Econ_12_Midterm_1A

Econ_12_Midterm_1A - Joutz, Principles of Macroeconomics,...

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Econ 12 Midterm 1A Page 1 of 9 Joutz, Principles of Macroeconomics, Fall 2007 Midterm IA Name (please print legibly) Name (sign) TA / Section There are 45 multiple choice questions. They are worth 1 point each. There are two short answer essay questions. The first is worth 2 points and the second is worth 3 points. See the title for these questions. 1. For an economy, expenditure is equal to income because A. by law firms must pay out all their revenue as income to someone. B. for every sale there is a buyer and a seller. C. prices of individual goods and services change, but the average price level stays the same. D. None of the above is correct; expenditure is not always equal to income for an economy. 2. GDP is defined as A. the market value of all goods and services produced within a country in a given period of time. B. the market value of all goods and services produced by the citizens of a country, regardless of where they are living in a given period of time. C. the market value of all final goods and services produced within a country in a given period of time. D. the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 3. Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 300 times as much as Babe Ruth earned in 1931. However, prices also have risen since 1931. We can conclude that A. the best baseball players today are about 300 times better off than Babe Ruth was in 1931. B. because prices have risen also, the standard of living of baseball stars hasn't changed since 1931. C. one cannot make judgments about changes in the standard of living based on changes in prices and changes in incomes. D. one cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931. 4. The inflation rate is defined as the A. price level. B. change in the price level from one period to the next. C. percentage change in the price level from the previous period. D. price level minus the price level from the previous period.
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Econ 12 Midterm 1A Page 2 of 9 5. In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct? A. The base year is always the first year among the years for which computations are being made. B. It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year. C. The value of the consumer price index is always 100 in the base year. D.
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This test prep was uploaded on 04/18/2008 for the course ECON 012 taught by Professor Joutz during the Spring '08 term at GWU.

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Econ_12_Midterm_1A - Joutz, Principles of Macroeconomics,...

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