ECON 202 LATEST 2026 EXAMINERS QUESTIONS
AND ANSWERS SURE A+
✔✔Tool 4: buys and sells government bonds (what it used to do) - ✔✔Open market
operations through buying and selling bonds
✔✔Unconventional monetary policy - ✔✔special actions the central bank uses when
normal interest rate tools don't work to help boost the economy.
✔✔Mandatory vs. Discretionary - ✔✔Mandatory: automatic rules that happen without
needing a new decision
Discretionary: decisions made by policy makers based on current economic conditions
✔✔Fiscal Policy - ✔✔The government's use of spending and tax policies to attempt to
stabilize the economy
✔✔T's of Fiscal Policy - ✔✔Timely: policy makers must act quickly
Targeted: focused on specific regions, industries, or groups
Temporary: extra spending ends once economy recovers
✔✔Automatic stabilizers - ✔✔adjust as the economy expands and contracts without
policymakers taking any action
✔✔surplus vs. deficit - ✔✔surplus: when income or revenue is greater than spending
deficit: when spending is greater than income or revenue
✔✔Comparative advantage - ✔✔The ability to do a task at a lower opportunity cost
✔✔Exchange rate - ✔✔The value of one's countries currency compared to another
countries currency (how much one currency can be traded for another)
✔✔ GDP - ✔✔the market value of all final goods and services produced within a country
in an given year
, ✔✔GDP Perspectives - ✔✔Expenditures: adding up all spending in thr economy
Income: adding up all income people and buinsess earn
Production (output): adding up thr value of all goods and servies produced
✔✔GDP Identity - ✔✔Y = C + I + G + NX
✔✔Real vs. Nominal GDP - ✔✔Real: measured in constant prices
Nominal: measured in todays prices
✔✔Macro Inputs - ✔✔Land: natural resources used to make goods
Labor: workers and human effort
Capitol: tools, machines and building used for production
✔✔Innovation - ✔✔increase productivity and growth
✔✔Property Rights - ✔✔control over a tangible or intangible resource (create
incentives)
✔✔Natural Unemployment Rate - ✔✔the % of the labor force that is unemployed
✔✔CPI (Consumer Price Index) - ✔✔an index that tracks the average price consumers
pay over time
✔✔Inflation - ✔✔a generalized rise in the overall level of prices
✔✔Real vs. Nominal variables as a whole - ✔✔Real: a variable that has been adjusted
to account for inflation
Nominal: a variable measured in dollars
✔✔Cost of Inflation - ✔✔- when inflation is low and stable, then money serves its three
functions well
- high or unpredictable inflation erodes the functions of money
(functions: money of exchange, unit of account, store of value)
✔✔MPC (marginal propensity to consume) - ✔✔the fraction of each extra dollar of
income that households spend on consumption
✔✔Saving - ✔✔the portion of income you dont spend in a given period
✔✔Dissaving - ✔✔the excess amount you consume above you income in a given
period
✔✔Stock vs. Flow - ✔✔Stock: quantity measured at a specific period in time
AND ANSWERS SURE A+
✔✔Tool 4: buys and sells government bonds (what it used to do) - ✔✔Open market
operations through buying and selling bonds
✔✔Unconventional monetary policy - ✔✔special actions the central bank uses when
normal interest rate tools don't work to help boost the economy.
✔✔Mandatory vs. Discretionary - ✔✔Mandatory: automatic rules that happen without
needing a new decision
Discretionary: decisions made by policy makers based on current economic conditions
✔✔Fiscal Policy - ✔✔The government's use of spending and tax policies to attempt to
stabilize the economy
✔✔T's of Fiscal Policy - ✔✔Timely: policy makers must act quickly
Targeted: focused on specific regions, industries, or groups
Temporary: extra spending ends once economy recovers
✔✔Automatic stabilizers - ✔✔adjust as the economy expands and contracts without
policymakers taking any action
✔✔surplus vs. deficit - ✔✔surplus: when income or revenue is greater than spending
deficit: when spending is greater than income or revenue
✔✔Comparative advantage - ✔✔The ability to do a task at a lower opportunity cost
✔✔Exchange rate - ✔✔The value of one's countries currency compared to another
countries currency (how much one currency can be traded for another)
✔✔ GDP - ✔✔the market value of all final goods and services produced within a country
in an given year
, ✔✔GDP Perspectives - ✔✔Expenditures: adding up all spending in thr economy
Income: adding up all income people and buinsess earn
Production (output): adding up thr value of all goods and servies produced
✔✔GDP Identity - ✔✔Y = C + I + G + NX
✔✔Real vs. Nominal GDP - ✔✔Real: measured in constant prices
Nominal: measured in todays prices
✔✔Macro Inputs - ✔✔Land: natural resources used to make goods
Labor: workers and human effort
Capitol: tools, machines and building used for production
✔✔Innovation - ✔✔increase productivity and growth
✔✔Property Rights - ✔✔control over a tangible or intangible resource (create
incentives)
✔✔Natural Unemployment Rate - ✔✔the % of the labor force that is unemployed
✔✔CPI (Consumer Price Index) - ✔✔an index that tracks the average price consumers
pay over time
✔✔Inflation - ✔✔a generalized rise in the overall level of prices
✔✔Real vs. Nominal variables as a whole - ✔✔Real: a variable that has been adjusted
to account for inflation
Nominal: a variable measured in dollars
✔✔Cost of Inflation - ✔✔- when inflation is low and stable, then money serves its three
functions well
- high or unpredictable inflation erodes the functions of money
(functions: money of exchange, unit of account, store of value)
✔✔MPC (marginal propensity to consume) - ✔✔the fraction of each extra dollar of
income that households spend on consumption
✔✔Saving - ✔✔the portion of income you dont spend in a given period
✔✔Dissaving - ✔✔the excess amount you consume above you income in a given
period
✔✔Stock vs. Flow - ✔✔Stock: quantity measured at a specific period in time
