Econ_199_Win_07_Exam__1 - Introduction to Macroeconomics...

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Introduction to Macroeconomics Allen R. Sanderson Economics 19900 Winter 2007 FIRST HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 14 points total. 1. Which of the following would not be included by economists (and national income accountants) as investment? a. a textile firm purchases new industrial-strength sewing machines to replace some that had worn out b. residential construction c. a firm can’t sell all of its output and has to add some to its inventory holdings d. a family reduces its monthly spending so that it can sock away $1,000 each month in a certificate of deposit at a commercial bank or buy a U.S. government bond e. a Chicago household buys a second home – a vacation cottage on a lake in Wisconsin 2. What is termed “the substitution bias” refers to: a. the fact that the CPI doesn’t capture fully changers in consumer spending habits when relative prices change. b. the fact that consumers – and producers – often substitute imported goods for domestic ones, even though publicly they express strong preferences for goods made in America. c. the fact that national income measures have to adjust for switches between home and market activity on the part of households, because home production doesn’t count in GDP. d. both worker and firm preferences for one type of activity or organization over another when tax rates or tax bases change. e. worker decisions with respect to labor-leisure choices based on income taxes, fringe benefits, and unemployment compensation alternatives. 3. Most unemployed people in the U.S. are unemployed because they: a. have unrealistic wage expectations. b. were fired from their last job and haven’t as yet been able to find a new one. c. are either new entrants or recent re-entrants into the labor force and are looking for work. d.
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This test prep was uploaded on 04/07/2008 for the course ECON 199 taught by Professor Sanderson during the Fall '07 term at UChicago.

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Econ_199_Win_07_Exam__1 - Introduction to Macroeconomics...

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