ECON 252 Final - Spring 2010

ECON 252 Final - Spring 2010 - 1. GDP is defined as a) the...

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1. GDP is defined as a) the market value of all goods and services produced within a country in a given period of time. b) the market value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. c) the market value of all final goods and services produced within a country in a given period of time. d) the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 2. Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $2 of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $5. Neither firm had any inventory at the beginning of 2007. During that year, Rolling Rawhide produced enough rawhide for 1000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for $1500 and promised to buy the remaining 25% for $500 in 2008. Chewy Chomp, Inc. produced 750 dog chews during 2007 and sold each one during that year for $5. What was the economy's GDP for 2007? a) $3750 b) $4250 c) $5250 d) $5750 3. Anna, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included a) in both German GDP and U.S. GDP. b) in German GDP, but it is not included in U.S. GDP. c) in U.S. GDP, but it is not included in German GDP. d) in neither German GDP nor U.S. GDP. 4. Compared to bonds, stocks offer the holder ______ risk and _______ expected return. a) lower; lower b) lower; higher c) higher; lower d) higher; higher 5. Ceteris paribus, an improvement in technology will lead to a _______ increase in labor productivity and a ______ increase in the rate of growth in real income. a) temporary; temporary c) temporary; permanent b) permanent; temporary d) permanent; permanent 6. In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct? a) When 2006 is chosen as the base year, the consumer price index is 90 in 2007. b) When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007. c) When 2007 is chosen as the base year, the consumer price index is 100 in 2006. d) When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007. Econ 252 Final – BLUE Page 1 of 7 Spring 2010
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In the countries of Ricardoville and Smithland two goods are produced: Wine and Cheese. The hours of labor required to produce bottles of wine and pounds of cheese in these countries are shown in the table below: WINE (Hours/Bottle) CHEESE (Hours/Pound) Ricardoville 6 4 Smithland 4 3 7. A free trade agreement between these two countries would be opposed by: a) producers of wine in Ricardoville. b)
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ECON 252 Final - Spring 2010 - 1. GDP is defined as a) the...

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