Exam 1 Key - Economics 2006, Spring 2009, Exam 1 KEY...

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Economics 2006, Spring 2009, Exam 1 KEY [1]Which of the following will not increase the average standard of living (per capita output)? 1. An increase in the EPR. 2. An increase in average hours worked. 3. An improvements in technology 4. An increase in population. 5. None of the above, each will increase the average standard of living. [2]If the unemployment rate is 8 percent, that means that 8 percent of 1. the population is not working 2. potential workers do not have jobs 3. the individuals who are looking for work cannot find jobs 4. people who want to work cannot find jobs 5. None of the above. [3]Over the past 75 years, the inflation rate has 1. generally increased 2. been positive in most years 3. stayed low 4. been negative in most years 5. dramatically increased [4]In 2003, the Ace Card Company produced $10 million worth of playing cards. Because of strong consumer demand for their product in 2003, Ace sold $12 million worth of cards, reducing their inventories by $2 million. How much value did Ace add to GDP in 2003? 1. $2 million 2. $8 million 3. $10 million 4. $12 million 5. $14 million [5]The phase of the business cycle characterized by falling output is called a(n) 1. peak 2. recession 3. depression 4. trough 5. expansion
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[6] Wages and salaries $800 Rent $100 Government purchases $200 Profit $300 Exports $400 Interest $250 Private investment spending $400 Imports $550 Consumption $1000 Based on the above information, GDP in this year was 1. $1,450 2. $2,000 3. $2,550 4. $2,900 5. $4,000 [7]Which of the following statements about unanticipated inflation is true? 1. It reduces average purchasing power in the economy. 2. It reduces total purchasing power in the economy. 3. It redistributes purchasing power in the economy. 4. It reduces nominal wages. 5. Its effects are spread evenly throughout the economy so that no one gains or loses from inflation. [8]Private investment during a year includes 1. the value of inventories plus the values of stocks and bonds 2. spending on plant and equipment, new housing construction, and changes in inventories 3. stocks and bonds purchased by firms 4. spending on plant and equipment plus government spending plus household spending on stocks and bonds 5. spending on plant and equipment plus capital formation [9]In the loans market the interest rate is above its equilibrium level. Given this fact which of 1-2 is true? 1. There is a surplus of loans. 2. There is a surplus of output. That is, full employment output is larger than the demand for output. 3.
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This note was uploaded on 12/09/2009 for the course ECON 2006 taught by Professor Rdcothren during the Spring '08 term at Virginia Tech.

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Exam 1 Key - Economics 2006, Spring 2009, Exam 1 KEY...

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