ECONfinal - Econ 207 Sample Final 1. Define the following:...

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Econ 207 Sample Final 1. Define the following: i) autonomous variable – ii) income – iii) liquidity – iv) real interest rate – 2. Do the following events primarily affect the AS curve or the AD curve and in what direction? [Circle one answer inside of the first bracket and + if there is an increase and – for a decrease.] i) The government increases spending. ( AS AD neither ) ( + - ) ii) Oil prices increase. ( AS AD neither ) ( + - ) iii) ‘Hot money’ leaves the country. ( AS AD neither ) ( + - ) iv) Expansionary monetary policy. ( AS AD neither ) ( + - ) 3. Suppose that the economy is in a recession. In each question below, use an AS-AD graph to explain the effect of the following policies. Explain. i) The government ‘does nothing’; no fiscal or monetary policy is used. ii) What, specifically, should the government do to speed recovery of the economy? How does your proposed policy affect the economy?
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ECONfinal - Econ 207 Sample Final 1. Define the following:...

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