ECN 211 QUESTIONS AND ANSWERS 2024 WITH COMPLETE SOLUTIONS
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Course
ECN 211
Institution
ECN 211
ECN 211 QUESTIONS AND ANSWERS 2024 WITH COMPLETE SOLUTIONS
Which of the following is a store of value?
U.S. government bonds
All of these are correct.
fine art
currency - Answer- All
Suppose as a result of a decline in economic conditions, some employed workers are forced to retire early...
ECN 211 EXAM QUESTIONS AND
CORRECT ANSWERS ALREADY
PASSED
Automatic stabilizers act to moderate business cycles primarily through the personal
income and consumption chanel - Answer- True
Increased domestic imports and and a higher national trade deficit are possible results
of government deficits - Answer- True
Which of the following statements about taxation is true? - Answer- A tax cut would
raise income and expenditures.
For the executive branch of government to approve their planned budgets the different
govenmnwt agencies submit their budget requests to the OMB or the - Answer- Office
of Management and Budget
If crowding out exists the expansionary effect of government will be - Answer- Smaller
than intended
A value-added tax is - Answer- An indirect tax collected at each stage of production
Once congress receives the presidents budget the _____ studies it and committees
modify it before the funds are appropriated - Answer- Congressional Budget Office
Refer to figure 13.1. A decrease in government spending would be most effective in
reducing the price level if the economy is in equilibrium - Answer- When real GDP
equals Y3
Crowding out takes place when the government budget deficit - Answer-
If bill earns $40,000 a year and pays $10,000 in taxes and Mike earns $70,000 a year
and pays $21,000 in taxes we can conclude hat this tax system is - Answer-
Progressive
If fewer businesses offered new bonds to raise investment funds because government
borrowing had increased interest rates, this would be an example of - Answer-
Crowding out
VAT and excise taxes constitute a direct tax - Answer- False
, Which of the following statements is false? - Answer- An increase in government
spending shifts the aggregate demand curve downward by a fraction of the rise in
government spending
Other things being equal, an increase in government spending financed by higher taxes
reduces real GDP because it causes bother aggregate demand and aggregate supply
to decline - Answer- False
The Federal Reserve (FED) is the central bank of the US - Answer- True
An excess supply of money occurs when people - Answer- hold more money than they
would like and attempt to buy bonds
The ultimate goal of monetary policy is - Answer- economic growth with low inflation
Money demand is - Answer- equal to the sum of the quantity demanded by each
individual
to increase equilibrium national income the fed could - Answer- purchase government
bonds
if people want to hold money that is convienient for the day to day buying and selling of
products then there is an - Answer- transactions demand for money
Refer to Figure 16.3. Assume that people form expectations adaptively. If they expect
an inflation rate of 7% and the actual inflation rate is 4%, - Answer- the economy would
be located at Point D. Pay attention to inflation rate curve (where 7% is constant) then
dotted line to the 4% on the actual to get Point D.
Suppose that the economy grows by 3 percent, the labor force rises by 2 percent, and
capital rises by 1 percent. If capital takes 40 percent of real GDP and labor takes 60
percent of real GDP, then the growth in total factor productivity must be - Answer- 1.4
percent economy growth % = TFP%+.6(%L)+.4(%C) 3 = TFP +.6(2)+.4(1) 3 - 1.2 - .4 =
3 - 1.6 = 1.4
Suppose that the labor force falls by 2 percent, the capital stock rises by 4 percent, and
total factor productivity rises by 2 percent. If labor and capital each take a 50 percent
share of real GDP, by how much does the economy grow? - Answer- 3 percent .5(-
2)+.5(4)+2 = economy growth -1+2+2 = 3
Economic growth is the sum of the growth rate of total factor productivity and the growth
rate of resources. - Answer- True
Refer to Figure 16.1. Phillips curve II is associated with the late 1980s in the United
States and indicates that 5 percent unemployment was consistent with 4 percent
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