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Macroeconomics ECO 202 Questions, Answers, Rationales
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Macroeconomics ECO 202 Questions, Answers, Rationales
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ECO 202Study online at https://quizlet.com/_g1juxd
1. The AD-AS supply model consid- both the producer (supply) side and the
ers _____ of the economy. spending (demand) of the economy
2. The AD-AS model seek to ex- the business cycle and the inflation rate
plain:
3. The level of AS in the long run is changes in the price level
NOT affected by
4. The level of AS in the long run is changes in technology
affected by changes in the number of workers
changes in the capitol stock
5. Suppose a developing country The LRAS curve will shift to the right
receives more machinery and
capital equipment as foreign en-
trepreneurs increase the amount
of investment in the economy. As
a result,
6. As an economy moves out and cyclical unemployment decreases
up along a given SRAS curve,
7. The invention of a cotton gin ush- It shifted the SRAS curve to the right
ered in the industrial revolution
and began a long period of tech-
nological innovation. What did
this technological change do to
the SRAS curve?
8. Workers and firms both expect The SRAS will shift left as wages in-
that prices will be 2.5% higher crease
next year than they are this year.
As a result,
9. Which of the following is one ex- Decreases in the price level raise
planation as to why the AD curve real wealth and increase consumption
slopes downward spending
10.
, ECO 202
Study online at https://quizlet.com/_g1juxd
The SRAS curve has a _______ Positive
slope because as prices of Final Goods and Services
______ rise, prices of ______ rise Inputs
more slowly.
11. Spending on the war in The AD curve would have shifted to the
Afghanistan is essentially cate- right
gorized as government purchas-
es. How do increases in spend-
ing on the war in Afghanistan af-
fect the AD curve?
12. German luxury car exports were The AD curve would have shifted left
hurt in 2009 as a result of the
recession. How would this de-
crease in exports have affected
Germany's AD curve?
13. Dollar bills in the modern econo- people have confidence that others will
my serve as money because accept them as money
14. A bank holds its reserves as vault cash
______ and ______. deposits at the federal reseve
15. Which of the following are the Interest rate on the bank reserve de-
two new monetary policy tools posits at the Fed and the interest on
for the federal reserve? funds deposited at the Fed for more than
one day (Term Deposit Facility)
16. A central bank can help stop a acting as a lender of last resort
bank panic by:
17. By increasing the interest rate Increasing
on bank reserve deposits, the Decreasing
fed can ______ the level of re-
serves are willing to hold, there-
by ______ bank lending
18. During bank panics, banks have the maturity mismatch between their de-
liquidity problems because of posits and loans
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