ECON 201 ECON201 Quiz 2 Answers (2017) - UMUC

ECON 201 ECON201 Quiz 2 Answers (2017) - UMUC


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ECON 201 Principles of Macroeconomics Quiz 2 Answers (2017)

  1. If Keynes’ law applies during economic contractions and Say’s law applies during economic expansion, how will the three goals of macroeconomics be affected? 
  2. What term is used to describe the maximum quantity that an economy can produce, in the context of its existing inputs, market and legal institutions? 
  3. ____________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment. 
  4. Which of the following will have the greatest influence on the slope of the demand curve in a single market model? 
  5. The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? 
  6. According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the: 
  7. If a Phillip curve shows that unemployment is low and inflation is high in the economy, then that economy: 
  8. According to the Keynesian framework, ________________________ may cause a recession, but not inflation. 
  9. Suppose that out of the original 100 of government spending, 33 will be recycled back into purchases of domestically produced goods and services in the second round and 10.89 is spent in the third round. Following this multiplier effect, what will the value of the total aggregate expenditures be after the fourth round in the cycle is completed? 
  10. Refer to the graph shown below. This graph illustrates a: 
  11. If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from: 
  12. _________________________ are included in the aggregate amount of MI money currently in circulation. 
  13. In 2010, Tara used $50,000.00 from funds she had invested in certificates of deposit as a down payment to buy a house. What function did this portion of her investments serve when she made the down payment? 
  14. Stealth bank holds deposits of $200 million. It holds reserves of $15 million. It has purchased government bonds worth $75 million. The current value of its loans, if sold at market value, is $130 million. What is the value of the Stealth bank’s liabilities? 
  15. When a shift in ________________ occurs, rational expectations hold that its impact on output and employment will only be temporary. 
  16. A vertical AS curve means that the level of aggregate supply (or potential GDP) will determine the real GDP of the economy, regardless of the level of: 
  17. When the central bank lowers the reserve requirement on deposits: 
  18. Which of the following events would cause interest rates to increase? 
  19. The central bank requires Southern to hold 10% of deposits as reserves. Southern Bank's policy prohibits it from holding excess reserves. If the central bank sells $25 million in bonds to Southern Bank which of the following will result? 
  20. The diagram above refers to a private closed economy. In this instance, the equilibrium GDP is: 

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