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Unformatted text preview: Economics 3 Sample Final Exam 1 MULTIPLE CHOICE (1 point per correct answer) Choose the one alternative that best completes the statement or answers the question. ______ 1) When the federal government spends less than it collects in tax revenue, it A) must enact monetary policy. B) must enact fiscal policy. C) has a government budget deficit. D) has a government budget surplus. ______ 2) The CPI can be used to measure A) changes in average price of the goods and services bought by a typical urban household. B) the unemployment rates of discouraged workers. C) how consumer unemployment has changed. D) expectations of the future rate of inflation. ______ 3) Potential GDP is the A) value of production when the economy is in a recession. B) value of production when the economy is at a peak. C) the value of production with fully employed resources. D) current value of production in the economy. ______ 4) Which of the following correctly describes GDP? I. GDP is a flow variable. II. GDP is the value of the production of an individual firm's goods and services. III. GDP can be calculated using the expenditure approach or the income approach. A) II and III C) I only B) I and III D) III only ______ 5) Which of the following relationships is correct? A) Nominal GDP = (GDP Deflator/Real GDP) 100 B) GDP Deflator = (Nominal GDP/Real GDP) 100 C) Real GDP = (Nominal GDP GDP Deflator)/100 D) Real GDP = Nominal GDP 100 ______ 6) Because pollution reduces economic welfare, on this count real GDP A) understates economic welfare. B) decreases as pollution increases. C) overstates economic welfare. D) increases to take into account the expenditures that will be made in the future to clean up the pollution. Economics 3 Sample Final Exam 2 ______ 7) Unemployment as measured includes the total number of people who A) would like to have a job but have stopped seeking work. B) have jobs or are currently looking for jobs. C) would like to have a full-time job but are working part-time. D) are available and looking for work but unable to find employment. ______ 8) The duration of a spell of unemployment A) falls during both recessions and expansions. B) rises during both recessions and expansions. C) rises during a recession and falls during an expansion. D) falls during a recession and rises during an expansion. ______ 9) Suppose the price level this year is 150 and the price level last year was 125. The inflation rate between last year and this year was A) 20 percent. C) 1.6 percent. B) 2 percent. D) 16.6 percent. ______ 10) If the money wage rate is $15.00 per hour and the price level is 120, the real wage rate is A) $10.75 per hour. C) $8.50 per hour. B) $15.00 per hour. D) $12.50 per hour....
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- Winter '07