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PracFinal

PracFinal - Name ID Economics 102 Fall 2006 M Doyle...

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Name: _______________________ ID#: ________________________ Part A: Multiple Choice 1. An upward shift in the Fed's policy reaction function corresponds to a _____ the aggregate demand curve and an increase in exogenous spending corresponds to a _____ the aggregate demand curve. A) shift left of ; shift right of B) shift right of; shift left of C) movement up; shift right of D) shift left of; movement up E) movement up; movement down Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. The following graph shows the production possibility curve for the economy with only two members, Amy and Mike. 5 10 15 20 25 30 35 40 45 50 Cans (number/year) z y x 1000 3000 5000 7000 9000 10000 11000 Cheese (pounds/year) Page 2
Name: _______________________ ID#: ________________________ 2. Mike's opportunity cost of producing one car is ______ pound of cheese. 3. If an economy produces 3 million oranges that sell for \$0.25 each and 100,000 cars that sell for \$25,000 each, then when the market value of total output is calculated: 4. When no output gap exists actual output _____ potential output and the rate of inflation will tend to ______. Page 3

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Name: _______________________ ID#: ________________________ An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts.
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