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Eco 202 Final Exam Review (Questions & Answers)

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The model of aggregate demand and aggregate supply explains the relationship between Which of the following would not be included in aggregate demand? Which of the following adjust to bring aggregate supply and demand in to balance? Which of the following is not included in aggregate demand? The wealth effect, interest rate effect, and exchange rate effect are all explanations for Changes in the price level affect which components of aggregate demand? When taxes increase, consumption Supposed businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift Tax cuts shift aggregate demand When the fed buys bonds Which of the following would cause investment spending to decrease and aggregate demand to shift left? Which of the following shifts aggregate demand to the right? The long run aggregate supply curve shifts left if The aggregate supply curve is upward sloping in Which of the following shifts both short run and long run aggregate supply left? Monetary policy is determined by The goal of monetary policy and fiscal policy is to According to John Maynard Keynes According to liquidity preference theory, the money supply curve is According to liquidity preference theory, the money supply curve would shift rightward When the fed sells government bond, the reserves of the banking system Liquidity refers to People hold money primarily because it According to liquidity preference theory, the opportunity cost of holding money is When the interest rate increases, the opportunity cost of holding money People are likely to want to hold more money if the interest rate According to liquidity preference theory, if the quantity of money supplied is greater than the quantity demanded, then the interest rate will Which of the following is correct? When there is an excess supply of money, People will want to hold less money if the price level The theory of liquidity preference illustrates the principle that If the interest rate is below the fed's target, the fed would When the interest rate is above the equilibrium level, If the MPC = 4/5, then the government purchases multiplier is Which of the following is an example of crowding out? A decrease in government spending Suppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would definitely According the Phillips curve, policymakers could reduce both inflation and unemployment by If policymakers expand aggregate demand, then in the long run The short run Phillips curve shows the combinations of

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