Sample_exam_II_2

Sample_exam_II_2 - 1. Which of the formulas below correctly...

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1. Which of the formulas below correctly describes the relationship between Present Value (PV), Future Value (FV), and the period rate of time discount or interest rate (r), where the present and future values are N periods apart: a) i = [PV/FV] 1/N -1 b) FV=PV/(1+r) N * c) FV= PV(1+r) N d) i = [FV/PV] N - 1 2. 10,000 career women decide to quit their jobs and become full time “stay at home” Moms. This would cause the unemployment rate to _______ and the labor force participation rate to ________. a) rise; rise * b) rise; fall c) fall; rise d) fall; fall 3. An increase in unemployment benefits will: * a) increase both frictional and the natural rate of unemployment. b) decrease frictional unemployment, but leave the natural rate of unemployment unchanged. c) increase frictional unemployment, but leave the natural rate of unemployment unchanged. d) decrease both frictional and the natural rate of unemployment. 4. Long-term bonds are generally ______ risky than short-term bonds and so pay _____ interest. a) less; higher b) less; lower * c) more; higher d) more; lower 5. The present value of expected future earnings of Acme Corporation is greater than the value of all outstanding shares of Acme stock. Acme’s stock is __________, which means traders will consider _______ it. a) overvalued; buying c) overvalued; selling b) undervalued; selling * d) undervalued; buying 6. Following an improvement in technology we would expect a _________ increase in the rate of growth of aggregate output and a _________ in the level of per-capita income. a) permanent; rise c) permanent; fall b) temporary; fall * d) temporary; rise 7. Following a decrease in the savings rate we would expect a _________ decrease in the rate of growth of aggregate output and a _________ in the level of per-capita income. a) permanent; rise c) permanent; fall * b) temporary; fall d) temporary; rise 8. Following a decrease in the rate of growth in the population we would expect a _________decrease in the rate of growth of aggregate output and a _________ in the level of per-capita income. * a)
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Sample_exam_II_2 - 1. Which of the formulas below correctly...

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