ECON 214 Exam 2

Liberty ECON 214 Exam 2 Answers

  1. The Great Depression lasted longer and was deeper than the average recession, in part, because:
  2. The aggregate demand curve slopes downward because:
  3. According to the textbook, which of the following countries is not considered a “wealthy nation”?
  4. Refer to the following figure to answer the questions that follow. Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was:
  5. When foreign income rises, U.S. aggregate:
  6. Which of the following economic statements would a classical economist tend to support?
  7. From 2011 to 2012, U.S. real GDP increased by 2.2% and the U.S. population grew by 1%. Therefore, per capita real GDP in the United States increased by:
  8. Use the following graph to answer the questions that follow. The graph depicts an economy where aggregate demand and long‐run aggregate supply (LRAS) have decreased, with no change in short‐run aggregate supply (SRAS). During the Great Recession, real gross domestic product (GDP) fell yet the price level was largely unchanged, as depicted in the graph. Because of this, we know that:
  9. In 1950, residents in Liberia were wealthier than those in Taiwan. Today, per capita gross domestic product (GDP) in Taiwan is more than twenty times that of Liberia. How would private property rights help explain why Taiwan is now so much wealthier than Liberia?
  10. If the current short‐run equilibrium level of output is greater than full employment output, we can then expect that in the long run:
  11. You read a study that predicts that rising oil prices projected for this summer are certain to fuel inflation. Having taken an economics class, due to this expected change in prices, you predict that spending today will _________ and aggregate demand today will
  12. The model used to study business cycles is the:
  13. When an economy experiences economic growth:
  14. During the Great Depression, there was a financial crisis and a stock market crash, both of which:
  15. When U.S. aggregate demand and long‐run aggregate supply decreased during the Great Recession:
  16. When considering how the economy works, classical economists hold that:
  17. “Living standards” refer to the well‐being of the residents of a country. Generally speaking, higher economic growth leads to higher living standards. But higher living standards today can further contribute to economic growth in the future. Which of the following aspects of higher living standards would contribute most to future economic growth?
  18. The Great Depression is characterized by a decrease in aggregate demand. Of the following factors, which would have caused aggregate demand to decrease?
  19. When computing economic growth, changes in nominal gross domestic product (GDP) must be adjusted to reflect changes in the price level because:
  20. Which of the following best summarizes the main causes of the Great Recession?
  21. From 2006 to 2010, per capita real gross domestic product (GDP) in Egypt grew an average of 4.8% per year. At that rate, according to the Rule of 70, in roughly how many years will the Egyptian economy double in size?
  22. Average world income began to rapidly rise during the Industrial Revolution because:
  23. If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that:
  24. The Great Recession was similar to most other recessions since World War II in that:
  25. Recently, Greece underwent an economic crisis. While there are numerous factors that contributed to the crisis, one problem is Greece’s tax system, which is very complicated. As a result, numerous Greeks simply choose not to pay their taxes. How would this situation affect Greece’s economic growth?
  26. The slope of the short‐run aggregate supply curve can be explained by:
  27. We know that resources are important for economic growth. Which of the following statements about resources is true?
  28. If large emerging economies continue to grow rapidly, we can expect U.S. aggregate:
  29. Refer to the following figure to answer the questions that follow. Based on the figure, which points represent short‐run equilibrium?
  30. During the Great Depression, aggregate demand in the U.S. economy decreased. As a result, the price level _________ and real gross domestic product (GDP)
  31. The relationship between sticky input prices and flexible output prices explains:
  32. In 2012, U.S. gross domestic product (GDP) was roughly:
  33. Residents of wealthy countries tend to have longer life expectancies because:
  34. The price index used to illustrate the aggregate demand curve is the:
  35. The Great Depression ended in:
  36. Which of the following policy statements would a classical economist tend to support?
  37. The Great Recession was similar to other recessions since World War II in that:
  38. When inflation pushes up prices in the economy, input prices are _________ and revenues _________ in the short run.
  39. The Great Recession was different from other recessions since World War II in that:
  40. A supply shock causes a shift in:
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