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2025 ASU ECON 211 Final Exam with accurate questions and verified answers covering principles of macroeconomics, fiscal policy, monetary systems, and economic indicators.
What are the two economic fluctuations? - ANSWER-1. In the short run, shifts in the aggregate demand causes fluctuations in the economy's output of goods and services
- In the long run, shifts in the aggregate demand affects the
overall price level not output
What are the effects of aggregate supply shifting? - ANSWER-It can cause stagflation.
How and why does the aggregate supply curve shift upward? - ANSWER-If there's an increase in unit costs for any reason other than an increase in real GDP.
Short run demand shock - ANSWER-Causes an increase in government purchases which will also increase real GDP and price level. 1 / 4
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When there's a demand shock how will it adjust to long run? - ANSWER-- In the short run input prices are sticky
- In the long run input prices can adjust; if the output is higher
than the full employment then the wage rate will rise which will shift the aggregate supply curve upward
What causes the long run aggregate supply to shift to the right? - ANSWER-If there's an increase in labor, capital, natural resources, and technology.
Specialization and exchange allows what? - ANSWER-- Enables us to have greater production and higher living standards
- Develop expertise
- Minimize downtime
Absolute advantage - ANSWER-The ability to produce goods with fewer inputs than another producer.
Comparative advantage - ANSWER-The ability to produce goods with a lower opportunity cost than another producer.
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Law of demand - ANSWER-When the price of good increases, quantity demanded will fall.
What causes the demand curve to shift rightward? - ANSWER-- If income increases
- If the price of the substitute increases
- If the price of complement decreases
- If population increases
- If they expect that prices will increase in the future
- If tastes transfers toward the good
Law of supply - ANSWER-As the price of good increases, the quantity supplied increases.
What causes the supply curve to shift to the right? - ANSWER-- If input prices decreases
- If the price of alternative decreases
- If the number of firms increases
- If they expect that the price in the future will increase
- Technological advancement
- Favorable weather 3 / 4
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What are the effects of an increase in demand? - ANSWER-- Increase in price
- Increase in quantity
What are the effects of a decrease in supply? - ANSWER-- Higher prices
- Lower quantity
What are the effects of an increase in demand and decrease in supply? - ANSWER-- Higher prices
- Quantity can rise, fall, or remain unchanged
GDP - ANSWER-Market value of all goods and services produced within a country in a given period of time.
GDP measures what? - ANSWER-It measures the total income of everyone in the economy and expenditure.
Nominal GDP - ANSWER-Measured without the adjustment to the change in dollar value and not adjusted for inflation.
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