209final - Questions of this SAMPLE exam were randomly...

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Questions of this SAMPLE exam were randomly chosen and may NOT be representative of the difficulty or focus of the actual examination. The professor did NOT review these questions. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The real rate of interest is equal to the nominal interest rate A) plus the price level. B) minus the rate of inflation. C) plus the risk ratio. D) multiplied by the rate of inflation. E) divided by the price level. 2) Economic booms can cause problems as well as create benefits because they are often accompanied by A) pressure on the government budget deficit to rise. B) rising real interest rates. C) deflationary pressures. D) excessive labour - force participation. E) inflationary pressures. 3) In macroeconomics, the "output gap" is the difference between A) output in the current year and output in the base year. B) real GNP and real GDP. C) output and employment. D) potential real national income and actual real national income. E) real and nominal national income. 4) Assume that Sarah agrees to lend $100 to Sam for one year. Sam agrees to pay Sarah $110 at the end of the year. If inflation over that one year is 7%, what real rate of interest does Sarah earn on her $100? A) 17% B) 7% C) 10% D) 13% E) 3% 5) The group that tends to be most hurt by unexpected inflation is A) banks. B) individuals with unindexed pensions. C) employers. D) fixed - income earners. E) both B and D are correct. 6) An output gap with Y < Y * A) is known as an inflationary boom. B) tends to force prices up. C) results in a loss of output due to unemployed resources. D) occurs when there is excess demand. E) is desirable because it keeps wage costs low. 7) Suppose that a country's population is 30 million and it has a labour force of 15 million people. Assuming it has 1.35 million people unemployed, the country's unemployment rate is A) 2.5 percent. B) 3.3 percent. C) 4.5 percent. D) 6.7 percent. E) 9.0 percent. 8) If nominal GDP in some year is $3800 and the GDP deflator for the same year is 152, then the real GDP for that year is A) $2280. B) $2500. C) $5776. D) $3500. E) $3800. 1
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9) An example of a transfer payment is A) payments to senior citizens from Old Age Security (OAS). B) government payments of salaries to police officers in the vice squad. C) government payments of salaries to Members of Parliament. D) private firms' payments of dividends. E) government spending on military equipment. 10) Suppose that the nominal national income in some country increased by 10 percent during the year, when inflation was 5 percent. Therefore the real national income A) fell by 10 percent. B) fell by 5 percent. C) was unaffected.
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209final - Questions of this SAMPLE exam were randomly...

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