Econ102_Midterm_Number_2_Nov_13

Econ102_Midterm_Number_2_Nov_13 - Macroeconomics Midterm #2...

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Macroeconomics Midterm # 2 I. Instructions 1 Time Allowed: 1 hour 50 minutes. 2 You may use a simple, 4 function calculator. 3 Part I. consists of 25 multiple choice questions. Each multiple choice question is worth 3 points. Answer all 25 multiple choice questions by choosing the single, best answer. Circle the appropriate letter on the exam. 4 Part II. Consists of a short answer question with various parts. The total points add up to 25 for this part. In answering each part, be sure to include your work, where possible. In order to receive full credit, show your work legibly. Point allocations vary among the parts so use your time accordingly. 5 There are 11 pages to the test. Please write your name on each page of the test. II. Rules, Guidelines and Expectations 1 Receiving or providing assistance on this exam is prohibitted. 2 Use, during the exam, of materials other than those permitted by me is strictly prohibitted. 3 If English is not your native language, you may use a dictionary to translate the english meaning of a word. I, _____________________________________________________________________________________, have read the above statements and I agree to the specified terms and conditions. ________________________________________________________________________________________________________ Sign and date Print your name neatly in the space provided
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Name___________________________________________ 1 1. The price index in the first year is 150; in the second year it is 160; and in the third year it is 175. The inflation rate is about a. 1.07 percent between the first and second years, and 1.09 percent between the second and third years. b. 5.4 percent between the first and second years, and 9.4 percent between the second and third years. c. 6.7 percent between the first and second years, and 9.4 percent between the second and third years. d. 10 percent between the first and second years, and 1.09 percent between the second and third years. e. None of the above 2. The market basket used to calculate the CPI in Pleasant Valley is 4 loaves of bread, 6 gallons of milk, 2 shirts and 2 pants. In 2005, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each and pants cost $10.00 per pair. In 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each and pants cost $12.00 per pair. Using 2005 as the base year, what was Pleasant Valley’s inflation rate in 2006? a. 30 percent b. 24.4 percent c. 21.6 percent d. 33.3 % e. It is impossible to determine without knowing the base year. 3 The president of a poor country has announced that he will implement the following measures which he claims are designed to increase growth: 1). Reduce corruption in the legal system; 2). Reduce reliance on market forces because they allocate goods and services in an unfair manner; 3). Restrict investment in domestic industries by foreigners because they take some of the profits out of the country; 4). Encourage trade with neighboring countries; and 5). Increase the
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Econ102_Midterm_Number_2_Nov_13 - Macroeconomics Midterm #2...

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