is2010 m_1 q - Dr. V.R. Bencivenga Economics 304L Feb. 25,...

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Dr. V.R. Bencivenga NAME: ______________________________ Economics 304L EID: ______________________________ Feb. 25, 2010 MIDTERM #1 Instructions : Record your answers to the multiple choice on a SCANTRON. Answer the problems in the spaces provided below. For the problems, show your work to receive credit. There are twenty-five multiple choice (100 points) and four problems (100 points). You may use a calculator and a one-page “formula sheet.” The exam will last 75 minutes. Good luck! Multiple choice (4 points each) 1. Which of the following transactions take place in the goods market? An auto maintenance and repair shop a. buys motor oil to use in oil changes for its customers. b. rents a tow truck for a day. c. buys a hydraulic lift. d. hires a second manager. 2. Which of the following would be included in gross private domestic investment? a. Toyota builds a manufacturing plant in San Antonio. b. Nike builds a factory in Indonesia. c. The US government buys Hummers for the army. d. Jet Blue decides to shrink its fleet and sells some of its planes to American Airlines. 3. Which of the following are final (as opposed to intermediate) goods or services? a. Bill and Melinda Gates hire a lawyer to draft their wills. b. Ford purchases computer chips to control engine timing in its cars. c. Cannon contracts with UPS for UPS to package and distribute cameras for a promotional sale. d. all of the above 4. During 2009, General Electric invests $30 million in a new factory and new equipment for manufacturing washing machines and dryers. It also purchases an old warehouse for $1 million. GE starts 2009 with $5 million of finished but unsold washing machines and dryers, and it ends 2009 with $2 million of finished but unsold washing machines and dryers. During 2009, GE’s buildings and equipment depreciate by $10 million. For 2009, gross investment by GE equals _____, and net investment equals _____. a. 30; 20 c. 28; 15 b. 31; 18 d. 27; 17 5. Which of the following is true ? If China has a trade surplus a. domestic investment exceeds national saving. b. national saving exceeds domestic investment. c. private saving exceeds domestic investment. d. domestic investment exceeds private saving.
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2 6. Real and nominal GDP for two years are below. The real growth rate between years 1 and 2 is _____ %, and the inflation rate between years 1 and 2 is _____ %. a. 20, 50 b. 30, 20 c. 30, 50 d. 50, 20 Year 1 Year 2 Nominal GDP 1300 2340 Real GDP 1000 1200 7. Suppose that from one year to the next, all prices double, while all quantities produced remain the same. Then real GDP _____, and nominal GDP _____. a. remains the same; remains the same c. doubles; remains the same b. remains the same; doubles d. doubles; doubles 8. The price of a computer increases 5% over some period. During this same period, the GDP deflator increases 20%. The relative price of the computer _____ by _____. a.
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is2010 m_1 q - Dr. V.R. Bencivenga Economics 304L Feb. 25,...

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