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Midterm+1+VA_AK - Professor Sheffrin Macroeconomics 1B Fall...

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Professor Sheffrin Macroeconomics 1B Fall 2009 Midterm #1 (Version A) Your Name __Answer Key_______________ Part I. (2 points each) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Gross investment in GDP accounting does not include: A) The purchases of plants by firms B) The total level of inventories C) Newly produced homes D) The purchases of equipment by firms 2) When a country runs a trade deficit: 3) Which of the following should not be included in U.S. GDP? 4) A firm has $2 million in capital that depreciates at 10% per year. The firm purchases $200,000 of equipment. Net investment for the firm is: 5) A firm sells its product for $1000, pays wages of $700, buys materials of $100, and has $200 profit. Its value added is: A) $1000 B) $300 C) $900 D) $800 6) Which principle of economics is used in understanding the shape of the short run production function:
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7) What principle best explains the reasons for constructing price indices?
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