Eco/372 Final Exam
ECO/372 Final Exam Study Guide
How to Use this Study Guide – READ ME FIRST
The following study guide will NOT have the same exact questions on your test! However, this study guide WILL help you ace the ECO/372 Final Exam. The guide covers the same topics and will help you gain a deeper understanding of the concepts. Best of all, you are still guaranteed a score of 90% or higher or your money back! Tip #1: Use CRTL+F to search a related keyword to quickly find the topic you need. Tip #2: If a topic is missing, please email us at firstname.lastname@example.org. We can usually provide immediate custom support during normal business hours. 1. What is the name of the market where businesses sell products to households and government institutions? Goods market
Explanation: The goods market is term that refers to the primary market where businesses interact with end users of products. 2. How would you describe Real Gross Domestic Product (GDP)? The market value of all final goods and services produced in an economy or country Explanation: Real GDP will be stated in the currency used during that year. It only includes final goods and services. 3. Who is included in underemployment figures?
People who are working part time or not actively working a fulltime job Explanation: Underemployment figures show us the number of people whose skills are not being fully utilized. 4. The Bureau of Economic Analysis in the United States is responsible for what? Calculating United States gross domestic product (GDP)
Explanation: The primary function of the Bureau of Economic Analysis is to produce reports related to economic activity, such as GDP. 5. The Federal Reserve is responsible for setting the…
Federal funds rate
Explanation: The federal funds rate is the interest rate at which the US government can borrow money from the fed. 6. Let’s say the government created a 10% income tax surcharge. What changes will occur in the AS/AD model? Shifted the AD curve to the left
Explanation: An income tax on the people would cause aggregate demand to shift to the left because people would have less income to spend on consumer goods. 7. Where does the largest source of household income originate from in the US? Wages and salaries
Explanation: The majority of people earn a living by working for an employer, while a minority of the population earns money from entrepreneurial endeavors. 8. Imagine a country were to increase aggregate expenditures by 20. What will happen to the AD Curve? Shift right by more than 20
Explanation: As the country spends more, it will create income that will be redistributed through wage income and cause demand to increase. 9. What is the main function of aggregate demand management policies? To control aggregate levels of spending within the economy
Explanation: Government policies are often needed to ensure that aggregate spending is correlating effectively with actual demand. 10. Imagine a world where consumer spending is declining. If output is equivalent to potential output, which policy would be ideal according to the AS/AD model An increase in government spending
Explanation: If output is already at its max potential, the next best option will be an increase in government spending. 11. What to John Maynard Keynes say about market economies? “They might recover slowly after they experience a significant decline in aggregate demand” Explanation: The recovery of demand is often much slower than the initial decline of demand. For example, stock markets crash rapidly and take many years to fully recover. 12. Based on laissez-faire policy, what is the best way to fix unemployment? Destroy labor unions and repeal government policies that make real wages excessively high Explanation: Laissez-faire policy believes that the invisible hand of the market be the most efficient way to reach full employment. 13. Based on the AS/AD model, expansionary monetary policy will have...
Please join StudyMode to read the full document