Exam 1 Key All Versions - Economics 304L: Principles of...

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Economics 304L: Principles of Macroeconomics 33525 Spring 2010 Morning Session Sadler NAME ________________________________ EID___________________________________ 1 EXAM 1 Version A KEY The first 20 questions are worth 3 points each. 1. If an economy is producing efficiently, then *a. there is no way to produce more of one good without producing less of another good. b. it is possible to produce more of both goods without increasing the quantities of inputs that are being used. c. it is possible to produce more of one good without producing less of another good. d. it is not possible to produce more of any good at any cost. 2. If a production possibilities frontier is bowed outward, then the opportunity cost of producing more of the first good is highest when *a. the economy is producing much of the first good and little of the second good. b. the economy is producing equal amounts of the first and second goods. c. the economy is producing little of the first good and much of the second good. d. None of the above is correct because the opportunity cost of producing more of the first good is constant. 3. Assume that the market for flip-flops begins in equilibrium and the price of rubber, an input into flip-flop production, is reduced. At the original equilibrium price for flip-flops, after the change, the flip-flop market will be in a situation of a. equilibrium b. deflation *c. excess supply or surplus d. excess demand or shortage 4. Continuing with the previous question, compared with the original equilibrium in the flip flop market, the new equilibrium will involve a. higher equilibrium price, higher equilibrium quantity b. higher equilibrium price, lower equilibrium quantity *c. lower equilibrium price, higher equilibrium quantity d. lower equilibrium price, lower equilibrium quantity 5. Gasoline is considered a final good if it is sold by a a. gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. b. pipeline operator to a gasoline station in San Francisco. *c. gasoline station to a motorist in Los Angeles. d. All of the above are correct. 6. Goods that go into inventory and are not sold during the current period are a. counted as intermediate goods and so are not included in current period GDP. b. counted in current period GDP only if the firm that produced them sells them to another firm. *c. included in current period GDP as inventory investment. d. included in current period GDP as consumption. 7. Changes in nominal GDP reflect a. only changes in prices. b. only changes in the amounts being produced. *c. both changes in prices and changes in the amounts being produced. d. neither changes in prices nor changes in the amounts being produced.
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2 8. A recession is always associated with a. rising inflation. b.
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Exam 1 Key All Versions - Economics 304L: Principles of...

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