ECON- 160 FINAL EXAM PRACTICE
QUESTIONS AND CORRECT ANSWERS
A Phillips' curve shows - correct answer- an inverse
relationship between unemplovment and inflation
A Progressive income tax system... - correct answer- Acts
as all automatic stabilizer for the economy and means that
average tax rates increase as income increases.
An inflationary gap occurs when - correct answer-
equilibrium GDP is above full employment GDP.
Assume a model with a Keynesian AD curve and an ordinary.
upward-sloping AS curve. An increase in resource prices
throughout the economy will cad to - correct answer- a
decrease in AS and real GDP. and an increase in prices
Assume a model with a Keynesian AD curve and an ordinary.
upward-sloping AS curve. What will cause an increase in the
price level and real GDP? - correct answer- an increase in
AD
, Assume a simple fixed-price Keynesian model where the MPC is
0.8. Which of the following will lead to the largest increase in
equilibrium GDP? - correct answer- An increase in
government spending of $100.
Automatic stabilizers - correct answer- reduce the
volatility of the business cycle by moderating fluctuations in
income.
coins and currency are included in - correct answer- M1,
M2, M3
Cost-push inflation results from increases in AD due to increases
in govemment spending. - correct answer- False
Determinants of aggregate supply - correct answer-
Resource prices, technology, business expectations, and
business taxes and regulations
If the economy is on the downward-sloping portion of the Latter
curve. then - correct answer- a decrease in tax rates will
increase tax revenue
QUESTIONS AND CORRECT ANSWERS
A Phillips' curve shows - correct answer- an inverse
relationship between unemplovment and inflation
A Progressive income tax system... - correct answer- Acts
as all automatic stabilizer for the economy and means that
average tax rates increase as income increases.
An inflationary gap occurs when - correct answer-
equilibrium GDP is above full employment GDP.
Assume a model with a Keynesian AD curve and an ordinary.
upward-sloping AS curve. An increase in resource prices
throughout the economy will cad to - correct answer- a
decrease in AS and real GDP. and an increase in prices
Assume a model with a Keynesian AD curve and an ordinary.
upward-sloping AS curve. What will cause an increase in the
price level and real GDP? - correct answer- an increase in
AD
, Assume a simple fixed-price Keynesian model where the MPC is
0.8. Which of the following will lead to the largest increase in
equilibrium GDP? - correct answer- An increase in
government spending of $100.
Automatic stabilizers - correct answer- reduce the
volatility of the business cycle by moderating fluctuations in
income.
coins and currency are included in - correct answer- M1,
M2, M3
Cost-push inflation results from increases in AD due to increases
in govemment spending. - correct answer- False
Determinants of aggregate supply - correct answer-
Resource prices, technology, business expectations, and
business taxes and regulations
If the economy is on the downward-sloping portion of the Latter
curve. then - correct answer- a decrease in tax rates will
increase tax revenue
