EC102SampleMidterm - EC102 Fall 2008 Sample Midterm 2...

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1 EC102 Fall 2008 Sample Midterm 2 Student: ___________________________________________________________________________ 1. A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2000 found a job paying $30,000. The CPI was 1.68 in 2005. The 1972 graduate's job paid ____ in nominal terms and ______ in real terms than the 2005 graduate's job. A. more; less B. more; more C. less; the same D. less, more E. less, less 2. Which of the following statements is correct ? A. If Nominal GDP increases, then Real GDP must increase. B. If Nominal GDP decreases, then Real GDP must increase. C. If Real GDP decreases, then Nominal GDP must decrease. D. If Real GDP decreases, then Nominal GDP must increase. E. Nominal and Real GDP can change either in the same direction or in opposite directions. 3. Deflating a nominal quantity is the process of dividing a ____ quantity by a ______ in order to express the quantity in ______ terms. A. nominal; real quantity; nominal B. nominal; nominal quantity; real C. real; nominal quantity; real D. nominal; price index; real E. real; price index; nominal 4. Which of the following is evidence of the diminishing return to labor (also known as decreasing labor productivity)? A. Ceteris paribus , when a company hires a new worker, the company has to pay that worker the same wage that it pays the workers hired previously. B. Ceteris paribus , when a company hires a new worker, that worker is even more productive than the worker hired previously because the two workers are able to work together. C. Ceteris paribus , when the wage for worker rises, a company is inclined to hire less workers. D. Ceteris paribus , when a company hires a new worker, that work is less productive than the worker hired previously because they must share the same equipment. E. Ceteris paribus , when the wage for a worker rises, the worker wants to more hours.
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2 5,Suppose that the US labor Statistics no longer counts people as unemployed who search for work only at places where they are unlikely to be hired . Then: a. the official rate of employment would be higher. b. the official labor-force participation rate would not change. c. the official labor-force participation rate would be higher. d. the official working-age population would be higher. the official rate of employment would be lower 6. If the Boskin Commission's conclusion that the CPI _____ the "true" inflation rate is correct, then the true improvement in living standards over time is ___________________. A. understates; overestimated B. understates; underestimated C. measures; overestimated D. overstates; overestimated E. overstates; underestimated 7. Who of the following would be considered a discouraged worker ? A. Ray wants to work forty hours per week, but can only find work for twenty hours per week.
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EC102SampleMidterm - EC102 Fall 2008 Sample Midterm 2...

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