252_Final_-_Spring_2010_-_PINK

252_Final_-_Spring_2010_-_PINK - 1. The rate of inflation...

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1. The rate of inflation in the United States is 3 percent per year and the rate of inflation in Europe is 6 percent per year. If purchasing power parity holds true the Euro price of the U.S. dollar will: a) increase 9 percent each year. c) fall 3 percent each year. b) increase 3 percent each year. d) fall 9 percent each year. 2. Monetary policy is ______ in the long run and is ______ in the short run. a) neutral; not neutral c) not neutral; neutral b) neutral; neutral d) not neutral; not neutral 3. Ceteris paribus, a decrease in the rate of growth in the labor force will lead to a permanent ________ in labor productivity and a ______ decrease in the rate of growth in real income. a) increase; temporary c) increase; permanent b) decrease; temporary d) decrease; permanent 4. If the rate of growth in nominal GDP is less than the rate of growth in real GDP, a) the economy is experiencing a deflation. b) labor productivity is rising as the economy is in a boom or recovery period. c) labor productivity is falling as the economy is in a recession. d) the economy is experiencing an inflation. 5. Ceteris paribus, recent increases in the government budget deficit will _____ real interest rates and _______ investment in the United States. a) decrease; decrease d) increase; increase b) decrease; increase e) not change; not change c) increase; decrease 6. Ceteris paribus, recent increases in the government budget deficit will ______ Net Capital Outflows from the United States and will cause a real ________ of the U.S. dollar. a) increase; depreciation d) decrease; appreciation b) increase; appreciation e) None of the above are correct. c) decrease; depreciation 7. A corporation’s earnings are the amount of revenue it receives for the sale of its products a) minus its cost of production as measured by its accountants. Earnings must be paid out as dividends. b) minus its cost of production as measured by its accountants. Earnings may be paid out as dividends or retained by the corporation. c) minus its direct and indirect costs as measured by its economists. Earnings must be paid out as dividends. d) minus its direct and indirect cost as measure by its economists. Earnings may be paid out as dividends or retained by the corporation. 8. Substitution Bias is a problem that emerges in calculation of: a) the GDP Deflator c) Real GDP b) the Balance of Trade d) the Consumer Price Index 9. Compared to bonds, stocks offer the holder ______ risk and _______ expected return. a) lower; lower b) lower; higher c) higher; lower d) higher; higher Econ 252 Final – PINK Page 1 of 6 Spring 2010
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10. The U.S. government recently increased unemployment insurance benefits. This policy will a) cause the short run Phillips curve to shift, but will not affect the long run Phillips curve. b)
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This note was uploaded on 03/03/2012 for the course ECON 252 taught by Professor Robertholand during the Spring '08 term at Purdue University-West Lafayette.

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252_Final_-_Spring_2010_-_PINK - 1. The rate of inflation...

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