ECON 202: Principles of Macroeconomics
Sample Final Exam
宏观经济学原理代考 If the government implement expansionary fiscal policy, which curve on your diagram in part a will shift as a result?
Multiple Choice Questions [28 questions, 1 pts each]
1.What is the Fed’s primary policy tool to influence the federal funds rate nowadays?
a.interest on reserve balances
d.open market operations
2.The factors that could cause money demand to shift do NOT include:
b.A change in the price level.
d.Increase in real GDP.
3.Comparing M1 and M2 we know that: 宏观经济学原理代考
a.M2 is larger because it contains M1 and other assets.
b.M1 is larger because it contains M2 and other assets.
c.M2 equals M1.
d.M1 is larger because it contains currency
4.Which of the following is NOT considered a function of money?
a.medium of exchange
c.unit of account
5.If the government’s revenues are greater than its expenditures, then it has a budget:
6.If the economy is in a recessionary gap, the actual output will be ____________ the potential output.
c.the same as
7.The federal funds rate is: 宏观经济学原理代考
a.determined by the supply of and demand for reserves.
b.set by Congress.
c.determined in the market for goods and services by the aggregate supply and aggregate demand curves.
d.the interest rate that banks pay when they borrow directly from the Fed.
8.Which fiscal policy would make a budget surplus larger or a budget deficit smaller?
a.an increase in government purchases of goods and services
c.higher interest rate.
d.lower government transfers
9.If overall spending declines, causing the economy to contract, the government could counter this by:
a.raising tax rates.
b.decreasing government transfers.
c.increasing government spending.
d.decreasing government spending.
10.If capital inflows are negative, then a country:
a.borrows more from other countries than it lends to them.
b.lends more to other countries than it borrows from them.
c.has balanced trade.
d.imports more than it exports.
11.The three tasks of a financial system do NOT include:
a.reducing transaction costs.
12.In the United States, the institution charged with determining the size of the monetary base and regulating the banking system is the:
c.Bureau of Labor Statistics
13.A goal of monetary policy and fiscal policy is to
a.offset the shifts in aggregate demand and thereby eliminate unemployment. 宏观经济学原理代考
b.offset shifts in aggregate demand and thereby stabilize the economy.
c.enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
d.enhance the shifts in aggregate demand and thereby increase economic growth
14.Stagflation is a combination of _________ unemployment and _________ inflation.
15.In the U.S., unemployment is measured through the Current Population Survey, conducted monthly by the _________.
a.Organization for Economic Cooperation and Development
b.Federal Reserve Board
c.Statistical Office of the European Communities
d.Bureau of Labor Statistics
16.Most economists use the aggregate demand and aggregate supply model primarily to analyze
a.short-run fluctuations in the economy
b.the long-run effects of international trade policies. 宏观经济学原理代考
17.Which of the following statements is correct?
a.Productivity is a determinant of human capital per worker
b.Technological knowledge is a determinant of productivity
c.Human capital and technological knowledge are the same
d.increases in technological progress lead to decreases in productivity
18.Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,
a.their consumption expenditures are being financed by someone else’s saving
b.their consumption expenditures are being financed by someone else’s investment
c.their investments are being financed by someone else’s saving
d.their investments are being financed by someone else’s consumption
19.The aggregate production function exhibits _____ returns to physical capital.
20.The main role of a financial system is to:
a.make the capitalist class richer.
b.provide credit cards to as many people as possible.
c.channel goods and services to the people willing to pay for them. 宏观经济学原理代考
d.channel funds from savers into investment.
21.The three tasks of a financial system do NOT include:
a.reducing transaction costs
22.The inflation rate is the:
a.price level in the current year minus the price level in the previous year.
b.price level in the current year plus the price level in the previous year.
c.percentage change in the price level from one year to the next.
d.price level in the current year multiplied by the price level in the previous year
23.The natural rate of unemployment is achieved when:
a.the actual rate of unemployment is zero.
b.cyclical unemployment is above the actual unemployment rate.
c.the quantity of labor supplied is equal to the quantity of labor demanded.
d.there is no cyclical unemployment.
24.Frictional unemployment is
b.set by the Fed
c.inevitable, because at any given time, jobs are being created in some firms and destroyed in other firms 宏观经济学原理代考
d.inevitable, because in some industries, wages are always set above the level that brings supply and demand into equilibrium
25.Last week, Saanvi quit her job as a copywriter at an advertising agency. She has spent the past few days browsing the help-wanted ads but hasn’t found anything that matches her skills. Saanvi is BEST classified as:
d.out of the labor force
26.Jayden has a part-time job. He would prefer to have a full-time job but has been unable to find one. Jayden is classified as:
c.not in the labor force
27.Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. Then:
a.Susan has an absolute advantage over Paul in washing windows
b.Susan has a comparative advantage over Paul in washing windows
c.Paul has a comparative advantage over Susan in ironing shirts.ECO 202 Fall 2023
d.All of the above are correct
28.British economist John Hicks first introduced the IS-LM model in 1937, examining the relationship between output and interest rates.
As shown above, the IS-LM graph consists of two curves: IS and LM. The IS curve depicts the set of all levels of interest rates and output (GDP) at which total investment (I) equals total saving (S).At lower interest rates, investment is higher, which translates into more total output (GDP), so the IS curve slopes downward. The LM curve depicts the set of all levels of income (GDP) and interest rates at which money supply equals money demand. The LM curve slopes upward because higher levels of income (GDP) induce increased demand to hold money balances for transactions, which requires a higher interest rate to keep money supply and liquidity demand in equilibrium.
Suppose there is a spell of very poor weather for production and simultaneously there is a design innovation that increases the profitability of projects (with no change in wealth or the cost of projects), then our model predicts that the equilibrium real interest rate will __________, and the real output will __________ .
a.rise; be uncertain
b.be uncertain; rise
c.be uncertain; fall
d.fall; be uncertain
Short Answer Questions [3 questions, 72pts in total] 宏观经济学原理代考
1.Given the following information about a closed economy, please answer the questions below.
a.What is the level of investment?
b.What is the level of national saving?
c.What is the budget balance?
d.What is the level of government saving?
2.Suppose the economy begins in a long-run equilibrium.
a.Draw the AD-AS model in its long-run macroeconomics. Label axes, intercepts, and curves correctly. Label the long-run equilibrium ELR.
b.Suppose consumer wealth declines. Draw the short-run effect on your diagram in part a.
c.Suppose the government does not want the economy to stay in a recession. What are the three possible ways they could implement expansionary fiscal policy get us back to our original long-run equilibrium?
d.If the government implement expansionary fiscal policy, which curve on your diagram in part a will shift as a result? In which direction and why? Be able to illustrate it.
3.Suppose the economy begins in an inflationary gap. 宏观经济学原理代考
a.Draw the aggregate demand curve, the long-run aggregate supply curve, and the short-run aggregate supply curve to show a short-run macroeconomics equilibrium in an inflationary gap. Label the curves AD1, LRAS, and SRAS1, respectively. Label the short-run equilibrium E1.
b.Government policy that closes the inflationary gap would be __________[expansionary/contractionary] and will shift ________ curve to the _______ [left/right]. As the result, the price level will _______ [increase/decrease], and the aggregate output will ________ [increase/decrease].
c.If the federal reserve decides to intervene and stabilize the prices, it will implement________________ [expansionary/contractionary] monetary policy that will _________[increase/decrease] the money supply. Draw a money market diagram to illustrate the impact of this policy. Label the new curve properly.
d.If the Federal Reserve chooses to use Interest on Reserve Balances (IORB) to close this gap, it will _______ [increase/decrease] IORB so that banks will _______ [add/deplete]their reserve balances. As a result, the supply of circulating money will _________[increase/decrease].