2006Prelim11April(QuestionsplusAnswers)[2]1 - Name: Section...

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Name: Second Prelim ECON 102 – 11 April 2006 Section Number: This exam has 20 multiple choice questions, 4 short answer questions and 2 essay questions Multiple Choice Questions One point per question. Write the answers on the separate sheet provided. 1. The aggregate demand curve _____ a market demand curve _____ it _____ the sum of all market demand curves in the economy. a) is not; and; is not b) is; and; is c) is; but; is not d) is not; but; is Answer: a 2. An increase in money supply will cause a) a rightward shift in the AD curve b) a leftward shift in the AS curve c) a rightward shift in the AS curve d) a leftward shift in the AS curve Answer: a 3. When an economy produces at its ____ level of output, the aggregate supply curve becomes ______ a) maximum; horizontal b) maximum; vertical c) minimum; vertical d) minimum; relatively flat and negatively sloped Answer: b 4. If there were no time lag between the input and output price changes the _____ aggregate supply curve would be almost entirely ______ a) long-run, horizontal b) long-run, negatively sloped c) short-run, vertical d) short-run, horizontal Answer: c 5. Which of the following factors will shift the aggregate supply curve to the left? a) supply of better educated labor b) late monsoon rains in an agricultural nation like India c) investment in infrastructure d) good weather Answer: b 1
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Name: Second Prelim ECON 102 – 11 April 2006 Section Number: 6. One possible explanation for involuntary unemployment is a) the wage rate does not adjust immediately to changes in the labor demand b) the labor market is perfectly competitive c) the firms, knowing the supply and demand curve for labor, implement the equilibrium wage, which happens to be so low that many people prefer to stay at home d) maximum wages which are implemented Answer: a 7. If inflationary expectations _____, the results will be a(n) _______ in the rate of inflation even though the unemployment rate _____ have changed a) increase; decrease; may not b) increase; decrease; may c) decrease; increase; may not d) decrease; decrease; may not Answer: d 8. Whether government debt is considered a good/bad thing by economists does not depend on a) the relative size of the debt b) the absolute size of the debt c) the proportion spent on consumption spending versus capital spending d) whether the bonds issued were bought by foreigners vs. domestic residents Answer: b 9. Which of the following components of government spending can be categorized as a consumption expenditure (CE) and which can be categorized as an investment expenditure (IE) respectively? a) CE: spending on unemployment payments; IE: salaries of the soldiers in the Iraq war b) CE: paying gardeners to maintain the White House grounds; IE: construction of a library c) CE: construction of new conference halls; IE: research and development expenditure d) CE: senators’ fringe benefits; IE: purchase of consumables for defense Answer: b Read the following scenario and answer the following 3 questions
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This note was uploaded on 10/21/2009 for the course ECON 102 taught by Professor Kyle during the Spring '08 term at Cornell.

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2006Prelim11April(QuestionsplusAnswers)[2]1 - Name: Section...

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