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Econ1010Q-Midterm-VersionA - YORK UNIVERSITY FACULTY OF...

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Unformatted text preview: YORK UNIVERSITY FACULTY OF ARTS DEPARTMENT OF ECONOMICS ECONOMICS 1t'l‘lfl 3.1] CI: INTRODUCTION TO MACROECONOMIOS Etc/em low 243% TE5T#1 ~fflflmv] l3? FEBRUARY 6, 2W8 Course Director: Dr. John Paschakis TOTAL WORTH: 25% STUDENT NAME: STUDENTS NUMBER: INSTRUCTIONS: A. This examination consists of l‘il'tyr {5D} multiple choice questions. There is only:I one correct answer. No penalty for wrong answers. B. Please answer all questions by making the appropriate spaces on the W ANSWER SHEET. Ug le pencil only. C. Time allowed: TD minutes. E! TEST 3] Wit-11$ 11110 3i] 0 WINTER IN'I'RDDUCI'IEHQ TD MhfllDEmNflhflEB PROF l. PASCHAKIS Name MULTIPLE CHOICE. Choose the one alterrtethre that best completes the statement or answers the on estiorl. 1} E. 1} Which of the following is a long-term economic problem? A] slow economic growth 13] inflation E C} persielent unem ployntent D} delicils E] all of the above 2) It the mill? exporter-ass a rise in reel GDP, then 2} _B A] the benefits of the increased number ofconsu rnp tion goods and services outweigh the costs of envirmmentol pollution associated with flier-eased indusu-is] output rates 3} more consumption goods and services become available. and environmental damage can of and ronmental pollution associated with increasedludush'inl output rates. D} the unemployment rate cannot rise cwEr this time period. E} only the increased benefits are felt. Environrnmtal damage is not a problem due to recent Federal regulation. occur. E C}Ihfibenefitsoiflaemaemdmmbaofmnpfimgoodsmdsenimsrelessfimnfltem 3] The correct order of the sequenee of business cycle phases is 3) E 2 A} expansion. trough. recession, peek. B} expmtsirm, deviation, recession. bongh. C] expansion peek. tough. deviation. D] expansion, peek, reeession, trough. E) expansion, rooession, trough, peak. 4} A business cycle occurs 4} I; 2 It} as a result oflhe rise in the economic potIEnti-ei to produce goods and services. B] as it remit of the irregular [ionisation of potential GDP 11er real GDP. C} when real GDP rises for more than 2 qt! tlrters. D] as a result of the irregular fluetuo lion of real GDP Hormel potemial GDP. 15.] when reel GDP falls for more than 2 quarters. 5} Wine}: of live following is a benefit of emnflc growth? 5] E A} more expenditure fighting pollution ll] more health care _ C} more housing D} more oonsuoaer goods such so colour television sets E} all ofrhe shove lit-l 6} The existence of discouraged workers in the economy means that the oificiel measures of s} C. tutetnpioj'ment A} testd to overstate the unemployment problem. Bl omit the eitoct of part-time workers. . C] tend to understate ttte totemponment problem D] are effectiveirt tracking economic activity. E} are unaffected F] Unemployment is a social-eoonomic and personal problem bemose oi 71 A} loss of income and production. B} loss of human capital. - C} uneven distribution of the-cost in the society. 16 D} an increase in crime rate. E) all of the above. 3} inflation is defined as B] 3.} any increase in prioes. B} when on important price such as the prioe of crude oll Increases. C]: a sustained upward trend in the average price level. C D} it suetained downward trend in the average price level. E} when the average ptioe level is moving neither up nor down it} The value of moneyr varies 9} it] directly with the inflation rate. B} direcdv Wi‘ll'l the unemployment rate. C} as the supply oi gold varies. D] inverselyr with the inflation rate. E] neither dii-eetl}J nor htverseljr 1Witt-t the inflation rate. Ill} How does unpredictable inflation cause problems? 1D) A} Resources are diverted From productive activities to forecasting inflation. B} The stock. market falls in value. '& {2} Resources are di't'erted from productive activities to tax evasion D} ll increases the verialiiiit],r of the business cycle. E} The value of money starts rising. 11] The governmesit deficit wilt fall if ii] A] unemployment rises. B} we bu}- more from other countries; than we sell to them. ‘ C.) the bob}r boomers continue to nan the oountrjr. D} tve sdlmore to other colmtries than we buy from thorn. E} government revenues rise. 12} Which one of the following will doom the Canadian currient account deficit? 12} A} Canada have steel from japan. B] Japan buys wheat from fanneta in Canada. \ C} Canada buys Japanese Savings Bonds. 1W to 11> W In to D] Japan buys wheat from tat-mere in Australia. E] Canada buys Toyota: from Japan. iii-2 13} The Canadian current amount equal: a $3 billion amt-plus. when 13‘; E; A} Canada importsSd-Dflhiflim ttxpm‘tsfiififlhillionand receive-3 SID billion inintereat Payments» B} Canada exports $403 billion. imports $391] billion and pava$1fl billion in interest payments. C} Canada airports $4.03 billion. impart: $390 hiilitmarui receives $10 hillinn in interest payments. D} Canada exports 542” biltitfll. nape-$3331 billion and pays $3 billion in interest payment; E} Canada imports $403 billion, exports'fl‘ifl billion and paya $tfl'hfliion in interest payments. war—“mo —- 10 :2 a K batiiu firth} 14] Of the following items. which one “mildbe mnaidereti an'invutment in the national expert 'ture 14} e ; ammts? A} the Purchase of a Canadian government brand B} the purchase of lflfl shares of Canadian stock on the Toronto Stock Exchange (2} thepurd'iaoeotanew rant-5r: pothirwhopaetcsitwithhianraresand tratreta toart shows on ' weekends D} ti-ie purchase of a iDfl-year-old house that was put on the protected hiatorieeitea list in the year in question E} all of the above ""‘H 15} Saving equals income minus 15] A} not taxes minus consumption expmditure. B} not taxea pitta subsidies. C7] turd-tr payments. [3} taxes. E} consumption expenditure. IE} Suppose the eeormny's capital stock increases over 1113 year. Therefore; it must be true that 16} A} net private domestic hivestmant was positive. ti) depreciation was greater thangroaa private dflmestminveettrunt. C} depreciation is less than zero. D} mt private domestic invest-Inuit was greater than gross private domufie rive-stator“. E} depreciation Woe greater than not private domesti e mveatment 171 InvaihTtet'It is financed by 1?] A] hermit-ring trmn the test of the world. B} government budget aurpltta C) private saving. Di all of the ahotre. E} A and C above. 13} With oi the following is a atoelc? 15} A} depreciation B} not investment ' Ci mint [ D} inventories E} none of the above iv to ii? it fill-3.. 19} The value of intermediate goods is not counted in GDP A} so as to avoid counting their value twice and thereby overstaling the value of GDP. 3] bomuse they are not consumed in the currentyear. Cl because of the tremendous difficulty in keeping trad: oi oil the interim-dime goods produced k in an Economy as large as that of Canada. D} to keep hum inehtding goods that reduce society's welfare: E} because they are only sold in mommmaritela. 20} From the following list. choose the item that would be included in aeurrent measure of GDP. A] the purd'taae of a previously owned house fliatwos built last year B] the purchase oi ll] litres of gasoline for your car C} a social semfity cheque for $500 D) income from the sale of your Canadian Snowhm .3ka E] a 52.000 cheque from your aunt Glace 21} The expenditure approach n-teasures GDP by adding together A} wages. salaries and. supplementary labour income. corporate profits. [mental and miscellaneous investment income. nm' income. and mm of mnfarm tusincorporated bushesses. ill the total expenditures of consrmm firms. net exporters. and by governments at all levels. Cl wagon. salaries and suppiemmlmy int-our income. corporate profits. interest and miscellaneous investment il'tcome, farmere‘ income, subsidies paid by the government. indirect taxes paid. and hicoroe of nonfann unincorporated businesses D} the value added ole-och firm in the economy. E} oompensation ofemployeos, rental income. corporate profits. net interest. proprietors' income. indirect taxes paid. and capital consumption expenditures. and by subtracting subsidies paid by the govemment. 22] it nominal GDP increased by ill peso-alt during a your art-tile real GDP inn-eased by only'fi percent. “11111- the A} price level remained steady but real output fell by 6 percent. 3] unemployment rate must have fallen during the year. C} price level must have moreased by 5 percent. D} price level must have decreased by ti percent. E} price level must have increased by to pet-ewe Us: the table below to answer ritefiflotoing queen-ants}. Table me Date From Southton Pricet$l Quonli item Base Cut-mu Base Curt-mt Ru Ehicits 1.00 1:25 too IIIIL'I Beach'i'otvelo one one 12 14 ' 23} From the date in Table Elle. compute Southon's nominal GDP in the current year. A} 519?. Insane lbfl(i.mr-|— ‘Lifisé: c; $226. mews. ”— "lflk‘gfil : fill)? [ii it cannot be calculated given the data. we; 21:6)le 2.97.43. 24] Table Elli gives price and quantity data arr mom}! with onlyr two mumplion goods: mbber 24} clocks and bench lmvels. Compute lho GDP deflotor for the current year. EL A.) ll? B} In} C} 105.15 D} 1l'lll.5 E} 92.4? 25} Real GDP in Acorn has; flanged from 51500 billion in 2092 lo ouoo billion in 2M3.Tl1e economic 25} C growth in Mona is 3002 is A} + 25%. (9% ”'23 El ID in. l W l r— h 3 .— .—’Z..u / C} i m / __ ..-— H? D] 25 To. " g1 } E} none of the above. ‘ \ 1 S’— 16} Since non-market exchanges are excludod from ammo of CD1“, the GDP moooiro lends to 26} L A] place loo much value on market harmonious E} undmsnnmte the total production of on economy. % C] be of little use to anyone Butmarkel economists. D] be of little significance in damning the lolol pmducfion of on Economy. El overealimate the total: production of on economy. 25"] Complete lite following whence. Real GDP 2?) E A} corrects nominal GDP with purdwfingpower peril}? prices. 3] in an arocurate measure of economic welfare. C]. overesllmoios commie welfare ii there is an underground ooonomy. 1% D} overestimates economic welfare beeouoe it implies eoonomisls provide useful-servicfi to line economy. E} Wereefimales ooonomiu: welfare if there is pollution. 23} Which of the following would be mambo-d as mployed in Canada? 23] ‘A: All Men rice has been laid off from his job for 2|] weeks but expects to he called back soon B] Dons only works five hours a week but is looking for a full—limo job. C} Kaniioyo has stopyed looking [or work since he was unable to find o'suilaliie job during :1 KW twournonih seordl. El} Sharon is o college snide-m with no job. E} Bogdan has been laid off from his job but does no! expect to be coiled hack. and is not looking. 2?) In in country with :- working-age papllafim ol 2!] million. 13 million ore employed. 1.5 miillon are 29] D unemployed, and 1 million of the mployed are workng porHime. hall" of whom nioh lo work Full-lime. The size of the labour formis A] 1.3 million. B} 15.5 million. mzomiuim. l _ 'I-= ._ ’— l‘m l l 1 Dilifirniillon. 3 + l S— !Ll \' 3.7 E} 11.5 million. A—E |t> Jot In a country with a working-age population ot 2!} million, 13 million are em plotted. 1.5 million an: an] unemployed, and '1 million of the employed are working part— time, half of whom wish to work lull-time. The labour force participation rote is A} 55.5 percent. I S-AC) B) 5?.5 percent. ’3_ C C} T15 percent. (—1‘8-‘: 15 D] 65 percent. E} none of the above 1:3 31} In a country with o working-age population of-Sfl million. 13 million ore employed, 2 million are 311 J I unemployed. and 2 nulllon of the employed are. writing port-titre, half of whom wish to work full-time The unemployment rate to Q / A} to percent. 1 ,._. Ii} 14.3 percent. f I D C} 9.1 percent. (M D} 11.1 percent. E] none of the above- 32‘] The productivity of labour can be meamered by computing the ratio of GDP to 32} 2 2 A} the number of people in-the labour foroe. B} the total population in the eoonomp. C} the number of people employed. D} aggregate hours. E} the number of people in the working-age population. 33} in a countryr with a working-ego population of 22 million, 1o million are Ie.I.'n|::-1o].reclr Emillion are 33] ; unflinployfii, and '1 million of the employed are roofing part-time. half of whom wish to work full—time. IE sonooo of thoee unemployed are qrelimlly unemployed, what to the natural rate of Luterrtplopment? kg. A} 9.4 eroen f . _ C gliogeroeni [SW fifgeo )(r not: ' 115.3 ercent D} trim: W P33 % mtg 341% 1-1} none of the above 34} Which one of the following Would be considered olruclut‘ttllyr unemployed? A} on oil-ice worker who. has lost her job because of a: general slowdown in. economic activity B} a Saskatchewan welder who lost her Job when ltercompany relocated to ll. C'. and of. currently ~ looking tor a job (I) a More Scolio lit-her},t worker who is searehing fior o better lob closer to home D] a steel worker who is laid off but who expects to be filled baolr. soon E} none of the above 35} 1I'll'hich one of the following would be comidered cyclically unemployed? 35} 43’ it.) an office worker who he: loot her job because of a general slowdown in economic activity ll] a steel worker who is laid oil but who expects to be called back 50m 3‘ C] a Nora Scone flattery worker who is searching for a belie: job closer to home K D} a Saskatchewan welder who lost her job when her mmpany reheated to B. C. and lo currertth.r lookhig for a job E] none ol the above A-fi 36} The neutral rate of unemployment in 3-6} ES A} the rate at which cyclical unemployment is equal to it percent. B} the rate at which unemployment is equal to 0 percent. C1 the same at cyclical unemployment. D} the rate at which cyclical tmemplnyrnent is equal in 6 percent. E} none of the above. 3?}1t'lhe prioeindexwas 125 at the end ofiilfli and 135: end theencl all“, what waethe rate of 3?] ; inflation ltIrEUIUfi? 3:22:22: 'H 4151.. 5’ he; 0 Cloiifipetoent {ff/l "F ”fill-”Lg Elllpercetit .— QJ-LT ’FJ 3-5} The market basket of Econolnnd consists of TIM. EDS, and BBC. Current prices are $1 per unit otA, 35] E 52 per unit of B, and $3 per unit at 1:. Bone year prices are $1 forced-t unit offiifi. and C What is theCFlirtthecurrentyear? fax-f u-lu hwi-f- Zfikgz lat-fife +‘fg: I!” <2: 9 Hid B} 100 C1110 mesa E] 43D fmki"'rz'ir'vli-“i' win-fox! ‘3‘ lm+1p+;“: £0 39] The Emulate: l’t'iee Index measures Inflation by using 39] A} only consumption goods and services pmchaeed, and using a current your brisket. B]: all goods and services that are produced. and using it current year basket. f U43 mag—g C] only coneumption goods and service: purchased, and using a hue yearbosket. 1 Y" J "In D} all goods and services that are produced. and using a base year basket 'E E} A and D. xiii} Elmore-economies, long run is 40} It.) one year. it} a period niiflciently long int real GDP to adjust to potential GDP. C] ten years. D} a period during which nee] GDP is not the same as potential GDP. E} Five yam. 41] To derive the diort—mn aggregate supply curve, economists hold constant which of the following 41] l S endebles? A] the price of inputs A B] expected future profits C} the price level D) the quantity of creme].r E} tax rates 42} Suppoot there is an intimate in the capital stock. he a result. the SAS 42] A} m... remains in the sum.- position but the we we shifts to the right B} will shift to the right. but the LAB curl-re obeys in the same position. C) curve remains in the same position but the his curve shifts to the left D D} and the LAS writes will both chiit to the right. The horizontal distance belt-teen the two 5A5 net-tree and the two L45 curves is the m E} and the MS curves will both thift tn the left. The horizontal distance between the two 5A5 ammo and the two LAS curves is the same. 43) Lang-run aggregate supply can increase forall oi the following reasons except: it} more aggregate labour hours. ii} an increase in human oapitaL C] a tall in the Il'lDl'tE’Jt" wage rate. D) more capital stock. E1 the introduction of new technology- +1} The aggregate demand curve is a relationship between A] real lrtoome and real GDP. B] the price level and real GDP demanded. C} real prises and real GDP. D] real aggregate tomendihtres and real GDP. Ell theprioe levelandnomirialGDI’. 45] Which one of the fellmtdrig factors helps explain why the aggregate demand curve has a. negative slope? fits the price level falls, A) the government will have to reduce taxes. which will lead to an increase in the amount purchased. 5} the wealth of people holding a fixed quantity dime-hey inneasm, causing them to expand their purd'teses. C1 the Bank at Canada will have to increase the simply simmer. which will lead to an increase in the ametmt purchased. D] people shiit to oensuming more goods in the future and less in the preeem. E} domestic contaminate have an incentive to purchase more of the d'teaper goods and senders. 415} All else constant an increase in the quantity of meme}r means that A] the aggregate sampler curve will shift to the right. B] the aggregate demand nerve will shift to the right. C} the aggregate supply curve will shift to the left B} there will he a movement down an aggregate demand curve. E} the aggregate demand curve will shift to the left. 4?"! An l.t't.1'.letlrittitar}.r gap is the amount bywhit’il h] the price level mustadjust to achieve hill employment. B] the supply curve must increase to achieve Full employment at a given price level. t2} the demand curve must increase to achieve tuil employment. at e gimen price level. D] patenfiai GDP exceeds real GDP. El real GDP exteedspoteritial en P. 43] Suppose we observe an finesse in the price level and a deflease in real GDP. Which of the following isa posrihle Biplane Heart? A} The expectation of future disposable income has increased. B} The min-neg:r supply has increased. g C] The steel: of capital has increased. [it]. The eXpedhfion of future profits has increased. E} The prior.- of raw materials has liven-eased. iii-E we 49} Consider an econnmy surfing from a position of full employment. Which on: of the following will 49} _E new: 35;: realm-of an impruvemmtia't the technqlugy level? A] The lung-rm 3331-2ng mpply curve will shift leftwmd tr: create the new lung-H.111 equiliblilm B}'I]1£pfiaeleuel will fall. (.1 Thelevelofreal GDP will {allin the short run. D] Resource price; will rise in the tang run, shifting the short-run aggregate supply curve lefhvani E} An i11£|iuil|nnna|tilr gap will uriae. fifl} Ifraal GDP is below patenfial GDP, We would Expect Sfl} ; A} pmmtial GDP tn fall. I B} wages to rise. C} wages tn falL n} poiential GDP tn rise. E} A and C. An? ...
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