Econ 201 FINAL EXAM SOLUTION SET

Econ 201 FINAL EXAM SOLUTION SET - Fall 2006 Econ 201...

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

View Full Document Right Arrow Icon
Fall 2006 Econ 201 SAMPLE FINAL EXAM SOLUTION SET 1. Crowding out occurs when a. increased taxes force higher levels of national saving. b. deficit spending by the government forces private investment spending to contract. c. local businesses cannot get government contracts because of the higher bids of large corporations. d. foreign investors are willing to pay higher prices for U.S. bonds than American citizens will pay. Graph 28-1 Use the figure shown for the following question. 2. Refer to Graph 28-1. When the money supply curve shifts from MS 1 to MS 2 , a. The equilibrium price level decreases. b. The opportunity cost of holding money decreases. c. The supply of money has decreased. d. The demand for goods and services will decrease. 3. Suppose that Hassan receives a pay increase. We would expect a. Hassan's demand for normal goods to remain unchanged. b. Hassan's demand for inferior goods to decrease. c. Hassan's demand for luxury goods to decrease. d. Hassan's demand for normal goods to decrease. 4. A monetary contraction by the Fed a. increases interest rates and increases aggregate demand. b. increases interest rates and decreases aggregate demand. c. decreases interest rates and decreases aggregate demand. d. decreases interest rates and increases aggregate demand. 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Graph 32-2 For the following question, use the figure shown. 5. Refer to Graph 32-2. Which of the following would cause the aggregate demand curve to shift from AD 1 to AD 2 ? a. Expansionary fiscal policy. b. A positive expenditure multiplier effect. c. Crowding out. d. A monetary expansion. Figure 9-6 6. In Figure 9-6, which segment of the aggregate supply curve has the largest multiplier effect? a. AB b. BC c. CD d. DG 7. Misery-Land is closed economy. The Central Bank of Misery-Land carries out expansionary monetary policy that lowers interest rates in the country. As a result, a. Misery-Land’s currency will appreciate. b. Misery-Land’s currency will depreciate. c. Misery-Land will experience a net capital outflow. d. Misery-Land will not experience any capital outflows. 2
Background image of page 2
Figure 1: use this graph to answer questions 8 and 9. 8. Figure 1 above shows the Keynesian cross for the United States. If the economy is currently at point K, which of the following factors could cause it to move to point N? a. Prices in the United States rise relative to prices in other countries. b. Congress passes new investment tax incentives. c. Open market sales. d. Declines in household wealth. 9. Refer to Figure 1 above. Suppose the economy is at point K and the government carries out fiscal policy to raise GDP by 400 billion and take the economy to point N. The slope of the AE function is 0.75. What is the vertical distance between AE1 and AE2? a.
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.

This note was uploaded on 04/07/2008 for the course ECON 201 taught by Professor Witte during the Spring '08 term at Northwestern.

Page1 / 10

Econ 201 FINAL EXAM SOLUTION SET - Fall 2006 Econ 201...

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