sample midterm

sample midterm - Econ 203 Principles of Microeconomics...

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Econ 203 Principles of Microeconomics University of Southern California Sample Exam Multiple Choice Questions Chapter 1 The Nature and Method of Economics 1. For economists, the word "utility" means: A) versatility and flexibility. B) rationality. C) pleasure and satisfaction. D) purposefulness. 2. Studying economics: A) helps one become a better-informed citizen and voter. B) is detrimental to good citizenship because economics emphasizes individualism. C) is a waste of time since we all participate in the economy whether we understand it or not. D) is important because economics is the science of earning money. 3. Which of the following statements is true? A) The process of deriving economic theories and principles is known as policy economics. B) Full employment, price-level stability, and economic growth are widely accepted macroeconomics goals in the United States. C) Normative economics deals with "what is," whereas positive economics deals with "what ought to be." D) There can be too little of a good thing, but never too much of a good thing. 4. Which of the following statements pertains to macroeconomics? A) Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. B) A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. C) The national productivity rate grew by 2.7 percent last year. D) The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point. 5. The fallacy of composition states that: A) generalizations relevant to microeconomics never apply to macroeconomics. B) expectations give rise to self-fulfilling prophesies. C) generalizations pertaining to individuals always apply to the group. D) quantifiable economic goals are always incompatible with one another. 6. A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of: A) the fallacy of composition. B) the economic perspective. C) loaded terminology. D) marginal analysis. Page 1
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Use the following to answer question 7: 7. Refer to the above diagram. Which line(s) show(s) a positive vertical intercept? A) A and D only B) B and C only C) A , D, and E D) A , D, and B Use the following to answer question 8: Answer the next question(s) on the basis of the following information. Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero. But if the interest rate were 16 percent, businesses will find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. 8. Refer to the above information. Which of the following correctly expresses the indicated relationship as
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sample midterm - Econ 203 Principles of Microeconomics...

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