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midterm1fall2007webversion

# midterm1fall2007webversion - Economics 102 Fall 2007 First...

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Economics 102 Fall 2007 First Midterm 1. “The government must keep the price stable,” is an example of a a) normative statement. b) positive statement. 2. The economy is said to be at full employment when a) the unemployment rate is zero. b) the cyclical unemployment rate is zero. 3. Baseball bats and baseballs are complements. When the price of baseballs increases, the demand curve for baseball bats shifts _______? a) left b) right 4. Dr. Strumming A. Long is considering leaving his position as a surgeon in Waco, Texas to become a professional banjo player in New York City. The following table indicates his expenses and income for both options. What is the annual opportunity cost of becoming a banjo player for Dr. Long? Expenses and Income (Annual) Surgeon Banjo Player Salary \$180,000 \$25,000 Rent \$5,000 \$9,000 Transportation \$3,000 \$2,000 Banjo Equipment 0 \$500 Banjo Lessons 0 \$800 a) \$37,300 b) \$155,000 c) \$159,300 d) \$188,000

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5. You are given the following information about MacroLand. Last year the government spent \$300 on goods and services and collected \$50 on taxes. Households purchased goods and services worth \$700 and received \$500 in wages and dividends. Firms had \$100 in investment spending and borrowed \$250 last year. The country imported \$250 and exported \$150. What was the GDP for MacroLand last year? a) \$1000 b) \$1500 c) \$1800 d) \$2000 6. If a point lies outside the production possibility curve it can never be produced. a) True b) False 7. The GDP in the US was 6% higher in 2003 than in 2002. Which statement is correct? a) The value of the production in the US economy increased by 6% from 2002 to 2003. b) The total cost of US goods and services increased by 6% from 2003 to 2002.
8. In Tropicia, a closed economy, there are 100 people. Except for 10 children and 10 retired people all others are seeking a job when unemployed and 60 are currently employed. What’s the current unemployment rate of Tropicia? a)

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midterm1fall2007webversion - Economics 102 Fall 2007 First...

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