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: A) It must also have a trade surplus B) It must sell assets to individuals or governments in foreign countries C) It must have a corresponding budget deficit D) It must have a government budget surplus 3) Which of the following should not be included in U.S. GDP? A) Wine produced in France and sold to the United States B) A car manufactured in the United States in a Japanese-owned factory and sold to a U.S. consumer C) The state of California’s payments to UC professors D) A city government’s payment to police officers 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: A) $200,000 B) $2.2 million C) $0 D) $1.8 million 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: A) Opportunity cost B) Real-nominal C) Diminishing returns D) Voluntary exchange
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7) What principle best explains the reasons for constructing price indices? A) Real-Nominal principle B) Principle of opportunity cost C) Principle of diminishing returns D) Marginal principle 8) Trade between nations is best explained by: A) Absolute advantage B) Marginal principle C) Comparative advantage D) Real-Nominal principle 9) Which of the following is an example of a consumption expenditure? A) the construction of a new fire station B) the purchase of a ticket to a Sacramento King’s game C) the purchase of a new police vehicle D) the salary paid to the governor of Illinois 10) Net exports include goods produced A) domestically that are sold domestically, less goods produced domestically that are sold abroad. B) domestically that are sold abroad, less goods produced domestically that are sold
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Midterm+1+VA_AK - Professor Sheffrin Macroeconomics 1B Fall...

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