sample mid-term 209

sample mid-term 209 -...

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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) 
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Gross  domestic  product is the sum of factor incomes ________ indirect business taxes, ________ subsidies, ________ depreciation.  A) 
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minus; plus; plus  B) 
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plus; minus; plus  C) 
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plus; plus; minus   D) 
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plus; plus; plus  E) 
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plus; minus; minus    2) 
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Consider a  macro model  in which output is assumed to be demand - determined. One situation which may justify this assumption is when   A) 
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all resources in the  economy are fully employed.  B) 
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net exports are  negative.  C) 
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the marginal  propensity to  consume out of disposable income is equal to the marginal propensity to spend out of national income.  D) 
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net exports are  positive.  E) 
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the economy is  operating with some unemployed resources.    3) 
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An  exogenous fall in the domestic price level causes an increase in wealth and  A) 
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a fall in desired  investment.  B) 
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a downward shift in  the AE curve.  C) 
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a rise in desired  consumption.  D) 
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a downward shift of  the net export function.  E) 
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a fall in government  purchases.    4) 
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When  calculating GDP from the expenditure side, which of the following is true of the investment component,  I a A) 
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it excludes  expansions of existing factories  B) 
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it includes changes  in inventories  C) 
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it only includes  business fixed investment  D) 
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it includes the  transfer of houses between individuals  E) 
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it only includes  decumulation of inventories    5) 
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Suppose  aggregate  output is demand - determined. If the business community decreases its planned investment expenditures by $4 billion,  causing equilibrium national income to fall by $8 billion, the marginal propensity to spend must be   A) 
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2/5. 
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B) 
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1/3. 
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C) 
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This note was uploaded on 02/14/2011 for the course ECON 209 taught by Professor Mattieuprovencher during the Spring '09 term at McGill.

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sample mid-term 209 -...

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