ECON304 - Final_Practice_KEY - F10

ECON304 - Final_Practice_KEY - F10 - ~. Sonoma State...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
~. Sonoma State University Department of Economics EeN 304 Florence Bouvet Fall 2009 Practice final- Answer Key Multiple Choice Questions 1. In the classical model with fixed output, the supply and demand for goods and services are balanced by a. Government spending b. taxes c. fiscal policy d. interest rate 2. The natural rate of unemployment is: a. The average rate of unemployment around which the economy fluctuates b. About 10 percent of the labor force c. A rate that never changes d. The transition of individuals between employment and unemployment 3. the one to one relation between the inflation rate and the nominal interest rate, the Fisher effect, assumes that the a. money supply is constant b. velocity is constant c. inflation rate is constant d. real interest rate is constant 4. the aggregate demand curve tells us possible a. combinations ofY and M for a given value ofP b. combinations ofM and P for a given value ofY c. combinations ofP and Y for a given value of M . d. results if the Federal Reserve reduces the money supply 5. If the short-run aggregate supply curve is horizontal, then a change in the money supply will change (compared with the initial equilibrium) in the short run and change in the long run. a. Only prices; only output b. Only output; only prices c. Both prices and output; only prices d. Both prices and output; both prices and output
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
p Po y 6. Refer to the figure above to answer this question. In this graph, initially the economy is at point E. Aggregate demand is given by ADO. Assume that investment increases. Consequently, the economy moves first to point _ in the short run and then to point__ a. A;D. b. D;A c. C;B d. B;C. 7. an interpretation of why the IS curve slopes downward and to the right is that as income rises, national saving rises, and this increase drives the interest rate a. down, thereby decreasing investment b. down, thereby increasing investment c. up, thereby decreasing investment d. up, thereby increasing investment 8. According to the theory of liquidity preference, tightening the money supply will __ nominal interest rates in the short run, and according to the Fisher effect, tightening the money supply will __ nominal interest rate in the long run. a. Increase; increase b. Increase; decrease c. Decrease; increase d. Decrease; decrease 9. The intersection of the IS and LM curves determines the values of a. r, Y, and P, given G, T and M b. r, Y, and M given G,T and P c. rand Y, given G, T, M and P d. P and Y, given G,T and M 10. In the IS-LM Model when the Federal Reserve decreases the money supply, the Federal Reserve __ bond and the interest rate , leading to a(n) in investment and income a. Buy; rises; increase b. Sell; falls; decrease c. Sell; rises; decrease d. Buy; rises; decrease
Background image of page 2
11. All of the following are reasons for frictional unemployment except a. workers have different preferences and abilities. b.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

ECON304 - Final_Practice_KEY - F10 - ~. Sonoma State...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online