ECN FINAL EXAM QUESTIONS WITH
100% CORRECT ANSWERS
Microeconomic substitution is impossible for the economy as a whole because -
Answer- real GDP measures the total quantity of goods and services produced by all
firms in all markets.
The model of aggregate demand and aggregate supply explains the relationship
between - Answer- real GDP and price level
Which pair of GDP growth rates and unemployment rates is realistic? - Answer- 3% and
5%
Historically, as recessions have ended the unemployment rate declined - Answer-
gradually to a rate of about 5-6%
Real GDP - Answer- measures economic activity and income
According to the classical model, an increase in the money supply causes - Answer-
prices to rise in the long run
Most economists believe that in the short run - Answer- real and nominal variables are
highly intertwined and that money can temporarily move real GDP away from its long-
run trend
Aggregate demand shifts left if - Answer- government purchases decrease and shifts
left is stock prices fall
An increase in household saving causes consumption to - Answer- fall and aggregate
demand to decrease
When the money supply decreases - Answer- interest rates rise and so aggregate
demand shifts left.
Monetary policy and fiscal policy influence - Answer- output in the short run only
According to classical macroeconomic theory, - Answer- output is determined by the
supplies of capital and labor and the available production technology.
100% CORRECT ANSWERS
Microeconomic substitution is impossible for the economy as a whole because -
Answer- real GDP measures the total quantity of goods and services produced by all
firms in all markets.
The model of aggregate demand and aggregate supply explains the relationship
between - Answer- real GDP and price level
Which pair of GDP growth rates and unemployment rates is realistic? - Answer- 3% and
5%
Historically, as recessions have ended the unemployment rate declined - Answer-
gradually to a rate of about 5-6%
Real GDP - Answer- measures economic activity and income
According to the classical model, an increase in the money supply causes - Answer-
prices to rise in the long run
Most economists believe that in the short run - Answer- real and nominal variables are
highly intertwined and that money can temporarily move real GDP away from its long-
run trend
Aggregate demand shifts left if - Answer- government purchases decrease and shifts
left is stock prices fall
An increase in household saving causes consumption to - Answer- fall and aggregate
demand to decrease
When the money supply decreases - Answer- interest rates rise and so aggregate
demand shifts left.
Monetary policy and fiscal policy influence - Answer- output in the short run only
According to classical macroeconomic theory, - Answer- output is determined by the
supplies of capital and labor and the available production technology.
