203-mt-winter10-v1a

203-mt-winter10-v1a - Econ 203: Mid Term Exam Name: Winter...

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Econ 203: Mid Term Exam Winter 2010 (version 1) Duration: 60 minutes Name: St. ID: 1) In a short - run macroeconomic equilibrium, real GDP exceeds potential GDP, so if aggregate demand does not change the A) long - run aggregate supply curve will shift leftward as the money wage rate falls. B) short - run aggregate supply curve will shift rightward as the money wage rate falls. C) short - run aggregate supply curve will shift leftward as the money wage rate rises. D) long - run aggregate supply curve will shift leftward as the money wage rate rises. Answer: C 2) If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases A) consumption expenditure by $18.00. B) consumption expenditure by $0.80. C) saving by $0.20. D) consumption expenditure by $8.00. Answer: D 3) If there are no taxes or imports and MPC = 0.67, the multiplier is A) 1.5. B) 6. C) 0.33. D) 3. Answer: D 4) The short-run aggregate supply curve is upward sloping because: A) of the net export effect B) higher price levels create incentives to expand output when resource prices remain constant. C) h igher price levels create an expectation among producers of still higher price levels D) of the interest-rate effect Answer: B 5) An example of "investment" in computing real GDP using the expenditure approach is the purchase of A) a new set of tools by an auto mechanic, for use in repairing cars B) a 100 year old house by a married couple C) computer chips by Dell to put in their personal computers D) 100 shares of IBM stock Answer: A 6) When a student finishes college and begins looking for work, A) cyclical unemployment increases. B) structural unemployment increases. C) frictional unemployment increases. D) frictional and cyclical unemployment increase. Answer: C 7) If labour force in Utopia grows by 7 per cent and employment grows by 5 percent unemployment rate will: A) increase by about 2 percent. B) remain unchanged. C) fall by about 2 percent. D) rise by about 12 percent. Answer: A 1
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8) For a household, the marginal propensity to save plus the marginal propensity to consume A) equals 1. B) equals a number that is larger the larger the household's disposable income. C) equals 0. D) equals a number that is smaller the larger the household's disposable income. Answer: A 9) If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $100 billion in the second round, the multiplier in the economy is: A) 2 B) 2.5 C) 5 D) 1.33 Answer: A 10) One reason that the aggregate demand curve has a negative slope is because A) the amount of money in the economy increases when the price level rises. B) firms supply less when prices rise. C) people buy more foreign goods when the domestic price level rises.
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203-mt-winter10-v1a - Econ 203: Mid Term Exam Name: Winter...

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