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

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Unformatted text preview: YORK UNIVERSITY FACULTY OF ARTS DEPARTMENT OF ECONOMICS ECONOMICS 1U1t'} 3.0 61: INTRODUCTION TO MAOROEDONOMIGS grew [om g—o Gx TEST#1 V1261. 014‘ E FEBRUARY E, 2003 Course Director: Dr. John Paschskis TDTAL WORTH: 25% STUDENT NAME: STUDENTS NUMBER: lNSTRUCTIONS: A. This examination consists of fillyr {50} multiple choice questions. There is only one correct answer. No penalty:r for wrong answers. B. Please answer all questions by marking the appropriate spaces on the comguten'zed ANSWER SHEEP. Use HE pencil only. C. Time allowed: m minutes. TEST t‘l ECONOMICS lillil 3.“ Q WINTER lN'l‘RflDUCTlfiN TUMCRUECDNUMICS PROF I. PASCI'IAKIS Name MULEFLE CHOICE. Choose the one altenutiee that heat enmpletee the statement drawers the questiun. Use the table below in answer the fullmvfng quest-‘13:! is}. Table 19.6 Data Frern Southtott {'25 C, V I" D D '1: “'72. - 4% Price [5} [Cl‘uaatrttitgpr 12— E, lie-m Ease Cu rrent Base Cummt W g) Beat‘l't Towels 9.03 tifll] 12 14 ll Table 2116 give-5 price and quanfitv data for an eetmomv with uni}r rive mnsumpiiun gun-d1: 11.1er I} E): ducks and beach towels. Compute the GDP deflate: tor the cummt year. a; 100 a}. 92.4.? C} 105.5 m was E} 112 2} From u-te data in Table 211m, compute Suuthun's numinal GDPin the cement year. 2} :é S A} $209. 15‘ 315226. 1W (l.15)—+lk1><fia cuter. F _ me... 415+“ -4429? Eilleeurtutbemlculultd givenfltedata. ( 3 C 10-0 1-“ +1 "l Cl") w—LLé 31 In macmecunnmirs, lung runes- 1"" l "“3 "(l ‘l‘ l ‘3 — 3} A} a period st..iil"'it::ientI}r lung [at real GDP to adjust to potential GDP. ll} live veers. C} ten years. B} one veer. E} a pctlod timing which t'enl 501’ is nut the same as pntenfiel GDP. 41 Which one at the tullewlng lecture helps explain why the aggregate demand DJJ'VE has a negative 4) E slope? he the price level falls. it] the guvemn‘let'll: will have to reduce taxes. which will lead in an lncreaee in the amount Purchased. B] the wealll‘l fill people hultlirtg a timed quantity 0F money mummies, causing them to expand their purchases. C} clunteslli' (atrium have an incentive to purchase mere ef the cheaper grinds and-services. D] penple shift to arm-stunting mere goods in the Future and less in the preeml. E] the Bani: of Canada will have to increase the reapply of money. which will lead to an increase in the amount purchased. 5] The value at intermedlale gentle is not counted in GDP 5] E A) became at the tremendous difficult}! in keeping track. uf all the. inteunediate gentle produced. in an ecunurnv as large as that of Canada. E B} tr.- keep item including goods that reduce society's welfare. C} because they are not consumed in the current year. D} hereuee ill it}! are only said in resource markets. 1:] so its to avoid munting their value twice and thereby weighting the value of GDP. He] ft} Consider an count-my starting from a position of {ull employment. Which one {It the followutg tviii o] S E auteur as it “:51!" (It on troprovm-enr in the technology level? A} Art inflationary gap will arise. H) The. price level will {31L C} The long-run aggregate supply curve will shift lettwrard to create the newliong—run equilibrium. DJ Tho love] of real GDP will fall in the Elliott rtm. E} Resource prises wifl rise in the long NHL-shifting titc short-nut aggregate supply curve leftward. T] The market basin: of Econoland consists of IDA, 2113. and SEE. Current prices are 51 per unit of A. 2?] ir— 52 per unitot' B, and it per unit of C. Base your pricesmil f-oreach unit'of A, B. tutti C. Whatis theCPIinthemmmrvoor? w .4- fl 2 l0 ‘1' ‘1‘ 0 +33}:- 3 {$13 Aj'lflfl 5143 \O‘r-“i ”anti *1- 33st??? 53:33 to k] aLOMrsgn or; 7.44.4: m.-—v3u 2‘ EH13 3} To derive the short— I'Ltl't aggregate supply curve, economists hold constant which of thefollotvtng E} E variables? I Livia r... A] Inspector? future profits “F? >3 W F 1—33 % at the price of inputs to C] the price level I'll} tax rates E} the quantity of money '9] Suppose the emnomv's capital stock increases over the your. Therefore, it must be true that 9]: I; A] depreciation is less than mm B] not private domestic investment was positive. % C} depreciation was greater titan net private domestic investment. D} depreciation Was greater than gross private domestic investment. E] out privoto domestic investment was greater titangross private domestic investment. 10} How does unpredictable inflation cause problems? 'lti] 9 fit} The stock Il'tfl'l‘kfll' tolls in value. ii} Resumes aredivemd trom productive activities to tilt evasion. C} The value of rumor starts rioting. D} Resources are diverted from productive activitiea to for-roosting inflation. E} It increases the. vo nobility of the bufi'ness cycle. 1 1] Suppose we observe an increase in the price level and o decrease in real GDP. Which of the 11} E following is a possible explanation? A} The money supply has increased. B} The stock of capital has increased. C] The expectation of future profits has increased. DJ: The expects tion of futme disposable income has him-eased. E} The price of raw materials has increased. s2" 12} The expenditure approach measures GDP by adding together 12} S 2 A) wag-38, salaries and supplmnentary labour hmne, omIroIote proil to. interest and miscellaneous investment inoomogiaroms‘ hicome. subsidies paid by the prominent, indirect tones paid and income of noniorm Lmincorporoted husineaou Bi conrpuootion of employeeo Iontnl income mrpoo'ite profits. net interest, proprietom' inoome indirect taxes paid and copiiol consumption expendimres, and by subtracting subsidies paid by the governmenL C] the value added oi each firm in the eoonomy. D} [he total expendihrm of motors, firms,” not exporters, and by governments at oi] levels. E} wages, salaries and mpplemoitary labour income, corporate profits, interest and niifioellumous invostn'iem income. farmers“ income, and income of nonfat-n [unincorporated hormones. 13] in n cotmtry with a working-age population of 22 million. 11': million are employod, 2 miiiion are 13) 53 Linemployod, and 1 million of the miployed are working port-time, half of whom Wish to work Foil-lime. If SUBBED of Lhooe unemployed are cyclically unemployed, what is the natural rate of unem lo cut? ‘flga P m \‘i §—O¢ l i. f x} 50 iii} 5.5 ercent B] 5.3 Eamon! H :— w (a 3 gig " a. CHLI percent [12(9537 . D] 9.4 Ferment E] none of the above 14} Unerrrploynmt is a social-economic and porsonol problem bocouoe of 14} E A] loss of income and production. B] moon distribution of the cost in the Society. (g C} anincreasein crime mic. D] loss of human capital. Hi all at the above. IE]: Which one of the following wmtld ho croisidered ohucturaliy unemployed? 15] Q. A} a Moon Scotin fishery worker who is searching for o boiler job cloaer to home ll} a steel Worker who is laid oil on who cxpcc‘s to he coiled hock soon C} n Saskatchewan welder who lost her iob what her company reiocaied to B. C. and is currimfly looking for in job D} on. office worker who has lost her ioo bemuse of a general slowdown in economic activity E} none of the above Io] Which of the following is a long-term economic problem? 16} E A} slow economic growth Ii} deficits Ci inflation g D} persistent onemploymenl E} all of the above lIl linominsl GDP increased by it percent during a was: while real GDP increased by only 5 percent, 1?] I 2 then the A} price leyel must have increased by. It‘- percent. 13-} price level remitted steady but real output fell by s PEECEI‘IL Cl nnemploymmt rob: must have fallen during the year. D} price level must have mm by 6 percent l3] price level must have decreased by 6 percent. [3] It the price index was 123 at the end ot'lflflfi and '[35 and the unit of 2006. what was the rate of 18] B inflation tor Elli-ti? A} 3 percent. p. ’L B) 615 percent K g C l 2 g C} 9.4 pfle‘fltl‘ far- : --—-— wfl D} 4.2 percent E} 5.9 peroent l mg l ___ (lo 1 1,5 g 19} Suppose there is an increase in the capital stock. As a result, the 5115 £91 I 2 it} curve remains in the same position but the Les court: shifts to the left Ii} will shift to the right, but the M5 nit-ye sieysin the same position. Cl and the 1.213 curves will both shift to the left “the horizontal distance between the two 5315 9 curvesendthemoMScuwesistbesame D} end the Les mores will both Shift to the right. The horizontal distance between the two 5A3 curves and the two ME mrves is-the some. E} curve remains in the some position but the LAS curve shifts to the right. so: The goverrunent deficit will [all if in} L? A} government revenues rise. B} we buy more from time: oounlries than we sell to them. C] we sell more to other cotuttries than we buy {tom them. D] unemployment rises. F.) the baby bourners continue to run the Bounty. 2 It investment is Poisoned by 21} D .t't} govenunent budget surplus. B} private saving. C] borrowing from the we! of the world. D] all of the nboye. E) A and L‘ ab titre. 12} The Canadian current account equals s so billion surpbis, when 22} E A} (I: node exports $4M billion, imports 53% billion and receives S'lll billion in interest pa yrnentse 5} Con tide exports $42K! billion, imports $381 billion nnd pays 53 billion in interest on ytnents. Cl Canada imports $493 billion. exports sass billion and receives $11] billion in interest E payments. D} Certs-tie imports $403 billion flpflfls $390 billion and peys $11] biltion in interest pay ments. E] Canada exports $403 billion, imports $390 billion and poys $10 billion in interest payments. ._ five":- Esme (.03, i we; 3:14- 23) lithe economy experiences a rise in real GDP, then 23] 4' it] only the increased benefits are ielt. Entrust-mental damage is not a problem due to recent federal regulation. B] the benefits of the increased number mime-notion goods and services are Less than the costs oi environmemal pollution associated with increased industrial output rates. C} more consumption goods and services heroine available, and environmental damage can ocwr. D] the unemployment rate cannot rise over this time period. E} the benefits of Ihe tum-eased munber of consumption goods and services outweigh the costs of environmental pollution associated with Increased industrial output rates. 24} From the following list. choose the item that wouldbe inducted in a currentmeasine ofGDi'. 2-1] g A} the purchase of a previously armed house that was built last year 3} a $2.0“: cheque Erom your aunt Grace C} a social security cheque [or $500 D} income from the sale of your Canadian Seiowftirt shacks E} the purchase of 10 litres of gasoline for your car 25] Long-rim aggregate supply can finesse tor all of the folio wing reasons except: 25} At more aggregate labour hours. I B} an innease in humim capital. C] a fall in the money wage rate. D] the introduction oi new tedinology. E} more capital stoic 26} Which one oi the follownig would be considered cyclically unemployed? 26} E at] a steel worker who is laid off but who expects to be called back soon I'll a Nova Scotia- fishery worker who is seardrhg for a better job closer to home C] it Saskald'tewan 1welder who lost herjolr when her company relocated to B. C. and is currently looking for a jolt D] on office worker who has lost her jot: because of e germ! slowdorm in economic activity E} none of the above 2?} Saving equals income minus 2?} G A} flexes. B] rererurnptlon expenditure. C} net taxes plus subsidies. D] transfer payments. E} not taxes minus consumption expendihite. 23] Since non-market exdunges are excluded from int-eateries of GDP, the GDP measure toads to 23] E A} overestimate the total production of an economy. I3} underestimate the total production of an economy. {1‘} he at little significance in determining the total production of on economy. D} be of little use to anyone but emitter economists. E} place too much 1value on market transactions. 29:111.: aggregate demand curve is a retaliomlfip between A} the price [two] and real GDP dmanded. B} the price level and nominal GDP. k C] real income and real GDP. D} real aggregate expenditures and rottl GDP. E} real prime and real GDP. 30] Which on of the following will derremae the Canadian current account deficit? A} Canada buys Toyotna [mm Japan. [3} Canada buys steal from Japan. C.) Iapan buys wheat from farmers in Canada. D} Canada buys Iaponese Sayings Bonds. E} Iapan buys wheat from {emit Australia. 311 Which of the tottowing Is a etoek? t'tl not investment B] saving Cl depreciation DJ inventories E} none oi line above 32} [n o country 1with o working-age population of 3D million. 13 million are EMPIDYEEL 1 million are mmployed. and 2 million of the employed are working partwtime, half of whom wish to work l'IJll- time. The unamptoyment rate Is in IL! percent. 1 06?. one rcent. '1 £114.?me 32;"— X [ {7'0 4 D11] percent. (W E) none of the above. .13] The correct order of the sequence oi husinees cycle ph anon is A} Expatuiinrt, deviatimt, recessm, trough. B] expansion. peakr trough, deviation. 9 C} Expansion, trough. recession, peak. D} expansion peak. reoession, trough. E] expansion. recession,- trough, peak. 34] In a country with a working- age population of I'll million. 13 million are employed, Limilfion are unemployed, and 1 million of the employed are working partifime. half of whom wish to work mil-time. The size of the labour from is 9 a; ll.5n1illion. ‘ 3:115t5mllliun fl - ‘ {313 'II' . - .5; l t Mt Ut Ulli.l2]ml?:m. \’9 ”if i 1'7 Li 5 “’1" ElZUmilllon. HAS 35} Inflation in defined as 35} D fit} when the average price level is moving neither up not tic-Wu. B} when on important prior: such as the prioe of Crude oil increases. 9 C} ant,r increase in prices. D} it mounted upward trend in the average price lwl'll. E} a nastaioed downward trmttl in the average price level. 315} Real GDP in Ataxia has changed from $1510 billion in EDGE to $12130 billion in no. The omnornic 36] Q gmwlit in Acana is 3002 ix “2:231: \Me ~— rpm?“ 3‘: PM; no: / .. IS‘ 1* \6‘30 E} none of the above. 3?} In a 171111111er with a working-age population of It} million. 13 million are employed. 1 .5.1nillion are 3?} E rutentpioyed, and I million of the employed are working par-mime. hell oi whom wish to wort: hill—limo. The labour force participation rate is A] 65 perormt. :13 B] 515 percent. )3 . 9 C} 355 percent. lLll r" j: 3" (2/3— D} '5'25 peruent. El none of the above. #2,:0 33) 0f the following items, which one would he oonsiderocl an investment in the national expondinue 38) E 2 acoounts? A} the purchase Dflt Canadian governmmtl bond B} the ptu‘dtase of tilt} shares of Canadian stock on lineToi-onto Stock Exchange C) the Ford-lose of n iDfl—year—old house that was put on the protected historic sites list in the 9 year in question D} the purehtute of a new van by a potter who packs it with his wares and travels to art shorts on weekends E] all of the Above 39] A busineafi cycle occurs 39} E E h] when real GDP rim for more than 2 quarters. B] when real GDP falls for more than 2 quarters. 8 C] as a remit of the riot: in the economic potential to produce good: and services. D} as a mll oi" the irreE-ular fluctuation of potential GDP around teal GDP. E} as a result of the irregular fluctuation oi real GDP around potential GDP. 4H} If real GDP is below potential-GDP. we would expect till} i 2 A} potential CD? to rise. B} Wages to rise. Cl Influential GDP to tell. D} wages to fall. E) A and C 41] The Consu met Price lt'tt‘lex measures inflation by use-Lg fit} all goods and services that are predated, and using-a curramt year baskiet. B} all goods and services that are Fromm and using e base year basket. only conaunpfion goods anfi services purehafld. and using a current year basket. WW eonsulnption goods and services prurd'tased, an»:l using a base year basket. l E}Aam:|D_ 42} The productivity of latent: can be mounted by computing the filth] of GDP to Q A} the number of people employed. B} the total population in the economy. Cl the ntunher of'people in the working-age population. D] the number of people in the labour force. El aggregate hours. 43] Welt of the following is a benefit of ECIH'IL'HTIlI'.‘ growth? 56 A] more consumer goods such as colour television sets B] more expent’iiture fighting pollution C] more housing D] more health care in all of theabovo In] Which of the feltewlng wmfld be counted as unanplory‘lttl in Canada? l? A] Maurice has been laid offfroln his job for ED melts hut expects to he called back soon. 3] Kanhaya has stopped looking For work sine: he was unahIe-to find a suitable iob during a two-vrnonth search. C} Begum has been. laid off from his iobbut does not expect to he called lea-dc, end is not looking. D] Sharon is a milege student with no job. E} Doris only works five hours a week but is looking for a full-time isle. 45} The existence of discouraged workers in the economy means that the official measures of unemploymenl \x A} tend to understate the unemployment problem. s} tend to overstate the unemployment problem. C] are tutefleeted- El} omit the effect of part- time workers. E] are effective in trn clung emrmmic eeltyity. as] 'the 1.I'nlue of money varies l? A} direrle with the inflation rate. it} inversely with theinftation rate. C} neither directly nortrwersely with the inflation rate. It} direetty with the unemployment rate. E] as the supply of gold maria. t?) The natural rate at unemployment is C/ A} the same as wettest unemployment. E} the rate at which unetnptuyment is equal to I] perms-u. Cl the rate at which cyclical unemployment is equal to ll percent. D} the rate at whid't cyclical immployment is equal to t5 percent. E} none at the above. its}; 4H] (Inmplete the following sentence. Real GDP A] is rut actuate mew cit emftfimix: wdfiare. B} everestimtes manic welfare because it implies cannon-time previde useful services to the WHEY. C} overestimates econon'tic welfare it there is pollution. D} overestimates cum-term: welfare if there is an underground economy. E] turret-ta nominal GD P- wilh purchasing pewer Pll'll'f wires. 49} An influtimuty gap [5 the ml by which A] the price level must adjust to ufltieve full employment. 5] the supplyr curve must increase to achieve full empluwnent' ate given price level. C} real GDP exceeds potential .GlJP. D} the demand curve must increasr: tu achieve full employment. at a given price level. E} putenflal GDP exceeds real GDP. 503 All else Eminnt, an increase in the quantity of mane}? means. that A} the aggregate supply curve will shift to the right. 3} the aggregate supply mm: will shift tn the left. C]: there will be a. movem dawn an aggregate demand curve. D} the aggregate demand curve wilishiit tn the right. El the aggregate demand curve will shift to the left. m C/ and? ...
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