Sample Final Key - ARE 138.f NAME Section A consists of 13...

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ARE 138 NAME: _ Section A consists of 13 multiple choice questions worth 10 points each. "' .. f Section B consists of 8 problems worth 40 points each. Please show your work for full credit. If you can't solve one step of a problem, you can still get credit for the remainder if you use the correct method. Total points possible = 450.
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Part I. Multiple choice (10 points each) 1. Many critics have charged that GOP (gross domestic product) is an inadequate and misleading indicator of economic progress. What is the basis for this criticism? a. GOP does not adjust for negative externalities that may be caused by economic activities. b. GOP does not account for depletion of natural resources used in production. a~Both a and b. 'a:' Neither a nor b. 2. Suppose Country X has been accused of dumping rice in the world market. What action by country X might have led to this charge?' a. Country X recently began a domestic quota program for rice. b. Country X recently established a rice support price for its producers, in which excess rice is purchased by the government and sold abroad. c. Country X recently imposed an export tariff on rice. ® Either a or b. e. Either a, b, or c. 3. Tony recently noticed that Brazilian government bonds are yielding 10% interest/year, while US government bonds are yielding only 2%. He decides to exchange his dollars for Brazilian reals (the Brazilian unit of currency), invest in Brazil, then exchange the proceeds back into dollars at the end of the year. Today's exchange rate is eo = 2.25 reals per dollar. What possibility should Tony consider in choosing this strategy? (cl)The exchange rate is likely to rise above 2.25 reals/dollar by the end of the year. Y The exchange rate is likely to fall below 2.25 reals/dollar by the end ofthe year. c. The US is likely to experience higher inflation than Brazil during the upcoming year. d. None of the above. 4. What controversial environmental problem has been associated with shrimp harvesting in recent years? a. Killing of dolphins. b. Mercury contamination from spilled fuel. C9 Drowning of sea turtles. d. All of the above. 5. Which of the following is NOT an actual international incident that has been in the news recently? (C:\ US banned importation of Mexican pineapples due to alleged infestation by insect pests. Y All of the above are actual recent news events.
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