Economics 1 - Summer 1996 - Olney - Midterm 2

Economics 1 - Summer 1996 - Olney - Midterm 2 - This is the...

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This is the second midterm from Prof. Olney's Summer 1996 offering of Economics 1. The exam was written as an 80 minute exam. 1. During the 1980s, the Gini coefficient describing the distribution of income for all U.S. households increased from 0.336 to 0.364. Did the distribution of income become more or less equal during the 1980s? Explain. (A graph will help.) 2. If someone is out of work, are they unemployed? Is everyone who is part of the "unemployment problem" unemployed? Explain your answers. 3. Why is the GDP Price Index considered a more accurate measure of inflation than the Consumer Price Index (CPI)? 4. A monopolist firm is said to charge a higher price and produce a lower quantity than would be produced in a perfectly competitive industry. Use the graph at right to demonstrate this assertion. Explain your graph. 5. For each of the following transactions, briefly explain why it is excluded from GDP. sales of marijuana in California sales of Microsoft stock cleaning up your room 6. People who shop in Alameda, Contra Costa, and San Francisco counties pay an extra ½ percent sales tax
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