ECN 211 EXAM 3 ASU LATEST ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES|AGRADE

ECN 211 EXAM 3 ASU LATEST 2023-2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES|AGRADE The velocity of money is a. the rate at which the Fed puts money into the economy b. the same thing as the long-term growth rate of the money supply c. the money supply divided by nominal GDP d. the average number of times per year a dollar is spent - ANSWER- D For a given real interest rate, an increase in inflation makes the after-tax real interest rate a. decrease, which encourages savings b. decrease, which discourages savings c. increase, which encourages savings d. increase, which discourages savings - ANSWER- B Suppose the MPC is 0.9. There are no crowding out or investment accelerator effects. If the governmentincreases its expenditures by $30 billion, then by how much does aggregate demand shift to the right? If thegovernment decreases taxes by $30 billion, then by how far does aggregate demand shift to the right? a. $283 billion and $254.7 billion b. $283 billion and $283 billion c. $300 billion and $270 billion d. $300 billion and $300 billion - ANSWER- C An increase in government purchases will a. shift aggregate demand from right to left b. shift aggregate demand from left to right c. cause movement from point A to point B along AD1 d. have no effect on aggregate demand - ANSWER- A When the Fed decreases the money supply, we expect a. interest rates and stock prices to rise b. interest rates and stock prices to fall c. interest rates to rise and stock prices to fall d. interest rates to fall and stock prices to rise - ANSWER- C Which of the following events would shift money demand to the right? a. an increase in the price level b. a decrease in the price level c. an increase in the interest rate d. a decrease in the interest rate - ANSWER- A . People choose to hold a larger quantity of money if a. the interest rate rises, which causes the opportunity cost of holding money to rise b. the interest rate falls, which causes the opportunity cost of holding money to rise c. the interest rate rises, which causes the opportunity cost of holding money to fall d. the interest rate falls, which causes the opportunity cost of holding money to fall - ANSWER- D Fiscal policy is determined by a. the president and Congress and involves changing government spending and taxation b. the president and Congress and involves changing the money supply c. the Federal Reserve and involves changing government spending and taxation d. the Federal Reserve and involves changing the money supply - ANSWER- A Monetary policy is determined by a. the president and Congress and involves changing government spending and taxation b. the president and Congress and involves changing the money supply c. the Federal Reserve and involves changing government spending and taxation d. the Federal Reserve and involves changing the money supply - ANSWER- D Which of the following shifts aggregate demand to the left? a. The price level rises b. Interest rates fall c. The dollar depreciates for some reason other than a change in the price level d. Stock prices fall for some reason other than a change in the price level - ANSWER- D In the short-run an increase in the costs of production makes a. output and prices rise b. output rise and prices fall c. output fall and prices rise d. output and prices fall - ANSWER- C Which of the following would cause prices and real GDP to rise in the short run? a. short-run aggregate supply shifts right b. short-run aggregate supply shifts left c. aggregate demand shifts right d. aggregate demand shifts left - ANSWER- C An economic expansion caused by a shift in aggregate demand causes prices to