Econ test 1 - Name: Class: Date: If : E104 EXAM IHF13...

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Unformatted text preview:Name: _ Class: Date: If): E104_EXAM IHF13 Multiple Choice Identifiz the choice that best completes the statement or answers the question. 1. The production possibility curve is bowed outward from the origin because of: a. the law of increasing opportunity costs. b. the finite nature of the resource base. 0. inefficiency. d. improper output mix. e. unemployment. Exhibit 2-5 Production possibilities curve Cars (miilinns per year) U 10!] 200 300 400 Grain (millions oftens per year) 2. In Exhibit 2—5, movement between which of the following points represents an increase in economic efficiency? a. A to C. b. C to D. c. D to B. d. A to B. e. A to D. Name: ID: A Exhibit 2-6 Production possibiiities curve data -' Capitai goods 150 140 120 90 50 0 Consumer ends 0 20 40 60 80 100 3. In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that: a. the quantity of capital goods produced must be less than 150. b. the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 0. greater amounts of capital goods must be sacrificed to produce each additionai unit of consumer goods. (1. the amount of consumer goods produced must be greater than zero. Exhibit 2-10 Production possibilities curve data 2 3 4 19 13 0 4. Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. The first unit of Capital goods ' - 0 1 25 23 Consnm tion oods capital goods will cost the economy % units of consumption goods. a. 25 b. 2 c. 1 d. 23 e. 11 5. Other things being equal, the effects of an increase in the price of computers would best be represented by which of the following? a. A movement up along the demand curve for computers. b. A movement down along the demand curve for computers. c. A leftward shift in the demand curve for computers. d. A rightward shift in the demand curve for computers. 6. According to the law of supply, there is a direct relationship between quantity supplied and: a. the number of sellers. b. costs of resources. 0. technology. d. the price of the good. 7. How will an increase in lumber prices influence the home construction market? a. The demand for newly constructed homes will increase. b. The demand for newly constructed homes will decrease. c. The supply of newly constructed homes will increase. (1. The supply of newly constructed homes will decrease. Name: 10. 11. 12. 13. 14. fD:A If people expect the price of packaged coffee to rise next week, coffee demand will: decrease now. increase now. stay the same now and increase next week. stay the same now and decrease next week. stay the same now and next week. EDP-99'?" Based on the circular flow model, goods and services flow from: a. households to businesses in product markets. I). businesses to households in product markets. c. households to businesses in factor markets. (1. businesses to households in factor markets. In the circular flow model, money flows from the business sector to the household sector through the: product market. capital market. goods market. services market. factor (resource) market. 99-99mm All final goods and services that make up GDP can be expressed in the form: GDP=C+I—G+(X+M). GDP=C+I+G+(X+M). GDP=C+I+G+(X—M). GDP=C+I+(X—M). GDP = C + I + G. 999175» Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods? a. The real GDP figures are a better measure of changes in the general level of prices. I). The real figures will reflect changes in the quantity of output and not changes in the general level of prices. c. The real figures will reflect changes in the general level of prices as well as changes in the quantity of output. d. The real GDP figures adjust for changes in the level of employment. Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The unemployment rate is approximately: a. (10/100) * 100 b. (50/100) * 100 o. (10/60) * 100 d. (25/75) * 100 e. (25/100) * 100 and real GDP growth increased dramatically; declined but remained positive. increased somewhat; became negative. During the Great Recession, unemployment a. increased somewhat; declined but c. remained positive. b. increased dramatically; became negative. d. Name: ID: A 15. John Steinbeck's Cannery Row describes a character who takes his own life because of poor job prospects. If he was an unemployed person who gave up looking for work, he would be considered: a. chronicaliy unemployed. b. a discouraged worker. c. a member of the labor force. d. frictionally unemployed. 16. If Sam Jackson voluntarily quits onejob, possesses marketable skilis, and expects to find a newjob in a few weeks, then Mr. Jackson is considered: a. frictionally unemployed. b. cyclically unemployed. c. seasonally unemployed. d. structurally unemployed. e. unwise to quit his job without already having another one. 17. The type of unemployment that occurs because of a recession is called: a. frictional unemployment. b. seasonal unemployment. 0. natural unemployment. d. cyclical unemployment. 18. Sam is a musician who is out of work because electronic equipment replaced live musicians. This is an example of: a. frictional unemployment. b. cyclical unemployment. c. structural unemployment. d. involuntary unemployment. 19. During the Great Recession the workers who experienced the greatest increase in unemployment were those with . a. low skills. 0. college degrees. 13. high skills. d. advanced degrees (e.g., PhD). 20. Suppose that the consumer price index of a country was 160 at the end of Year 2011 and 168 at the end of Year 2012. What was the country's inflation rate during Year 2012? a. ((168 ~160)/160)* 100 b. ((160 - 168)/l60) * 100 c. ((160 -168)f168)*100 d. ((168:, 160)f160) * 100 21. According to the Bureau of Labor Statistics' survey, which category represents the largest expense for the typical urban family? a. Housing. b. Food and beverages. 0. Transportation. d. Medical care. Name: ' ID: A 22. Consider an economy with only two goods: bread and wine. In 1982, the typical family bought 4 loaves of bread at 50¢ per loaf and 2 bottles of wine for $9 per bottle. 111 Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X (using a 1982 base year) is: a. (MO/$23) * 100 b. ($23 l$20) * 100 c. ($23 '3' $20) * 100 d. ($23 - $20) * 100 23. The size of the National Debt is currently about . If Congress does not come to an agreement to by mid-October, the US. government will default on its debt. a. $4.8 trillion; increase employment 0. $4.8 trillion; raise the debt ceiling b. $l7 trillion; increase employment d. $17 trillion; raise the debt ceiling __ 24. The Employment Report released September 6th indicated, —W in August and the unemployment rate . a. there were 169,000 jobs; rose back to c. there were 200,000jobs; fell to 7.3%. 7.5%. b. 169,000 newjobs were created; fell to d. 169,000 new jobs were created; rose to 7.3%. 7.5%. 25. If RGDPgml represents Real GDP for 2011 and NGDPZOH represents Nominal GDP for 201 1, which of the follow equals the GDP Deflator): a. (RGDPgml lNGDszl) X C. (NGDPZOH lRGDPgog1)X b. (RGDP2011 XNGDP2011)X d. (NGDPZOH - RGDP2011)X 26. Suppose you place $10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least: a. 1.6 percent. b. 3 percent. 0. 4 percent. (1. 5 percent. 27. Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true? 3. Your real wage increased. b. Your nominal wage decreased. c. Both your nominal and real wages decreased. d. Although your nominal wage rose, your real wage decreased. 28. Deflation refers to: a. decreasing oil prices. b a decreasing price level. 0. a slowing down of the rate of inflation. (1 federal government policy of running budget surpluses. Name: ID: A True/False Answer A if true and B if False. 29. The dollar amount of lost output since the financial crisis of 2008 is approximately $5 trillion. 30. The labor force participation rate rose in August to 80 percent the lowest level since 1978. 31. The outcome of the two-day Federal Reserve meeting in September was to keep interest rates low to simulate spending on exports and imports which would lift GDP growth. 32. Consumption expenditures are approximately 70 percent of total output produced. 33. When the economy is at full employment this means unemployment is zero. Short Answer (Each question is worth 2.5 points) Use the foilowing production possibilities frontier (PPF) for consumer goods and capital goods for questions 34 and 35. 34. Suppose this country chooses point A on the above PPF which reflects the year 2000. Based upon this combination of consumeggogdws and capital goods, the standard of living of this country in 2015 will: be unchanged { increaspQ/ decrease. (Circle one) 35. Update the graph above to illustrate your answer to number 34. Label the PPF for 2015. Use the following graph to answer question 36 and 37. Quantity 0 fgu ml at (turits per time period 36. The market shown above is in equilibrium at E4. Suppose Union negotiations result in an increase in wages. Ceteris paribus, identify the new equilibrium after the wage increase has taken effect. (Circle one) ' ' a. E; 1). E2 Cl. E4 37. Suppose the market shown above is in equilibrium at point E3 (Q3, P3). Changes in market conditions result in a new equilibrium at E2 (Q2, P2). This change is stated as a (circle one): decrease in demand and an increase in supply. decrease in demand and a decrease in quantity supplied. decrease in quantity demanded and an increase in supply. decrease in quantity demanded and a decrease in supply. Use the following graph of the labor market to answer question 38. Labor "Ywarkei— "x at. m Rt egea I); ' ' _ ,,:L»I,.r,..'$_'_r_w .,.., he. Q. Q Q4"; 0i Labor" g l 38. The above graph of the labor market was initially in equilibrium at E1 (Q1, W1) in 2006. When the housing market collapsed and the financial crisis began in 2007, there was a crisis in confidence. Construction companies and automobile producers, for example, cut production. Using the above graph: a. Show how the cut in production affected the labor market. b. At the original equilibrium wage, WE, there is agpltiss / sheitage (circle one). Label the surplus or shortage in the graph above. 0. Label the new equilibrium E2 at (Q2, W2). 39. Consider the following data for a simple economy. 2009 2011 Price Quantity Price $ 20.00 250 S 21.00 French Fries 1.00 2,300 2.00 Digital Cameras 200.00 50' 14033, Calculate nominal GDP in 2011, using 2009 as the base year (fill in the blanks): NominalGDP2011=( 2513); )+(2:3_0c1) x )+( £3?) ng/t/O 40. Using the table above, calculate real GDP for 2011, using 2009 as the base year (tilt in the blanks): I RealGDonu = ( X x )+( 642) X Form SCHQOGS [or rleaching Excelience Schreyer lustfijute NAME . -— i — COURSE mu, "m... DATE. 0 USEA NO. 2PENCIL ONLY.' r r I MARK OJ'JLYm'EANSWER FOR EACHITEM.' 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