Econ 203 Final Questions
Final questions given to use before hand
- 1.The natural rate of unemployment is the.....
- A.
Unemployment rate that would prevail with zero inflation
- B.
Rate associated with the highest possible level of GDP
- C.
Difference between the LR and SR unemployments
- D.
Amount of unemployment the economy normally experiences
- E.
None of them are right
- 2.The sticky price theory of the SRAS curve states that when prices fall unexpectedly some firms will have....
- A.
Lower than desired prices which increases sales
- B.
Higher than desired prices which increases sales
- C.
Lower than desired prices which decreases sales
- D.
Higher than desired prices which decreases sales
- 3.Which of the following is true concerning a CLOSED economy...
- A.
Unmployment rises as the economy moves from A to B
- B.
Either fiscal or monetary policy could be used to move the economy from B to A
- C.
If the economy is left alone then as the economy moves from B to LR equilibrium the P level would fall farther
- D.
All of the above
- 4.In a small open economy with perfect capital mobility if x-rates are fixed, AD could be increased by....
- A.
Increase gov. expenditure
- B.
Decreasing tax rates
- C.
Increasing MS
- D.
All of the above
- E.
Only A and B
- 5.If the closed economy starts out at C and 1, then in the SR an increase in the MS growth rate moves the economy to.....
- A.
A and 1
- B.
B and 2
- C.
C and 3
- D.
None of the above
- 6.If the BoC reduces inflation by 2% and this makes the output fall by 12% and unemployment rises 4% the sacrifce ratio is....
- A.
6
- B.
4
- C.
3
- D.
2
- E.
1/6
- 7.If the reserve ratio is 20% and banks do not hold excess reserves, when the BoC sells $40 million of bonds to the public, bank reserves....
- A.
Increase by $40 million and Ms eventually increases by $200 million
- B.
Increase by $40 million and Ms eventually increases by $800 million
- C.
Decrease by $40 million and Ms eventually decreases by $200 million
- D.
Decrease by $40 million and Ms eventually decreases by $800 million
- 8.Which list contains only actions that decrease the MS?
- A.
Raise bank rate, make open market sales
- B.
Raise bank rate, make open market purchases
- C.
Lower bank rate, make open market purchases
- D.
Lower bank rate, make open market sales
- 9.Arnold puts money into an account, 1yr later he checks and sees that he has 7% more money and that his money will buy 3% more goods
- A.
Nominal int. rate = 4% and unempl. = 3%
- B.
Nominal int. rate = 5% and unempl. = -1%
- C.
Nominal int. rate = 6% and unempl. = 5%
- D.
Nominal int. rate = 10% and unempl. = 3%
- E.
None of the above
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