finalexamsg - Final Exams Exam 1 11 Of the following which...

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301 Exam 1 1 1. Of the following, which would not be included in GDP? a. Your purchase of a haircut. b. Your purchase of a used textbook for this course. c. Your investment of $100 in a savings account at your bank. d. Neither b nor c would be included in GDP. 1 2. Which points in a production possibilities frontier are both attainable and inefficient? a. Points beyond the frontier. b. Points on the frontier. c. Points within the frontier. d. Both points on and within the frontier. 1 3. Suppose a heat wave in the South causes millions of chickens to commit suicide. Keeping in mind that only live chickens can be sold to be processed into food, as a result of the heat the equilibrium relative price of a chicken dinner ____ and the equilibrium quantity ____. a. rises; increases b. probably changes, but in an ambiguous direc- tion; decreases c. rises; probably changes, but in an ambiguous direction d. rises; decreases 1 4. If wages and prices were perfectly flexible so that the labor market is always in the equilibrium where the supply of labor equals the demand for it, then a. the AS curve is vertical. b. the AS curve is horizontal. c. the AS curve has a 45 degree slope. d. the AD curve is vertical. 1 5. According to the quantity theory, changes in the growth rate of the quantity of money lead to changes in the inflation rate. Using the new classical (rational expectations) theory, if the public is aware of the Fed’s monetary policy, then an increase in the growth rate of the quantity of money has no effect on the unemployment rate. a. Both sentences are true. b. The first sentence is true; the second sentence is false. c. The first sentence is false; the second sentence is true. d. Both sentences are false. 1 6. If the nominal interest rate is 10 percent and the real interest rate is 3 percent, the expected inflation rate is approximately a. 30 percent b. 13 percent c. 7 percent d. 3.3 percent 1 7. The stage of the business cycle during which output is falling is a. the recession. b. the expansion. c. the peak. d. the trough. 1 8. The supply curve for pizza is NOT directly shifted if there is a change in the a. number of sellers of pizza. b. technology used to produce pizza. c. price of pizza. d. price of resources (such as cheese) used to pro- duce pizza. ±Final±Exams
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302 FINAL EXAMS 1 9. If the government’s tax revenues are $1,050 billion and its total expenditures are $1,000 billion, the government has a a. deficit of $50 billion b. surplus of $50 billion c. deficit of $900 billion d. surplus of $950 billion 10. An assumption of the neoclassical growth theory is that a. in the long run, people earn only a subsistence real wage rate. b. all technological advances are the result of peo- ple’s deliberate actions. c. the economy-wide return to capital diminishes as more capital is accumulated.
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finalexamsg - Final Exams Exam 1 11 Of the following which...

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