Econ final

Suppose Andrea spends all of her money on canned tuna and hand sanitizer. In 2015, Andrea made $60,000, tuna cost $2.00 per can, and hand sanitizer cost $4 per bottle. The economy goes through some difficult times, and in 2022, Andrea is making $40,000 while tuna costs $1.50 per can, and hand sanitizer costs $3 per bottle. What can be said about the changes in her nominal and real income, respectively?

Nominal: decrease. Real: decrease.

Suppose the economy starts at Point R. If aggregate demand increases from AD2 to AD3, then in the short run the economy moves to Point O. Point Q. Point P. Point S.

Point O.

Which of the following would shift short-run aggregate supply to the left? technological advances that reduce the cost of energy. a decrease in the expected price level. an increase in the actual price level. an increase in the expected price level.

an increase in the expected price level.

In what way did developments in the housing market contribute to the Great Recession? When home prices fell, many consumers lost wealth and cut back on consumption. Many financial institutions lost money invested in mortgage-backed securities, contributing to a financial crisis. When the housing bubble burst, construction of new houses fell sharply. All of the above.

All of the above.

Which statement about the long run aggregate supply curve is false. Its position is determined by the economy's capacity to produce. At any time it is a vertical line in the AD-AS graph. Normally when it shifts to the right, SRAS shifts along with it. It typically shifts to the left during a recession.

It typically shifts to the left during a recession.

According to the analysis of Chapter 14, which of the following decrease if the U.S. imposes an import quota on computer components? U.S. exports and U.S. imports U.S. exports but not U.S. imports U.S. imports but not U.S. exports neither U.S. exports nor U.S. imports

U.S. exports and U.S. imports

Which statement about the Great Recession is false? The gap between real potential GDP and real GDP got as large as 6 percent. Unlike most recessions, this one is better understood as a drop in aggregate supply rather than aggregate demand. When the recession became apparent, the Fed and the U.S. Treasury took unusual actions, but similar actions were taken in response to the COVID pandemic. From peak to trough, real GDP fell by about 4 percent.

Unlike most recessions, this one is better understood as a drop in aggregate supply rather than aggregate demand.

Refer to Figure 33-8. Suppose the economy starts at Z. If changes occur that move the economy to a new short run equilibrium of P1 and Y1 , then it must be the case that aggregate demand has decreased. short run aggregate supply has shifted left. aggregate demand has increased. short run aggregate supply has shifted right.

aggregate demand has decreased.

If businesses in general decide that they have overbuilt and so now have too much capital, their response to this would initially shift aggregate supply right. aggregate supply left. aggregate demand left. aggregate demand right.

aggregate demand left.

he recession of 2008-2009 was preceded by a sharp decline in housing prices. rises in mortgage defaults and home foreclosures. large losses among financial institutions that owned mortgage-backed securities. all of the above

all of the above

If wages are sticky and the price level turns out to be higher than expected businesses have an incentive to expand production, so the short-run aggregate supply curve shifts right. businesses have an incentive to decrease production, so the aggregate quantity of goods and services declines. businesses have an incentive to expand production, so the aggregate quantity of goods and services rises. businesses have an incentive to decrease production, so the short-run aggregate supply curve shifts left

businesses have an incentive to expand production, so the aggregate quantity of goods and services rises.

Other things the same, if the interest rate falls, then domestic firms will want to borrow less, which decreases the quantity of loanable funds supplied. domestic firms will want to borrow more, which increases the quantity of loanable funds demanded. domestic firms will want to borrow less, which decreases the quantity of loanable funds demanded. domestic firms will want to borrow more, which increase the quantity of loanable funds supplied.

domestic firms will want to borrow more, which increases the quantity of loanable funds demanded.

Suppose that even after the pandemic subsides fewer Americans travel abroad and fewer foreigners travel to the U.S. than before. By themselves, those changes imply that both U.S. imports and U.S. exports will fall, with an unclear effect on net exports. must lead to a reduction in net exports for the U.S. must lead to an increase in net capital outflow for the U.S. Both b and c are correct.

imply that both U.S. imports and U.S. exports will fall, with an unclear effect on net exports.

In the open-economy macroeconomic model, if a country's real interest rate rises, then its net capital outflow falls and its net exports rise. net capital outflow rises and its net exports fall. net capital outflow and net exports rise. net capital outflow and net exports fall

net capital outflow and net exports fall

In the open-economy macroeconomic model, if a country's supply of loanable funds shifts right, then net capital outflow rises, so the exchange rate falls. net capital outflow falls, so the exchange rate rises. net capital outflow rises, so the exchange rate rises. net capital outflow falls, so the exchange rate falls.

net capital outflow rises, so the exchange rate falls.

In the open-economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange is the real interest rate. nominal interest rate. real exchange rate. nominal exchange rate.

real exchange rate.

The aggregate quantity of goods and services demanded changes as the price level falls because real wealth falls, interest rates rise, and the dollar appreciates. real wealth falls, interest rates rise, and the dollar depreciates. real wealth rises, interest rates fall, and the dollar depreciates. real wealth rises, interest rates fall, and the dollar appreciates.

real wealth rises, interest rates fall, and the dollar depreciates.

National saving is represented by the supply curve in graph (c). demand curve in graph (a). supply curve in graph (a). demand curve in graph (c).

supply curve in graph (a).

On January 1, 2020 one U.S. dollar could buy 1.3 Canadian dollars. On April 1, 2020 it bought 1.42 Canadian dollars. Suppose that the price levels within the two countries were constant over this time. Then we can say that regarding nominal (Canadian dollars per U.S. dollar) and real (Canadian goods for U.S. goods) exchange rates over this time the dollar appreciated while the real exchange rate was unchanged. the dollar depreciated and the real exchange rate fell. the dollar appreciated and the real exchange rate increased. the dollar depreciated while the real exchange rate was unchanged.

the dollar appreciated and the real exchange rate increased.

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for the slope of short-run aggregate supply. the slope of the aggregate-demand curve. the slope of long-run aggregate supply. everything that makes the aggregate-demand curve shift.

the slope of the aggregate-demand curve.

If U.S. citizens decide that they want to buy more foreign assets the demand for dollars in the market for foreign-currency exchange would shift left. the demand for dollars in the market for foreign-currency exchange would shift right. the supply of dollars in the market for foreign-currency exchange shifts right. the supply of dollars in the market for foreign-currency exchange shifts left.

the supply of dollars in the market for foreign-currency exchange shifts right.

The open-economy macroeconomic model examines the determination of the output growth rate and the inflation rate. the output growth rate and the real interest rate. unemployment and the real exchange rate. the trade balance and the real exchange rate.

the trade balance and the real exchange rate.