ECON 104 Sample Test CH6

ECON 104 Sample Test CH6 - MACROECONOMICS — ECON 104 —...

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Unformatted text preview: MACROECONOMICS — ECON 104 — Name # ‘ George Mason University Last Name, First Name Not Student ID Sample Test Chapter 6 - Thursday 7:20 — 10:00 PM — Instructor: EC Holt 26 “February 2004, When you are finished, sign pledge below and turn in both this test and your Scantron. Honor Pledge: [have neither given nor received aide on this exam. Signed: (Student's Signature) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) 2) In the macroeconomic long run, A) GDP always is below potential GDP. 13) output always is above potential GDP. C) there is full employment and real GDP is equal to potential GDP. D) there is full employment with no unemployment. 3) The long—run aggregate supply curve shows the A) maximum GDP the nation will ever produce. B) level of output for which real GDP equals nominal GDP. C) level of real GDP associated with a constant price level. D) full—employment level of real GDP. 4) Which of the following is true about the long—run aggregate supply curve? A) It shOWS the relationship between the price level and real GDP when wages and other costs are at an equilibrium level. B) It is vertical at the level of potential GDP. C) It does not shift in response to temporary changes in aggregate demand. D) All of the above are true. =100) Price level (GDP deflator, 1996 o 9.0 9.5 10.0 10.5 11.0 11.5 Real GDP (trilli f 1996 dollars} 5) In the figure above, potential GDP equals A) $10.5 trillion. B) $10.0 trillion. C) $9.5 trillion. D) None of the above answers is correct. 6) [n the figure above, the economy is at pointA when the price level rises to 120. Money wages and other resource prices remain constant. Firms are willing to supply output equal to A) $10.5 trillion. B) $10.0 trillion. C) $9.5 trillion. D) None of the above answers is correct. 7) In the figure above, the economy is at point/1 when the price level falls to 100. Money wages and all other resource prices remain constant. Firms are willing to supply output equal to A) $10.0 trillion. B) $9.5 trillion. C) $10.5 trillion. D) None of the above answers is correct. 8) A change in the full—employment quantity of labor the short—run aggregate supply curve and the long-run aggregate supply curve. A) shifts; does not shift B) shifts; shifts C) does not shift; does not shift D) does not shift; shifts 9) The short—run aggregate supply curve shifts because of changes in all of the followingEXCEPT A) money wage rates. B) technological progress. C) the price level. D) the capital stock. 10) An increase in the money wage rate A) decreases the longwrun aggregate supply. B) increases the long—run aggregate supply. C) increases the short—run aggregate supply. D) decreases the Short—run aggregate supply. g3 g LAS SAS1SAS _ “— 0 3 S s a: W Real GDP Real GDP Figure A Figure B E LASQ [143151450 E 9 - sx-xs-E 9 a- d: Real GDP Real GDP Figure C Figure D 11) In the above figure, which part corresponds to a destruction of part of the nation's capital stock? A) Figure A B) Figure B C) Figure C D) Figure D 12) In the above figure, which part corresponds to a fall in the money wage rate? A) Figure A 13) Figure B C) Figure C D) Figure D 13) Moving along the aggregate demand curve, a decrease in the quantity of real GDP demanded is a result of A) a decrease in the price level. B) an increase in the price level. C) a decrease in income. D) an increase in income. 14) One reason that the aggregate demand curve has a negative slope is because A) people earn more money when out-put rises. B) people buy fewer goods and save more when the price level rises because their real wealth decreases. C) firms produce more when the price rises. D) The premise of the question is wrong because the aggregate demand curve has a positive slope. 15) One reason that the aggregate demand curve has a negative slope is because A) people buy more foreign goods when the domestic price level rises. 13) firms supply less when prices rise. C) firms supply more when prices rise. D) the amount of money in the economy increases when the price level rises. 16) A decrease in government transfer payments A) increases aggregate demand. 13) decreases the aggregate quantity demanded. C) increases the aggregate quantity demanded. D) decreases aggregate demand. 17) An increase in the quantity of money A) decreases aggregate demand. B) increases the aggregate quantity demanded. C) increases aggregate demand. D) decreases the aggregate quantity demanded. 18) A rise in the foreign exchange rate of the dollar A) increases the aggregate quantity demanded. B) decreases aggregate demand. C) decreases the aggregate quantity demanded. D) increases aggregate demand. 19) An increase in foreign incomes A) increases aggregate demand in the United States. B) decreases aggregate demand in the United States. C) decreases the aggregate quantity demanded in the United States. D) increases the aggregate quantity demanded in the United States. ...| (A) O _.1 N O 110 100 Price level (GDP deflator, 19965100) (D O 3 A02 ADD 0 9.6 9.8 10.0 10.2 10.4 10.5 Real GDP (tr'll'ons of 1996 dolla ) 20) In the above figure, the economy is initially at pointB. If taxes increase, there is A) a shift to A131. B) a movement to pointC. C) a movement to pointA. D) a shift to A02. Short—run aggregate supply (trillions of 1996 dollars) Long—run aggregate supply (trillions of 1996 dollars) Aggregate demand (trillions of 1996 dollars) 130 10 120 10 110 10 100 10 90 10 2.1) The data in the above table indicate that when the price level is 120, A) inventories fall and the price level rises. B) the unemployment rate is at its equilibrium level. C) the economy is in a long—run macroeconomic equilibrium. D) inventories rise and the price level falls. 22) A recessionary gap means that short—run macroeconomic equilibrium GDP A) is more than full—employment GDP. B) may be less than, more than, or the same as full—employment GDP depending on the level of potential GDP. C) equals full-employment GDP. D) is less than full—employment GDP. Price level (GDP defiator, 19962100) (.0 Q L) o 9.0 9.5 10.0 10.5 10.0 10.5 Real GDP (trillions of 1996 dollars) 23) The above figure illustrates A) an equilibrium at the economy's physical limits. B) a recessionary gap. C) an inflationary gap. D) a full—employment equilibrium. 24) In a short—run macroeconomic equilibrium, real GDP exceeds potential GDP, so the A) short—run aggregate supply curve will shift rightward as the money wage rate falls. B) long—run aggregate supply curve will shift leftward as the money wage rate rises. C) short—run aggregate supply curve will shift leftward as the money wage rate rises. D) long—run aggregate supply curve will shift leftward as the money wage rate falls. Long—run aggregate supply (trillions of 1996 dollars) Aggregate demand Short-run aggregate (trillions of 1996 supply (trillions of dollars) 1996 dollars) 140 10.0 130 10.0 130 10.0 110 10.0 100 10.0 25) The data in the above table indicate that the economy will be in a short—run macroeconomic equilibrium at a price level A) between 120 and 110. - B) of 110. C) of 120. D) between 130 and 120. 26) If the economy experiences inflation, aggregate A) supply increases faster than aggregate demand. 13) demand and supply increase at about the same rate. C) demand increases faster than aggregate supply. D) demand increases more slowly than aggregate supply. Mo New Economy: Debate Over Exporting Jobs Raises Questions on Policies I’age 1 of 3 Eli-r :‘Ci‘itrflsrltfijiinrs __ __ February 23, 2004 ‘5 Unit-“.4 ~21: 2.1.? “a. e: in". {kiwi-Kai : Debate Over Exporting Jobs Raises Questions on Policies By STEVE LOHR here is certainly no shortage of political heat surrounding the subject of jobs migrating abroad. On Ea the campaign trail, Senator John Kerry routinely decries "Benedict Arnold" bosses. And N. Gregory Mankiw, chairman of the White House's Council of Economic Advisers, faced an uproar after he said earlier this month that offshore outsourcing was a good thing for the economy in the long run. In a presidential election year, when few new jobs are being created despite a growing American economy, the issue of jobs lost to foreign competition - and what can be done about it — will be an important one on the campaign agenda of both Democrats and Republicans. Job migration, while only one factor in the current employment slump, points to two related economic challenges. The first is how the United States will respond to a new wave of international competition, and the second is what policies can help displaced workers make the transition to new jobs. Transplanting work, not just call center operations but also skilled professional labor like computer programming, to lower—cost nations is a manifestation of a change in the terms of trade in global competition. Such jobs can more easily be sent to India or China largely because of technology — inexpensive telecommunications and the Internet. And China, Eastern Europe and India, which all have large numbers of well-educated workers, have entered the global trading system in earnest only in recent years. "The structure of the world has changed and policy has to change as well," said Craig R. Barrett, chief executive of the Intel Corporation, the world's largest computer chip maker. Mr. Barrett is also the chairman of the Computer Systems Policy Project, a Washington-based policy and advocacy group whose members include the chief executives of leading technology companies like Hewlett—Packard, I.B.M., Dell and others. The group supports a series of policy steps intended to spur innovation and long—term job growth, The recommended steps include doubling federal spending on university research and development, extending research—and-development tax credits and an initiative to hasten the deployment of high-speed Internet services nationwide. Investment and innovation, to he sure, are time—tested engines of economic growth. In the 1980's, Japan seemed unstoppable, and Silicon Valley and other industries were reeling. Yet the high—tech industry soon regained its footing, mainly through innovation, as American companies led the way in personal computing and the Internet. The United States enjoyed much of the resulting wealth and job creation. Job Worries Dim Outlook of Consumers Page 1 of 1 Elia“ swam: $511M. .. February 25, 2004- Job Worries Dim Outlook of Consumers y The Associated Press Consumer confidence tumbled in February as persistent worries about jobs tarnished Americans' optimism, an industry group reported yesterday. The Conference Board said its consumer confidence index dropped more than 9 points, to 87.3, after a rise in January to a revised reading of 96.4. That reading was the index's highest since mid—2002. Analysts expected a decline, but the index came in significantly below their consensus forecast of 92.3. "Consumers began the year on a high note, but their optimism has quickly given way to caution," said Lynn Franco, director of the Conference Board's Consumer Research Center. "Consumers remain disheartened with current economic conditions, and at the core of their disenchantment is the labor market.” The confidence reading is watched closely because consumer spending accounts for two—thirds of the economy. The decline in confidence is a sign that consumers are disturbed by changes in the job market, which have quickly become a crucial issue in the presidential campaign, economists said. "The labor market is actually improving, not very rapidly, but it's improving," said Sung Won Sohn, chief economist at flflszarggfiefiBEi; Company in Minneapolis. "But the perception is otherwise." The decline in confidence reflects consumer uncertainty over both the current business climate and economic conditions in the next six months. In February, an index measuring consumers‘ assessment of current conditions declined to 73.1, from 79.4 in January. Those describing the present climate as good declined to 19.3 percent, from 21.9 percent in January. Those who said conditions were bad increased to 25.1 percent, from 22.9 percent. The sentiment on jobs was similarly depressed, with those saying positions are hard to get rising to 32.1 percent, from 31.6 percent, while those saying jobs are plentiful slipped to 11.8 percent, from 12.3 percent. Cogyright 2004 The New York Times Company I Home I Privacy Policy I Search I Corrections I flelp I Back to Top http://wwwnytimescom/ 2004/ 02/25/business/25econ.htm1?pagewantedfl)rint&position: 225/2004 ...
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ECON 104 Sample Test CH6 - MACROECONOMICS — ECON 104 —...

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