EC4710-M2-F07

EC4710-M2-F07 - NAME: ECONOMICS 4710 MIDTERM EXAM-2...

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Unformatted text preview: NAME: ECONOMICS 4710 MIDTERM EXAM-2 Louisiana State University Instructor: Bulent Unel Date: November 6, 2007 Important: This is a closed book exam. The exam has two parts. The first part consists of 20 multiple choice questions and the second part consists of 2 quantitative questions. Check that you have them all. Do not take any part of this exam with you when you leave. Part I: Multiple Choice Questions (Each 2.5 pts). 1. In a small open economy, if exports equal $20 billion, imports equal $30 billion, and domestic national saving equals $25 billion, then net capital outflow equals: a. -$25. b. -$10. c. $10. d. $25. Answer: b 2. In a small open economy, if the world real interest rate is above the rate at which national saving exceeds domestic investment, then there will be a trade and net capital outflow. a. surplus; negative. b. deficit; positive. c. surplus; positive. d. deficit; negative. Answer: c 3. In a small open economy, starting from a position of balanced trade, if the government increases the income tax, then this produces a tendency toward a trade and net capital outflow. a. surplus; positive. b. deficit; negative. c. deficit; positive. d. surplus; negative. Answer: a 4. The lower the real exchange rate is, the expensive domestic goods are relative to foreign goods, and the the demand is for net exports. a. more; greater 2 b. more; smaller c. less; greater d. less; smaller Answer: c 5. Protectionist policies implemented in a small open economy with a trade deficit have the effect of the trade deficit and the quantity of imports and exports. a. decreasing; decreasing b. decreasing; not changing c. not changing; not changing d. not changing; decreasing Answer: d 6. One reason for unemployment is that: a. it takes time to match workers and jobs. b. all jobs are identical. c. the labor market is always in equilibrium. d. a laid-off worker can immediately find a new job at the market wage. Answer: a 7. Any policy aimed at lowering the natural rate of unemployment must either the rate of job separation or the rate of job finding. a. reduce; increase b. increase; increase c. reduce; reduce d. increase; reduce Answer: a 8. Efficiency-wage theories suggest that a firm may pay workers more than the market- clearing wage for all of the following reasons except to: 3 a. reduce labor turnover....
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EC4710-M2-F07 - NAME: ECONOMICS 4710 MIDTERM EXAM-2...

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