ECON202 Final Exam (2024 Q1) (D This is a preview of the published version of the quiz Started: Mar 12 at 5:05pm Quiz Instructions Instructions: - You have FIVE attempts for this exam. - 1 will only keep the score of your latest attempt (not the best score among all attempts), please make sure that you answer all the questions for your latest attempt. - You may want to download the following file to save a copy of the exam. - There are 5 bonus points in this exam. - Some students may not be able to see the graphs on the exam possibly due to issues with MacBook. A pdf file of the exam is available on the instruction page for your reference. You can refer to the pdf file to see those graphs. Yet please make sure that you take the exam online on canvas. - Do the exam individually. - You can see whether you get the questions right/wrong and the points you get for each question only after the exam is closed and your grade is finalized. - The purpose of multiple attempts is not to let students get a perfect score by \"trials and errors\". In case you think that you make mistakes in your previous attempt, you can take the exam again to correct the mistakes before the exam is closed. Question 1 2 pts If Harold were to withdraw cash from his savings account, which of the following changes would take place? O M1 would remain the same. O M2 would increase. O M1 would decrease substantially. O M1 would decrease. O M1 would increase. Question 2 2 pts Which of the following would be a liability for a private bank? O loans O US Treasury securities O savers' deposits O reserves Question 3 2 pts Discount rate is the interest rate for loans from to O a private bank; another private bank a private bank; households and firms O Fed; a private bank O Fed; households and firms O households and firms; a private bank Question 4 2 pts Price level (P) LRAS Real GDP (Y) Based on the above graph, an increase in to go from point A to point B. O the price of raw materials O corporate taxes O consumer confidence O the price of oil O income taxes Question 5 2 pts Monetary policy is O the use of the money supply to influence the economy. O only used during times of recession. only used during times of expansion. O could cause the economy the use of government spending to influence the economy. O the use of taxes to influence the economy. Question 6 2 pts The economy is in a recession. There is a significant decrease in aggregate demand. The unemployment rate is above the natural rate of unemployment and the real GDP is below the full-employment output. Which of the following statements is correct? O There is downward pressure on the price level, and the government may want to conduct a contractionary fiscal policy to revive the economy. O The economy is slipping into a recession, and the government may want to conduct an expansionary fiscal policy to revive the economy. O There is upward pressure on the price level, and the government may want to conduct a contractionary fiscal policy to revive the economy. O The economy is overheating, and the government may want to conduct a contractionary fiscal policy to revive the economy. Question 7 2 pts A decrease in taxes and an increase in government spending during a recession will @) increase the budget deficit but pay off some of the government debit. O work to decrease the budget deficit and pay off some of the government debt. O work to decrease the budget deficit but will not pay off any of the government debt. increase the budget deficit and increase the size of the government debt. O work to decrease the budget deficit and increase the government debt. Question 8 2 pts MPC = 0.9 Your income increases by $1,000. How much of the $1,000 additional income will go to savings? O $100 O $900 O $10,000 O $9,000 Question 9 1.5 pts How household deposits and banks loaning out money can generate money multiplier effects? O Household deposits can increase government spending, which lead to decrease in AD. O Banks loaning out money will increase government borrowings, and lead to crowding out. O Households deposits enable banks to loan out money, which lead to more spending, and then subsequent rounds of deposits and loans. O Household deposits will lead to an increase in required reserve ratio. Question 10 2 pts The economy of country D originally was at the full-employment output. Because of the decrease in consumer confidence, the economy is now in recession. The government conducts a policy to bring the economy back to full-employment output. Choose an AD-AS graph which correctly describes the above scenario occurring in country D. \fO Price level AD3 LRAS AD2 AD SR SRAS1 C B Government policy Real GDP (Y) O Price level LRAS2 LRAS1 SRAS Government policy SR A B AD1 AD2 Real GDP (Y) :::: Question 11 2 pts If the government of country H increases tax rate, tax revenue increases. Choose a Laffer curve which correctly describes the current status of country H.Tax revenue The economy is currently at point A Tax revenue The economy is currently at point A Tax rate Tax rate Tax revenue The economy is currently at point A Taxrate ) Interest rate i The economy is currently at point A Savings/Investments Question 12 2 pts The Federal Reserve wants to decrease money supply by conducting an open market operation. Choose a correct diagram which illustrates the open market operation. Also determine if interest rate increases or decreases. $$55$ Interest rate r\\ decreases Federal Reserve Private bank U/ Treasury securities Reserve Interest rate f\\ increases Treasury securities O Treasury securities Interest rate increases Federal Private Reserve bank $$$$ O Treasury securities Interest rate decreases Federal Firm Reserve $$$$ :::: Question 13 12 pts Categorize each into one of the factors of economic growth