Suppose a developing country receives more machinery and capital equipment as foreign
entrepreneurs increase the amount of investment in the economy. As a result, - CORRECT
ANSWER- ✔✔The LRAS curve will shift to the right
As an economy moves out and up along a given SRAS curve, - CORRECT ANSWER-
✔✔cyclical unemployment decreases
The invention of a cotton gin ushered in the industrial revolution and began a long period of
technological innovation. What did this technological change do to the SRAS curve? -
CORRECT ANSWER- ✔✔It shifted the SRAS curve to the right
Workers and firms both expect that prices will be 2.5% higher next year than they are this
year. As a result, - CORRECT ANSWER- ✔✔The SRAS will shift left as wages increase
Which of the following is one explanation as to why the AD curve slopes downward -
CORRECT ANSWER- ✔✔Decreases in the price level raise real wealth and increase
consumption spending
, The SRAS curve has a _______ slope because as prices of ______ rise, prices of ______ rise
more slowly. - CORRECT ANSWER- ✔✔Positive
Final Goods and Services
Inputs
Spending on the war in Afghanistan is essentially categorized as government purchases. How
do increases in spending on the war in Afghanistan affect the AD curve? - CORRECT
ANSWER- ✔✔The AD curve would have shifted to the right
German luxury car exports were hurt in 2009 as a result of the recession. How would this
decrease in exports have affected Germany's AD curve? - CORRECT ANSWER- ✔✔The AD
curve would have shifted left
Dollar bills in the modern economy serve as money because - CORRECT ANSWER-
✔✔people have confidence that others will accept them as money
A bank holds its reserves as ______ and ______. - CORRECT ANSWER- ✔✔vault cash
deposits at the federal reseve
Which of the following are the two new monetary policy tools for the federal reserve? -
CORRECT ANSWER- ✔✔Interest rate on the bank reserve deposits at the Fed and the
interest on funds deposited at the Fed for more than one day (Term Deposit Facility)
A central bank can help stop a bank panic by: - CORRECT ANSWER- ✔✔acting as a lender
of last resort
By increasing the interest rate on bank reserve deposits, the fed can ______ the level of
reserves are willing to hold, thereby ______ bank lending - CORRECT ANSWER-
✔✔Increasing
Decreasing
During bank panics, banks have liquidity problems because of - CORRECT ANSWER-
✔✔the maturity mismatch between their deposits and loans
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