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Exam 1 - Fall 2007 - , 7 ,rt' if; y?\ -\Part 1. Multiple...

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Exam 1 - Fall 2007

Exam 1 - Fall 2007 - , 7 ,rt' if; y?\ -\Part 1. Multiple...

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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: 0Jack 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 andmaterials for this course cost $500. The course runs for 8 weeks for 4 hoursper week. ' 5 ,r 7,} i 1:;The total economic cost ofthe class is: 1 ~ '1" ~60 2",? we 5% 9f" 75 a. $500. wb. is the opportunity cost.{El/0980 , ,,d. bothb and c are correct. . 1 ; ~ 1.7 (rThe implicit cost is:, a(fl/$480 ib. 1 1/01" H 4..- . ,7 w0. $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 W2006 100.0 r ~ V Z 2007 102.0 ., .film. . 5)? ttit: '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 yourloan is 8% and the rate of ination is 2.5%, What is the real rate of interest you arepaying? , I, , , ga. 8% ' (Ismsb. 2.5% /t 6: 5.500 7 If 15:,L L \ 1 3 3;] an... :4 u 1 N;l 4 " Jm ~ 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 , a7. During the great depressionm a Ination was a problem.3:7 Deation was a problem.in??? V8. 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-356BI 83c. 90d. 141e. 1539. 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 \et1\xj 45'll.12.l3.14.People who enjoy high standards of living usually have all of the followingEXCEPT:a. more and better consumer goods.b. longer life expectancies.0. better general health.(1. higher literacy rates.@freedom from scarcityMost economists who have studied it believe that the Great Depression wascaused 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 cyclea. 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 thatillustrated how a business cycle could occur. The resulting cycle produced by theDzgame 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 betterare counted as part of:a. -. frictional unemployment.[: Structural unemploymentc. 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?lJ m/ 1 i 19y :\ 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.ELr 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" .) Number. of people employed 20 millionNumber of people unemployed f _ I 2 millionand ..... _. , 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 billionPopulation 0.3 billionEmployed 0.15 billion In 1958 a friend and I turned in soda bottles for 2 cents each until we had enoughmoney 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 datacalculate the real price of the walkie talkies in 2007 dollars. (i.e. use 2007 as thebase ye ar). Year Ql1958 28.92007 203.2 8. What is the relationship between a countrys level of pollution control and its percapita income? / l 1" t A " ~ r, . f n v LelvrL? f4 6!U i' <15"; " .. 3will. (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 gasoline1Housing, per square ft. gasoline, per gallonmillions sq. millions offt./Lear gallonsjyear2005 4 100 $1.00 + 7 $2.75 l2006 115 l $1.20 8 $2.25Assuming the economy only produces housing and gasoline, calculate @@E in 2005 and 2006 using 2005 as the base year. (8 points) r 2? i a? r . 0. 3. Given the following data: Marlret 2005 2006Basket_ Quantity/Month Price (SS/unit) Price ($/unit)Housing 2,000 sq. ft. $1.00/sq. ft. $01.10/sq. ft.Transportation 1,500 miles $0.50/mile $0.45/mileFood L240,000 calories 1 $0.003/calories $0.004/caloriesa. Calculate the CPI for 2005 and 2006 using 2005 as the base year. (5oointS) / J I. mar 4.Norma}. (as opposed to hyper) ination imposes costs on the economy due tofour 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:! WQSLBGOHLZl 666 9091 EM ROLDQO 12345678910 E803E30:[7']:2::20::6: ,_._...___.._. . .:11 4m :;>< 0:: i,1 03> xa :W rn"7 >m [7r" 20m >-~ 00 :0n mg x3 P1 a' m z>n -l :09 m x_< mss-:52kg:g05>:90:my4%o'91wnngam swgod 99L .Asa uo eug; 33:1 319: sue guo azugod ennaefqns alqgssod 3mm, mew . S {/31m33>E: :2:23.043w'9Z:ammEwe23,3cm0:025%$93We 'IIDNHJZ'ON 350 v, .1:F\z\2J1IWBank/EH 33008HALLOEHSHS 33H 01. LUOO'SLUJOMOJLU'BOS'MMMENI'INO 8308038 Part IV. Extra Point Question (16 points)Given the following data evaluate how the economy is doing With respect to the threemacroeconomic goals. Year Nominal GDPIr CPI Labor Force Employed Billion S millions millions2000 _ 10,000 I 100.0 200 I 1902007 10,300 [ 105.0 204 l 194 r3 ir\;{]}: "eifg/m 7IKA \: olfalj...
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