Practice question: Chapter 3
1. The horizontal axis of a graph which shows a market demand curve indicates the:
A) prices at which various levels of output can be sold.
B) number of consumers who are in the market for this product.
C) various quantities o
Chapter 16 The Monetary System
1. Mia puts money into a piggy bank so she can spend it later. What function of money does this
a. store of value
b. medium of exchange
c. unit of account
For Output destination(s), enter Served Customers. For # of output objects, enter 1 because
people leave the teller one at a time. (If, for example, this Work Station represented a machine
that split objects into identical pieces, then we would enter a bi
Chapter 13 Saving, Investment, and the Financial System
1. Papa Mario's Pizza Company sells common stock.
a. They are using equity financing and the return shareholders earn is fixed.
b. They are us
Suppose the government changes tax laws to encourage personal household saving. Using a diagram of
the market for loanable funds, describe the impact of this change on investment, national saving, and the
interest rate. (6 points)
Part B - Short Answer (15 points)
Answer on the test paper.
1. The table below uses data for the year 2000 provide by Statistics Canada and adjusted to be comparable to U.S. data.
All values are in millions. Fill in the blank entries in the table. (9
12. Suppose that in a closed economy GDP is equal to 10,000, Taxes are equal to 2,000, Consumption
equals 6,500, and Government expenditures equal 2,500. What are private saving and public
a. 1500 and -500
b. 1500 and 500
c. 1000 and -500
6. Which of the following is a financial intermediary?
a. a mutual fund
b. the stock market
c. a U.S. government bond
d. None of the above are correct.
OBJ: TYPE: M
REF: SECTION: 13.1
7. A mutual fund
a. is a financial market where small fir
27. In 1995, Congressperson Bill Archer proposed that the income tax be replaced with a consumption
tax. If his program had been passed, then today it is likely that the equilibrium interest rate
a. and quantity of loanable funds would be lower.
b. and qu
45. You are required to testify before congress concerning the effects of an increase in the government
surplus. Which is the correct thing to say?
a. The debt and interest rates will rise.
b. The debt and interest rates will fall.
c. The debt will rise a
Page 1 of 10
Department of Economics
Midterm Test #1
Instructor: Professor H Holmes
Duration: 1.5 hours
Total Number of Pages: 10
Answer all questions on the scan sheets. USE AN HB PENCIL ONLY. Make su
Page 2 of 10
Identify the choice that best completes the statement or answers the question.
1. Economics is defined as the study of
b. how society manages its scarce resources.
c. central planning.
d. government regulation.
Page 4 of 10
_ 10. Refer to Table 3-3. The opportunity cost of 1 birdhouse for Montana is
a. 1/3 basket.
b. 1 basket.
c. 4/3 baskets.
d. 3 baskets.
_ 11. Refer to Table 3-3. Montana has an absolute advantage in
a. birdhouses and Missouri has an absolute a
Page 5 of 10
_ 17. Refer to Figure 4-9. If the price is $25, there would be a
a. surplus of 300 and price would fall.
b. surplus of 200 and price would fall.
c. shortage of 200 and price would rise.
d. shortage of 300 and price would rise.
Use the figure below for the following questions.
51. Refer to Figure 13-1. Which of the graphs in the figure above shows the effects of an increase in
the tax rate on saving?
a. graph 1
b. graph 2
c. graph 3
d. None of the above are correct.
Page 6 of 10
_ 22. Suppose that demand increases AND supply decreases. What would happen in the market for the good?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be
b. Equilibrium price would increase, but t
7. Real GDP per person
a. minus real GDP per person from the previous period equals the growth rate of real GDP per
b. provides a less useful measure of the standard of living than nominal GDP per person
c. provides more meaningful comparisons ac
33. When deciding how much to save, people care most about
a. before-tax real interest rates.
b. after-tax real interest rates.
c. after-tax nominal interest rates.
d. before-tax nominal interest rates.
34. Suppose that in a closed economy GDP is equal
26. When the money market is depicted in a diagram with the value of money on the vertical axis, if the money supply is
increased, then in the long run the price level
a. and the quantity of money demanded increases.
b. and the quantity of money demande
Service level =
58 + 7
In words, the service level for each simulation is the fraction of demand that is satisfied.
Again for the first simulation, lets next consider the element Line, which is a Buffer. First, we
notice that 51 objects left the
Improving the process, Variation 2
Next, lets see how much the waiting time can be reduced by installing new automated checkreading machines, instead of a second teller. The process flow map for this variation is the same
as our original map with one tell
The overall mean cycle time of the Line plus the Teller is 6.21 + 2 = 8.21, also a clear
improvement. The overall mean service level has nicely increased to .97. The overall mean
inventory of Line has dropped to 2.89 objects. The overall mean fraction tim
Example 7: An airport security system
A process flow map for the passenger security process at one terminal of a medium sized airport
is given below. The process works as follows. Between 8 A.M. and 10 A.M., one passenger
arrives every half-minute (on ave
Here are some details: A Decision Point chooses a direction for an object in zero time.
However, if a Decision Point chooses a direction for an object and cannot pass the object on
(e.g., the next element is a full Buffer or a working Work Station), then
Sec. Line 2
Here are the some of the results from 50 simulations of this 2-hour time period (the results for
the Work Stations are not shown).
Lets consider the statistics collected for the Decision Point. First, we count the number of
objects leaving it during each simulation. The overall mean from the 50 simulations is 225.37.
The statistic Final inventory (int. buff.) is the number of objects
OMR EXAMINATION - STUDENT INSTRUCTIONS
NOTE: IT IS YOUR RESPONSIBILITY TO ENSURE THAT THE ANSWER SHEET IS
PROPERLY COMPLETED: YOUR EXAMINATION RESULT DEPENDS UPON
PROPER ATTENTION TO THESE INSTRUCTIONS.
The scanner, which reads the sheets, senses the sh
Term Test #2
This examination paper includes 11 pages including the title page and 42 questions. You are responsible for ensuring that your copy of the paper is complete. Please bring any discrepan