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Unformatted text preview: EXAM #1 SPRING 2008--PPF, GDP, Growth & CPI Multiple Choice--2 points each Identify the letter of the choice that best completes the statement or answers the question. 1. According to economic growth theory, which of the following facts about New Mexico can explain why we are poorer than other states. a. We have two national labs, while most states have no national labs. b. Our high school drop out rate is among the highest in the country. c. We have less business investment. d. Both b & c above contribute to our relative poverty. e. a, b & c all contribute to our relative poverty.. 2. A country that experiences a sustained 3.5% increase in real per capita income can expect to double its income in a. 60 years. b. 35 years. c. 70 years. d. 15 years. e. 20 years. 3. In order to calculate GDP, which of the following should be included? I. Consumer spending II. Government spending on goods and services III. Investment spending by businesses IV. Net Exports V. Government spending on social security VI. Income, Property and Sales taxes a. All should be included. c. I, II, III, IV & V only. b. I, II, III & IV only. d. I, III & IV only. 4. Which of the following measures best represents a countrys standard of living? a. Nominal GDP c. Nominal GDP per person. b. Real GDP d. Real GDP per person. 5. Richer countries by definition have _____________ than poorer countries. a. larger populations c. lower inflation b. higher productivity d. more economic activity in agriculture 6. According to the simple PPF model, countries can increase output by a. increasing productive resources like capital and human capital. b. producing more products that have a high value. c. trading with other countries. d. All of the above are correct. 7. Which of the following increases labor productivity? a. Lowering employee compensation. b. Reducing the quantity of machinery per worker c. Providing on-the-job training d. All of the above are correct. 8. Which of the following measures productivity? a. Output per capita c. Employment per dollar of GDP b. Output per labor hour d. Inflation per unit of output 9. If the Federal minimum wage were indexed for inflation, a. the purchasing power of the minimum wage would fall over time. b. the purchasing power of the minimum wage would rise over time. c. the purchasing power of the minimum wage would not fall or rise over time. 10. My grandmothers social security check is indexed for inflation. Last year inflation, as measured by the change in the CPI, was 3.0%. My grandmother spends 20% of her income on medical care. If the cost of medical care rose 7.5% last year, which of the following statements is true? a. The CPI likely overestimated inflation for my grandmother and she is receiving more than enough additional money to keep her standard of living constant....
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This note was uploaded on 04/09/2008 for the course ECON 202 taught by Professor Jeniffer during the Spring '08 term at New Mexico.
- Spring '08