ECON 102 QUESTIONS AND ANSWERS LATEST UPDATED
VERSION, GRADED A+.
The point where economic activity bottoms out in a full business cycle is known as:
The point where economic activity bottoms out in a full business cycle is known as the trough. The low
point in a business cycle which precipitates a period of economic growth is known as the trough.
A recession is the entire period of time where real GDP is falling. The phrase pre-expansion is not
commonly used.
One of the primary goals of most governments with regard to the economy is:
One of the primary goals of most governments with regard to the economy is full employment.
Full employment is a typical goal of most governments since this means that a percentage of those
individuals that would like to be employed are employed. These employment opportunities provide
individuals with the means to increase their standard of living and reduce the amount of government
transfer payments needed to provide support for the unemployed. Increased taxation, increased
military spending, and higher consumer spending may all be occurring in an economy they are rarely
listed as an economic goal but are instead mechanisms used to achieve some goal.
What is nominal interest rate?
real interest rate plus the rate of inflation
What is the real interest rate?
nominal interest rate - inflation rate
The balance of trade is:
The balance of trade is equal to the difference between exports of goods and imports of goods.
Countries rarely balance with the value of exports exactly equal to the value of imports. Trade surpluses
and trade deficits are the norm for all open economies.
Many economists believe the CPI __________ inflation because it fails to consider quality
improvements in products.
Many economists believe the CPI overstates inflation because it fails to consider quality improvements
in products. For example, while many electronic products have fallen in price, they have also improved
significantly with added functions and more features. The CPI does not capture this change in quality
because it is difficult to assign a value to quality differences.
Economic variables that are calculated in current year prices are referred to as __________ variables,
while variables that have been corrected to account for the effects of inflation are __________
variables.
, Economic variables that are calculated in current year prices are referred to as nominal variables, while
variables that have been corrected to account for the effects of inflation are real variables. Nominal
variables simply look at the observed value, but in order to adjust for change that is simply due to a
change in price, you need to adjust for inflation. Real values have been adjusted for inflation.
Positive net exports occur when:
Positive net exports occur when exports are greater than imports. Countries rarely balance with the
value of exports exactly equal to the value of imports. For example, while Canada has had a long history
of running trade surpluses (until fairly recently when we began to record small trade deficits), the United
States consistently imports a higher value of goods than it exports and therefore runs a trade deficit.
Unemployment rates in developed countries around the world:
Unemployment rates in developed countries around the world show substantial variation.
Unemployment rates vary quite a bit from country to country. For example, in early 2013 the
unemployment rates in many southern European countries such as Spain and Greece exceeded 20
percent while the unemployment rate in Canada was below 7.5% percent.
The stated rate of interest on a loan is the:
The stated rate of interest on a loan is the nominal interest rate. The nominal, or stated or quoted rate,
incorporates the real rate of interest plus an expected inflation premium. If inflation differs from
expected, savers can be harmed and borrowers will benefit.
The nominal rate of interest = real rate of interest + rate of inflation.
Which type of fiscal policy would cause the move of the AD curve right?
Higher government spending would cause the move of the AD curve represented in this graph. Higher
government spending would increase aggregate demand which is represented by a rightward shift in the
AD curve.
Higher taxes and lower money supply would cause the AD curve to shift to the left. In addition,
decreasing the money supply is monetary policy and not fiscal policy.
During the 1960s, many economists believed the government could do a good job regulating the level
of inflation and unemployment. These policies were referred to as:
During the 1960s, many economists believed the government could do a good job regulating the level of
inflation and unemployment. These policies were referred to as fine-tuning the economy. These policies
could be used to stimulate or contract the economy depending on what action was needed.
Monetizing the debt refers to expansionary monetary policy that makes the debt worth less due to
inflation.
What is fiscal policy?
the means by which a government adjusts its spending levels and tax rates to monitor and influence a
nation's economy
VERSION, GRADED A+.
The point where economic activity bottoms out in a full business cycle is known as:
The point where economic activity bottoms out in a full business cycle is known as the trough. The low
point in a business cycle which precipitates a period of economic growth is known as the trough.
A recession is the entire period of time where real GDP is falling. The phrase pre-expansion is not
commonly used.
One of the primary goals of most governments with regard to the economy is:
One of the primary goals of most governments with regard to the economy is full employment.
Full employment is a typical goal of most governments since this means that a percentage of those
individuals that would like to be employed are employed. These employment opportunities provide
individuals with the means to increase their standard of living and reduce the amount of government
transfer payments needed to provide support for the unemployed. Increased taxation, increased
military spending, and higher consumer spending may all be occurring in an economy they are rarely
listed as an economic goal but are instead mechanisms used to achieve some goal.
What is nominal interest rate?
real interest rate plus the rate of inflation
What is the real interest rate?
nominal interest rate - inflation rate
The balance of trade is:
The balance of trade is equal to the difference between exports of goods and imports of goods.
Countries rarely balance with the value of exports exactly equal to the value of imports. Trade surpluses
and trade deficits are the norm for all open economies.
Many economists believe the CPI __________ inflation because it fails to consider quality
improvements in products.
Many economists believe the CPI overstates inflation because it fails to consider quality improvements
in products. For example, while many electronic products have fallen in price, they have also improved
significantly with added functions and more features. The CPI does not capture this change in quality
because it is difficult to assign a value to quality differences.
Economic variables that are calculated in current year prices are referred to as __________ variables,
while variables that have been corrected to account for the effects of inflation are __________
variables.
, Economic variables that are calculated in current year prices are referred to as nominal variables, while
variables that have been corrected to account for the effects of inflation are real variables. Nominal
variables simply look at the observed value, but in order to adjust for change that is simply due to a
change in price, you need to adjust for inflation. Real values have been adjusted for inflation.
Positive net exports occur when:
Positive net exports occur when exports are greater than imports. Countries rarely balance with the
value of exports exactly equal to the value of imports. For example, while Canada has had a long history
of running trade surpluses (until fairly recently when we began to record small trade deficits), the United
States consistently imports a higher value of goods than it exports and therefore runs a trade deficit.
Unemployment rates in developed countries around the world:
Unemployment rates in developed countries around the world show substantial variation.
Unemployment rates vary quite a bit from country to country. For example, in early 2013 the
unemployment rates in many southern European countries such as Spain and Greece exceeded 20
percent while the unemployment rate in Canada was below 7.5% percent.
The stated rate of interest on a loan is the:
The stated rate of interest on a loan is the nominal interest rate. The nominal, or stated or quoted rate,
incorporates the real rate of interest plus an expected inflation premium. If inflation differs from
expected, savers can be harmed and borrowers will benefit.
The nominal rate of interest = real rate of interest + rate of inflation.
Which type of fiscal policy would cause the move of the AD curve right?
Higher government spending would cause the move of the AD curve represented in this graph. Higher
government spending would increase aggregate demand which is represented by a rightward shift in the
AD curve.
Higher taxes and lower money supply would cause the AD curve to shift to the left. In addition,
decreasing the money supply is monetary policy and not fiscal policy.
During the 1960s, many economists believed the government could do a good job regulating the level
of inflation and unemployment. These policies were referred to as:
During the 1960s, many economists believed the government could do a good job regulating the level of
inflation and unemployment. These policies were referred to as fine-tuning the economy. These policies
could be used to stimulate or contract the economy depending on what action was needed.
Monetizing the debt refers to expansionary monetary policy that makes the debt worth less due to
inflation.
What is fiscal policy?
the means by which a government adjusts its spending levels and tax rates to monitor and influence a
nation's economy
