Practice Problems I

# Practice Problems I - ECON 502 Practice Problems I 1. Which...

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Page 1 ECON 502 Practice Problems I 1. Which of the following statements about economic models is true? a) There is only one correct economic model. b) All economic models are based on the same assumptions. c) The purpose of economic models is to show how endogenous variables affect exogenous variables. d) Economists use different models to address different questions. 2. The assumption of continuous market clearing means that: a) sellers can sell all that they want at the going price. b) buyers can buy all that they want at the going price. c) in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price. d) at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price. 3. In a simple model of the supply and demand for pizza, the endogenous variables are: a) the price of pizza and the price of cheese. b) aggregate income and the quantity of pizza sold. c) aggregate income and the price of cheese. d) the price of pizza and the quantity of pizza sold. 4. In an economic model: a) exogenous variables and endogenous variables are both fixed when they enter the model. b) endogenous variables and exogenous variables are both determined within the model. c) endogenous variables affect exogenous variables. d) exogenous variables affect endogenous variables. 5. The amount of capital in an economy is a ______ and the amount of investment is a ______. a) flow; stock b) stock; flow c) final good; intermediate good d) intermediate good; final good 6. All of the following are a stock except : a) a consumer's wealth. b) the government budget deficit. c) the number of unemployed people. d) the amount of capital in the economy. 7. All of the following transactions that took place in 2006 would be included in GDP for 2006 except the purchase of a: a) book printed in 2006, entitled The Year 3000 . b) 2001 Jeep Cherokee. c) year 2007 calendar printed in 2006. d) ticket to see the movie “2001.”

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Page 2 8. All of the following actions are investments in the sense of the term used by macroeconomists except : a) IBM's building a new factory. b) corner candy store's buying a new computer. c) John Smith's buying a newly constructed home. d) Sandra Santiago's buying 100 shares of IBM stock. 9. An increase in the price of imported goods will show up in: a) the CPI but not in the GDP deflator. b) the GDP deflator but not in the CPI. c) both the CPI and the GDP deflator. d) neither the CPI nor the GDP deflator. 10. Real GDP is a better measure of economic well-being than nominal GDP, because real GDP: a) excludes the value of goods and services exported aboard. b) includes the value of government transfer payments.
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## This note was uploaded on 06/09/2009 for the course ECON 502.01 taught by Professor Mccafferty during the Spring '08 term at Ohio State.

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Practice Problems I - ECON 502 Practice Problems I 1. Which...

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