Econ 102 Final Exam: Questions With Solutions (100%)
Which of the following questions would be classified as MACROECONOMIC questions?
1). What will happen to spending by consumers when the economy enters a downturn?
2). What is the relationship between a nation's unemployment rate and its inflation rate? 3). How will the price of oranges change when a late frost damages Florida's orange groves? 4). What determines a university's cost of offering a new course?
A. 1) and 2)
B. 3) and 4)
C. 1) and 4)
D. 2) and 3) Correct Ans - 1 and 2
John Maynard Keynes believed that the government should:
A. actively try to mitigate the effects of recessions by using fiscal and monetary policies.
B. not interfere with the economy but let the economy self-correct.
C. intervene only when there is a boom but let the recession run its course.
D. not use fiscal and monetary policies, as these policies have long-term adverse effects. Correct Ans - A. actively try to mitigate the effects of recessions by using fiscal and monetary policies.
If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as:
A. the quantity theory.
B. the crowding-out theory.
C. the paradox of thrift.
D. the permanent income hypothesis. Correct Ans - C. the paradox of thrift.
Which of the following statements is CORRECT?
A. Supply and demand cannot explain why a particular good or service becomes more expensive relative to other goods and services. B. Inflation affects only the more advanced countries, whereas less advanced countries face deflation.
C. Prices of most goods and services remained stable during the Great Depression.
D. When the economy is in recession and jobs are hard to find, inflation tends to fall. Correct Ans - D. When the economy is in recession and jobs are hard to find, inflation tends to fall.
The national accounts keep track of everything EXCEPT
A. the spending of consumers and the government.
B. the sales of producers.
C. business investment.
D. exchange rates. Correct Ans - exchange rates.
Pizza company questions: Calculated as spending on final goods and services, GDP equals ___
A. $200
B. $285
C. $250 D. $85 Correct Ans - $200
When inflation rises quickly, borrowers will _____ and lenders will _____
A. be hurt; benefit B. benefit; be hurt
C. be hurt; be hurt D. benefit; benefit Correct Ans - benefit; be hurt
Look at the figure Circular-Flow Model on the right. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is a decrease in exports, which of the following is likely to happen?
A. a decrease in the nominal GDP
B. an increase in the real GDP
C. a decrease in the unemployment rate D. an increase in the inflation rate Correct Ans - A. a decrease in the nominal GDP
An example of investment spending is the purchase of a:
A. bond by a banker.
Which of the following questions would be classified as MACROECONOMIC questions?
1). What will happen to spending by consumers when the economy enters a downturn?
2). What is the relationship between a nation's unemployment rate and its inflation rate? 3). How will the price of oranges change when a late frost damages Florida's orange groves? 4). What determines a university's cost of offering a new course?
A. 1) and 2)
B. 3) and 4)
C. 1) and 4)
D. 2) and 3) Correct Ans - 1 and 2
John Maynard Keynes believed that the government should:
A. actively try to mitigate the effects of recessions by using fiscal and monetary policies.
B. not interfere with the economy but let the economy self-correct.
C. intervene only when there is a boom but let the recession run its course.
D. not use fiscal and monetary policies, as these policies have long-term adverse effects. Correct Ans - A. actively try to mitigate the effects of recessions by using fiscal and monetary policies.
If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as:
A. the quantity theory.
B. the crowding-out theory.
C. the paradox of thrift.
D. the permanent income hypothesis. Correct Ans - C. the paradox of thrift.
Which of the following statements is CORRECT?
A. Supply and demand cannot explain why a particular good or service becomes more expensive relative to other goods and services. B. Inflation affects only the more advanced countries, whereas less advanced countries face deflation.
C. Prices of most goods and services remained stable during the Great Depression.
D. When the economy is in recession and jobs are hard to find, inflation tends to fall. Correct Ans - D. When the economy is in recession and jobs are hard to find, inflation tends to fall.
The national accounts keep track of everything EXCEPT
A. the spending of consumers and the government.
B. the sales of producers.
C. business investment.
D. exchange rates. Correct Ans - exchange rates.
Pizza company questions: Calculated as spending on final goods and services, GDP equals ___
A. $200
B. $285
C. $250 D. $85 Correct Ans - $200
When inflation rises quickly, borrowers will _____ and lenders will _____
A. be hurt; benefit B. benefit; be hurt
C. be hurt; be hurt D. benefit; benefit Correct Ans - benefit; be hurt
Look at the figure Circular-Flow Model on the right. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is a decrease in exports, which of the following is likely to happen?
A. a decrease in the nominal GDP
B. an increase in the real GDP
C. a decrease in the unemployment rate D. an increase in the inflation rate Correct Ans - A. a decrease in the nominal GDP
An example of investment spending is the purchase of a:
A. bond by a banker.
