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Principles of Macroeconomics Final Exam Spring 2011 Choose the best answer to each of the following. WORK INDEPENDENTLY!!! 1. The branch of economics...

Which of the following contributed to the financial crisis of 2008?

Principles of Macroeconomics Final Exam Spring 2011 Choose the best answer to each of the following. WORK INDEPENDENTLY!!! 1. The branch of economics that focuses on the study of output, inflation, and unemployment is known as __________. a) Capital b) Labor c) Macroeconomics d) Microeconomics 2. Which of the following describes a situation most closely related to microeconomics? a) A business firm decides to purchase new computers for its employees. b) The government reports that unemployment has increased over the past year. c) Research finds that inflation has slowed over the past decade. d) The government decides to cut taxes during a period of high unemployment. 3. Which of the following factors of production used in making a textbook is an example of capital? a) The printing press used to print the book b) The lumber used to make the paper c) The worker in charge of operating the printing press d) The author of the textbook 4. Janet is said to have a comparative advantage in software design compared with Miguel if a) she can produce software code faster than Miguel. b) she can produce software code at a lower opportunity cost than Miguel. c) when their skills cannot be compared. d) when their skills are about the same. 5. A market a) is any arrangement people have for trading with one another. b) provides information that helps to coordinate decisions. c) provides incentives for people to participate in trading. d) All of the above
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6. An economic model a) is a way of representing a theory. b) often involves the use of a graph or mathematical expression. c) is used to explain the relationship among observed facts. d) All of the above 7. The figure to the right shows the production possibilities for a city deciding how to allocate resources between police stations and hospitals. According to the figure, which production possibility requires more resources than the city has as its disposal? a) Point A b) Point B c) Point C d) Point D 8. If the price of a good rises, what are people likely to do? a) Substitute a less expensive good b) Buy more of the good c) Buy more of all goods because of added buying power d) All of the above 9. If hot dogs and hamburgers are substitutes and the price of hot dogs increases, what do we expect? a) An increase in the quantity of hot dogs demanded b) The demand curve for hot dogs to shift to the left c) The demand curve for hot dogs to shift to the right d) The demand curve for hamburgers to shift to the right 10. If bagels and cream cheese are complements and the price of cream cheese increases, what do we expect? a) An increase in the quantity of cream cheese demanded b) The demand curve for cream cheese to shift to the left c) The demand curve for cream cheese to shift to the right d) The demand curve for bagels to shift to the right 11. If an increase in income leads to an increase in the demand for beef, what do we conclude? a) The price of beef has decreased. b) Beef is a normal good. c) Beef is an inferior good. d) Tastes have shifted toward beef. 12. According to Figure 2.5, how many pounds of beef will be sold when the market is in equilibrium? a) 4 thousand b) 3 thousand c) 2 thousand d) 1 thousand Police Stations Hospitals A B C D Price of Beef (Dollars per pound) Quantity of Beef (Thousands pounds per year) 1 2 $1.00 3 4 $2.00 $3.00 $4.00 Figure 2.5 D S
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