ECON 214 exam 2 complete solutions correct answers key

Liberty University ECON 214 exam 2 complete solutions correct answers key

Two different versions

Version A Quiz

Question 1 Suppose a change in health care laws increases the cost of hiring an employee. We can expect output in the short run to __________ and output in the long run to __________.

Question 2 In 1350, average world income was roughly:

Question 3 When firms invest less because people are saving less, it is called the:

Question 4 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?

Question 5 From 2006 to 2010, per capita real gross domestic product (GDP) in China grew an average of 10.62% per year. At that rate, according to the Rule of 70, in roughly how many years will Chinese per capita real GDP double in size, beginning in 2006?

Question 6 Competitive markets contribute significantly to economic growth because:

Question 7 If the current short­run equilibrium level of output is greater than full employment output, we can then expect that in the long run:

Question 8 During the Great Recession, long­run aggregate supply decreased. This was caused by __________.

Question 9 When an economy experiences economic growth:

Question 10 Suppose housing values fall during a recession. In the short run:

Question 11 When considering the basic operations of the macroeconomy, Keynesian economists argue that:

Question 12 Suppose a country’s population is growing due to immigration. In the long run, output will _________ due to _________.

Question 13 During the Great Recession, ___________ caused aggregate demand to decrease.

Question 14 The Great Recession was similar to other recessions since World War II in that:

Question 15 Refer to the following figure to answer the questions that follow. Based on the figure, if the economy is at point F, then in the long run, we can expect:

Question 16 When 9,000 banks failed during the Great Depression, it caused aggregate demand to decrease because:

Question 17 A supply shock causes a shift in:

Question 18 In 1800, the average income of U.S. citizens was roughly:

Question 19 A decrease in aggregate demand is harmful in the short run because __________, but beneficial in the long run because __________.

Question 20 As a result of several factors, aggregate demand decreased during the Great Depression. One factor would be:

Question 21 When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because:

Question 22 If the price level rises by 10%, then all else being equal, the long­run quantity of aggregate supply will:

Question 23 Access to lifesaving medicine is very limited in parts of Africa; as a result, over 10% of children do not reach the age of five. What effect would an increase in medical aid to African children have on overall economic growth for the continent?

Question 24 Suppose a prolonged war in a country destroys 30% of the capital stock. In the long run, the price level will _________ as _________.

Question 25 In 2009, per capita real gross domestic product (GDP) in Croatia was $10,059.68. By 2010, it had increased to $10,257.71. At what rate did Croatia’s economy grow in that time?

Question 26 During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which:

Question 27 Which of the following is an example of an institution that promotes economic growth?

Question 28 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will _________ and the price level will _________.

Question 29 The Great Recession was similar to other recessions since World War II in that:

Question 30 Suppose people are worried about losing their jobs. In the short run, this will:

Question 31 During the Great Depression, thousands of U.S. banks failed. As a result:

Question 32 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:

Question 33 Residents of wealthy countries tend to have longer life expectancies because:

Question 34 Which of the following best summarizes the main causes of the Great Recession?

Question 35 Use the following graph to answer the questions that follow. The graph depicts an economy where aggregate demand and long­run aggregate supply (LRAS) have decreased, with no change in short­run aggregate supply (SRAS). During the Great Recession, real gross domestic product (GDP) decreased yet the aggregate price level remained largely unchanged, as depicted in the graph. Unemployment increased to above­normal levels. Which of following best explains why this happened?

Question 36 When computing economic growth, changes in nominal gross domestic product (GDP) must be adjusted to reflect changes in the price level because:

Question 37 Classical economists believe that savings is crucial for economic growth because:

Question 38 Higher rates of economic growth are negatively correlated with:

Question 39 Menu costs help to explain:

Question 40 Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _________ and the price level will _________.

Version B Quiz

Question 1 From 2009 to 2010 per capita real gross domestic product (GDP) in the United States grew by 1.8%. At that rate, according to the Rule of 70, in roughly how many years will per capita real GDP double?

Question 2 How many recessions have there been in the United States since 1982?

Question 3 When U.S. aggregate demand and long­run aggregate supply decreased during the Great Recession:

Question 4 Refer to the following figure to answer the questions that follow. Based on the figure, starting at point A, if there is an increase in government spending, then in the short run we would move to point __________ and in the long run to point __________.

Question 5 The long­run aggregate supply curve is:

Question 6 From 2006 to 2010, per capita real gross domestic product (GDP) in Poland grew an average of 4.71% per year. At that rate, according to the Rule of 70, in roughly how many years will the Polish economy double in size?

Question 7 An increase in the general price level will lead to:

Question 8 Keynesian economists believe that government intervention in the economy is necessary because:

Question 9 Which of the following would cause an upward movement along the aggregate demand curve?

Question 10 One of the reasons why the Great Depression was so severe is that:

Question 11 Use the following graph to answer the questions that follow. The graph depicts an economy where aggregate demand and long­run aggregate supply (LRAS) have decreased, with no change in short­run aggregate supply (SRAS). The graph accurately summarizes what happened during the Great Recession, because during that time, the price level _________ and real gross domestic product (GDP) _________.

Question 12 The economy is in short­run equilibrium when:

Question 13 James has worked for the same company his entire life. His current income is $100,000 per year. When he was originally hired, he made $50,000 per year. The company has given James a consistent raise of 2% every year. How long has James been with the company?

Question 14 Krista owns a hair salon. She wants to increase the number of clients she serves each month, so she knows she needs to acquire more resources. Which of the following actions would represent an increase in the human capital resource at her hair salon?

Question 15 The Great Depression is characterized by a decrease in aggregate demand. Of the following factors, which would have caused aggregate demand to decrease?

Question 16 According to classical economists, changes in aggregate demand have little effect on the overall economy, and therefore:

Question 17 A(n) _____________ in capital goods should ____________ worker productivity.

Question 18 During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because:

Question 19 Suppose an economy has a law that requires all wages to be adjusted quarterly to reflect changes in the general price level. This means wages either increase or decrease depending on the percent change in the general price level. In this economy:

Question 20 If asked about the basic functioning of the economy, a Keynesian economist would state that:

Question 21 When inflation pushes up prices in the economy, input prices are _________ and revenues _________ in the short run.

Question 22 Refer to the following figure to answer the questions that follow. Based on the figure, which of the following would cause the short­run aggregate supply curve to shift from SRAS1 to SRAS2?

Question 23 From 2006 to 2010, per capita real gross domestic product (GDP) in Japan grew an average of 0.46% per year. At that rate, according to the Rule of 70, in roughly how many years will the Japanese economy double in size?

Question 24 Suppose there is a surge in stock market values. In the short run, we would expect the price level to __________ and the unemployment rate to __________.

Question 25 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will _________ and the price level will _________.

Question 26 In 2009, per capita real gross domestic product (GDP) in Croatia was $10,059.68. By 2010, it had increased to $10,257.71. At what rate did Croatia’s economy grow in that time?

Question 27 Steve owns a bike shop. He wants to increase the number of bikes he sells each week, and he wants to use a technological advance to do so. _______________ would represent a technological advance at his bike shop.

Question 28 Which of the following economic statements would a Keynesian economist tend to support?

Question 29 Which of the following best summarizes the main causes of the Great Recession?

Question 30 The price index used to illustrate the aggregate demand curve is the:

Question 31 An increase in ________________ would lead to an increase in long­run economic growth.

Question 32 Use the following graph to answer the questions that follow. This graph depicts an economy where aggregate demand has decreased, with no change in either short­run aggregate supply (SRAS) or long­run aggregate supply (LRAS). Which of the following would have caused aggregate demand to decrease in the graph, such as occurred during the Great Depression?

Question 33 Per capita real gross domestic product (GDP) is higher in the United States than in Mexico. Based on that, we could predict the United States to have a higher rate of ___________ and a lower rate of ___________.

Question 34 Residents of poor countries tend to have higher rates of infant mortality because:

Question 35 From 2006 to 2010, per capita real gross domestic product (GDP) in China grew an average of 10.62% per year. At that rate, according to the Rule of 70, in roughly how many years will Chinese per capita real GDP double in size, beginning in 2006?

Question 36 During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

Question 37 Which of the following would have caused aggregate demand to decrease during the Great Depression?

Question 38 Residents of poor countries tend to have fewer automobiles per capita because:

Question 39 Which of the following factors is negatively correlated with economic growth?

Question 40 When an economy experiences economic growth: