Exam 1 - fall 2007

Exam 1 - Fall 2007
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Unformatted text preview: , 7 , rt' if; y? \ -»\ Part 1. Multiple Choice (be sure to marklyour exam as well as your scantron) (2 points each) Answer questions 1-3 using the following information: 2. Answer question 4 using the following informalion: 0 Jack works evenings at a job and can make $15 an hour (including tips). Suppose he decides to take an EMT class at the VoTech. The tuition and materials for this course cost $500. The course runs for 8 weeks for 4 hours per week. ' 5 ,r 7,} i 1:; The total economic cost ofthe class is: 1» ¥ ~ '1" ~60 2",? we 5% 9f" 75 a. $500. w b. is the opportunity cost. {El/0980 , ,, d. bothb and c are correct. . 1 ; ~ 1.7 (r The implicit cost is: , a (fl/$480 i b. 1 1/01" H 4..- . ,7 w 0. $980 l _ d. $0 ~ 52; The explicit cost is: a. $980 'b. $500 'c. $480 : d. none of the above. " 41,: ' " Year 921 {M w W 2006 100.0 r ~ V Z 2007 102.0 ., . film. . £5)? tt it»: '1 as Average prices are 20 percent higher in 2006 than in 2007. W Average prices are 2 percent higher in 2006 than in 2007. c. The rate of ination is 2 percent between 2006 and 2007. (1. both b and c are correct. If you borrow money to buy a car and the interest rate you are paying on your loan is 8% and the rate of ination is 2.5%, What is the real rate of interest you are paying? , I, , , g a. 8% ' (Isms b. 2.5% / t 6: 5.500 7 If 15:, L L \ 1 3 3;] an... :4 u 1 N; l 4 " Jm é ~ M... . J none of the above. y :53 6. During; the great depression Unemployment fell. (p.77 "{EQThe unemployment rate rose as high as 25%. CL? The unemployment rate never got as high as 10%. " df Britney Spears fell into a funk. «» 1 .m a "r {\xfi , a 7. During the great depression m a Ination was a problem. 3:7 Deation was a problem. in??? V 8. Given the following data for the economy, compute the value of GDP. 4* E Government purchases of goods and services 10 A Consumption expenditures 7O i a l? Exports 5 4, <2; farm Change ininventories - ~7 i a Construction of new homes and apartments 15 A? ll Imports ' , ' l2 t1 Gov ernment payments to retirees 17 Tl? Business fixed mam ent 9 Sales of existing new homes and apartments 22 tap-356 BI 83 c. 90 d. 141 e. 153 9. Ination was a major problem in the United States during the: a. 1950s. p. 1960s. m {6319705. L9 3819805. 7 e. 19903. 10. Human capital is: ah factories and machinery used by humans in the production process. "ibjthe talents, training, and education of workers. d. nancial resources available to humans for investment. 6. factories and machinery made by workers. f. the total savings of all workers currently employed \ e t1 \xj 45' ll. 12. l3. 14. People who enjoy high standards of living usually have all of the following EXCEPT: a. more and better consumer goods. b. longer life expectancies. 0. better general health. (1. higher literacy rates. @freedom from scarcity Most economists who have studied it believe that the Great Depression was caused by: a. the stock market crash. b. the underlying instability of market economies. c. a sharp decline in average labor productivity. El) poor economic policymaking. e. illegal immigration. The business cycle a. consists of an expansion followed by a contraction. (Lijionsists of an expansion followed by a receSSiOIl- c. consists of an expansion followed by a depression. d. All of the above could be true. In the video The Business Cycle MIT business students played a game that illustrated how a business cycle could occur. The resulting cycle produced by the Dzgame was caused by: The teams overreaction to a one time increase in the level of orders. b. A continuing increase in the level of orders. c. Fluctuations in the level of orders. d. the fact MlT business students are not very bright. In the video Unemployment people who quit a job to look for something better are counted as part of: a. -. frictional unemployment. [: Structural unemployment c. cyclical unemployment. d. temporary employment. Part II. Short Answer and Calculation (4 points each) 1. What is the relationship between the price of a good and its scarcity? l J m / 1 i 19 y :\ Dene Opportunity Cost Vl/LAQ MA- 5215" K. . 67 ,i ,t s 3 MON {vim/{j a" WWW at} 4;; Dene ination a]; :f 4w) Q: (to: it"? fl (3 CDM.£EL r m Given the following data calculate the unemployment rate (express it as a percent) Pgr {mp 1'" '» (9&4; r\Populat;Londxryearsrof"agE'0lder'M "100mil'lion" é.) Number. of people employed 20 million Number of people unemployed f _ I 2 million and ..... _. , z ,, """"" :1 y s 1 1., w Dr? V i 65%;: xx in. . m Given the following data calculate average labor productivity. Real GDP $12,000 billion Population 0.3 billion Employed 0.15 billion In 1958 a friend and I turned in soda bottles for 2 cents each until we had enough money to buy a set of wireless walkie talkies that were advertised in a comic book. The price of the walkie talkies was $2.50. Given the following data calculate the real price of the walkie talkies in 2007 dollars. (i.e. use 2007 as the base ye ar). Year Ql 1958 28.9 2007 203.2 8. What is the relationship between a countrys level of pollution control and its per capita income? / l 1" t A " ~ r, . f n v LelvrL? f4 6! U i' <15"; " .. 3 will. (air-"n. mw this. Part III. Longer Answer and Analysis l. The Soviet Union had abundant supplies of economic resources. Why did it fail? (There were two main causes) (6 points) a- llama . Given the following data: .Year Quantity of Price of housing Quantity of Price of gasoline1 Housing, per square ft. gasoline, per gallon millions sq. millions of ft./Lear gallonsjyear 2005 4 100 $1.00 + 7 $2.75 l 2006 115 l $1.20 8 $2.25 Assuming the economy only produces housing and gasoline, calculate @ @E in 2005 and 2006 using 2005 as the base year. (8 points) r 2? i ° a? r . 0. 3. Given the following data: Marlret 2005 2006 Basket _ Quantity/Month Price (SS/unit) Price ($/unit) Housing 2,000 sq. ft. $1.00/sq. ft. $01.10/sq. ft. Transportation 1,500 miles $0.50/mile $0.45/mile Food L240,000 calories 1 $0.003/calories $0.004/calories a. Calculate the CPI for 2005 and 2006 using 2005 as the base year. (5 oointS) / J I. mar 4. Norma}. (as opposed to hyper) ination imposes costs on the economy due to four factors. List and briey explain each of these factors: (12 points) a. 9002 NOLFVHOdHOO NOELLNVOS @ (QSLSLQG 'ON .chx S'r 'GSAHESBH SLHSIB TIV % NOLLOSHIG SIHL 033:! W QSLBGOHLZl 666 9091» EM ROLDQO 1 2 3 4 5 6 7 8 9 10 E803 E30: [7'] :2: :20: :6: ,_._...___.._ . . . :11 4m :; >< 0:: i, 1 03> x a :W rn "7 >m [7 r" 20 m > -~ 00 :0 n mg x 3 P1 a ' m z> n -l :0 9 m x _< m ss- :52 kg: g 05> :90: my 4% o '91 wnngam swgod 99L . Asa uo eug; 33:1 319:» sue guo a zugod ennaefqns alqgssod 3mm, mew . S {/3 1m 33> E: :2: 23 .04 3w '9 Z :a mm Ewe 23,3 cm 0:0 25% $93 We 'IIDNHJZ'ON 350 v, .1: F \ z \ 2 J 1 I W Bank/EH 33008 HALLOEHSHS 33H 01. LUOO'SLUJOMOJLU'BOS'MMM ENI'INO 8308038 Part IV. Extra Point Question (16 points) Given the following data evaluate how the economy is doing With respect to the three macroeconomic goals. Year Nominal GDPIr CPI Labor Force Employed Billion S millions millions 2000 _ 10,000 I 100.0 200 I 190 2007 10,300 [ 105.0 204 l 194 r 3 i r\;{]}: "eifg/m 7 IKA \: olfalj ...
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