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ECO 372 Final Exam New 1. As a country develops economically, what changes usually take place in the goods it exports? 2. According to the Classical growth model, an economy that increases its saving will grow: 3. Central banks are responsible for: 4. News Story: Workers at a car-manufacturing plant in Flint, Michigan are laid off because the economy is weak and GM cars aren't selling well. GM isn't sure when the plant will reopen. What type of unemployment describes the workers' situation? 5. If a country wants to prevent its exchange rates from falling, it could: 6. U.S. imports involve an: 7. If the reserve requirement is 20 percent, and banks keep no excess reserves, an increase in an initial inflow of $100 into the banking system will cause an increase in the money supply of: 8. According to Keynes, why might deflation create problems for an economy? 9. Between 2007 and 2009, the U.S. unemployment rate rose from under 5 percent to over 8 percent. A Keynesian economist would most likely blame this increase in unemployment on 10. Suppose farmers can use their land to grown either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause: 11. The interest rate is the price paid for use of a: 12. How do investment in technology and investment in capital differ? 13. Macroeconomics is: 14. The study of individual choice and how that choice is influenced by economic forces. Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model? 15. According to Keynes, market economies: 16. What would make foreigners want to buy more from the United States? 17. Globalization that allows governments to pursue expansionary policies can be dangerous because it can lead to: 18. Which of the following types of unemployment is considered to be the most controllable through demand-side macroeconomic policy? 19. Which of the following topics is best characterized as a macroeconomic issue? 20. The law of demand states that quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes: 21. Quotas and tariffs can: 22. The depreciation of currency will: 23. When interest rates rise, people are: 24. The largest expenditure component of GDP is: 25. If income increases more rapidly than expected, then: 26. Which of the following is the path through which contractionary monetary policy works? 27. If banks hold excess reserves whereas before they did not, the money multiplier: 28. In which of the following situations is a budget surplus most likely to occur?