ECON 201 � Final Exam � Ansbach - Katterbach - Spring 2013, Session 1 - Solved Assignments

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ECON 201–FINALEXAM–ANSBACH-KATTERBACH-SPRING 2013, SESSION 1Page1of18ECON201–FinalExam–Ansbach-Katterbach-Spring 2013, Session 1

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ECON 201–FINALEXAM–ANSBACH-KATTERBACH-SPRING 2013, SESSION 1Page2of18TRUE / FALSE1.TrueFalseA side benefit of international trade is that it links national interestsand increases the opportunity costs of war.2.TrueFalseWhenC+Ig= GDP in a private closed economy,S=Igand thereare no unplanned changes in inventories.3.TrueFalseThe risk-free interest rate is the rate on long-term U.S. governmentbonds.4.TrueFalseBond prices and interest rates are directly or positively related.5.TrueFalseThe public debt is the accumulation of all deficits and surplusesthat have occurred through time.6.TrueFalseTheM2money supply may be larger or smaller than theM1moneysupply depending on the size of small-denominated time depositbalances and Money Market Mutual Fund balances held byindividuals.7.TrueFalseExcess reserves are the amount by which required reserves exceedactual reserves.8.TrueFalseThe public debt is held as Treasury bills, Treasury notes, Treasurybonds, and U.S. savings bonds.9.TrueFalseThe equilibrium price level and equilibrium level of real GDPoccur at the intersection of the aggregate demand curve and theaggregate supply curve.

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ECON 201–FINALEXAM–ANSBACH-KATTERBACH-SPRING 2013, SESSION 1Page3of1810.TrueFalseInvestment is highly stable; it increases over time at a very steadyrate.MULTIPLE CHOICE11.A recessionary expenditure gap is:A.the amount by which the full-employment GDP exceeds the level of aggregate expenditures.B.the amount by which equilibrium GDP falls short of the full-employment GDP.C.the amount by which investment exceeds saving at the full-employment GDP.D.the amount by which aggregate expenditures exceed the full-employment level of GDP.12.The multiplier effect indicates that:A.a decline in the interest rate will cause a proportionately larger increase in investment.B.a change in spending will change aggregate income by a larger amount.C.a change in spending will increase aggregate income by the same amount.D.anincrease in total income will generate a larger change in aggregate expenditures.13.Which one of the following is true about the U.S. Federal Reserve System?A.There are 12 regional Federal Reserve Banks.B.The head of the U.S. Treasury also chairs the Federal Reserve Board.C.There are 14 members of the Federal Reserve Board.D.The Open Market Committee is smaller in size than the Federal Reserve Board.

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ECON 201–FINALEXAM–ANSBACH-KATTERBACH-SPRING 2013, SESSION 1Page4of1814.If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rateis:A.18 percent.B.24 percent.C.12 percent.D.6 percent.15.Refer to the above diagram for a private closed economy. The equilibrium level of GDP is:A.$400.B.$300.C.$200.D.$100.

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ECON 201–FINALEXAM–ANSBACH-KATTERBACH-SPRING 2013, SESSION 1Page5of1816.Which of the following represents the most expansionary fiscal policy?A.a $10 billion tax cutB.a $10 billion increase in government spendingC.a $10 billion tax increaseD.a $10 billion decrease in government spending17.Refer to the above table. The economy shown is a:A.private economy.B.private open economy.C.mixed closed economy.D.mixed openeconomy.

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ECON 201 � Final Exam � Ansbach - Katterbach - Spring 2013, Session 1 - Page 1

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