Eco/252 Midterm Practice Paper
ECO 252 Midterm Practice
Fall 2013
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following transactions represents the purchase of a final good? 1) _______
A) Apple computer buys computer processors from Intel.
B) Delta buys a new European-made jetliner.
C) Your father buys a new John Deere riding lawn mower.
D) Starbucks purchases coffee beans.
Table 19-3
Consumption expenditures $800
Investment expenditures 200
Government purchases 300
Exports 100
Imports 200
Wages 800
2) Refer to Table 19-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals 2) _______ …show more content…
A) $2,200. B) $1,600. C) $1,400. D) $1,200.
Table 19-10
Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts 2009 1,800 $0.90 110 $30.00 2011 2,000 1.00 110 35.00
Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts.
3) Refer to Table 19-10. Real GDP for Vicuna for 2009 using 2011 as the base year equals 3) _______
A) $4,620. B) $5,100. C) $5,650. D) $5,850.
4) If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is 4) _______
A) 12.5. B) 80. C) 125. D) 800.
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
5) Fill in the missing values in the table of data collected in the household survey for November, 2009. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.
Working-age population 235,900
Employment
Unemployment
Unemployment rate 9.4%
Labor force
Labor force participation rate 65.5%
5) _____________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Table 20-2
Base Year (2006) 2011
Product Quantity Price Price
Milk 50 $1.20 $1.50
Bread 100 1.00 1.10
6) Refer to Table 20-2. Assume the market basket for the consumer price index has two products bread and milk with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals 6) _______
A) 118. B) 116. C) 86. D) 85.
Table 20-6
Year CPI 1996 157 1997 161 1998 163
7) Refer to Table 20-6.
Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to 7) _______
A) 1.2 percent. B) 2.0 percent. C) 2.5 percent. D) 4.0 …show more content…
percent.
8) Suppose your grandfather earned a salary of $9,000 in 1964.
If the CPI is 31 in 1964 and 219 in 2010, then the value of your grandfather's salary in 2010 dollars is approximately 8) _______
A) $63,580. B) $60,830. C) $37,200. D) $26,280.
9) Suppose you borrow $1,000 at an interest rate of 12 percent. If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation 9) _______
A) equal to 7 percent. B) equal to 0 percent.
C) greater than 7 percent. D) less than 7 percent.
10) In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) 10) ______
A) Y - C - T + TR B) Y - G - T C) T - G - TR D) Y - C - T
11) Under which of the following circumstances would the government be running a deficit? 11) ______
A) G = $5 trillion
T = $5 trillion
TR = $1 trillion B) G = $7 trillion
T = $10 trillion
TR = $3 trillion C) G = $7 trillion
T = $7 trillion
TR = $0 D) G = $5 trillion
T = $7 trillion
TR = $1 trillion
Figure 22-1
12) Refer to Figure 22-1. Technological change is illustrated in the per-worker production function in the figure above by a movement from 12)
______
A) D to C. B) B to A. C) B to C. D) A to B.
13) Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $27 million, what unplanned changes in inventories occurred? 13) ______
A) There was an unplanned decrease in inventories equal to $19 million.
B) There was an unplanned increase in inventories equal to $2 million.
C) There was an unplanned decrease in inventories equal to $2 million.
D) There was no unplanned change in inventories.
Figure 23-1
14) Refer to Figure 23-1. According to the figure above, at what point is aggregate expenditure greater than GDP? 14) ______
A) J B) K
C) L D) none of the above
15) In the aggregate expenditure model, ________ has both an autonomous component and an induced component. 15) ______
A) government spending B) planned investment spending
C) consumption spending D) net export spending
16) If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then 16) ______
A) the MPC is 0.5. B) the MPC is 0.75.
C) the MPC is 0.8. D) the MPC is 0.9.
17) Given the equations for C, I, G, and NX below, what is the marginal propensity to consume?
C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400 17) ______
A) -0.1 B) 0.1 C) 0.9 D) 2000
Figure 23-4
18) Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP1 which is equal to $90 billion. If the MPC is 0.6, then how much must autonomous spending change for the economy to move to potential GDP? 18) ______
A) $16.7 billion B) -$6 billion C) $4 billion D) $10 billion
19) Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will the new equilibrium level of GDP be if government spending increases to 2,500?
C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500 19) ______
A) $32,500 B) $34,000 C) $38,000 D) $42,000
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
20) C = 4,000 + 0.5Y
I = 1,500
G=2,250
NX = -150
Given the equations for C, I, G, and NX above, what is the equilibrium level of GDP (Y)?
20) _____________
1) C
2) D
3) C
4) C
5)
Working-age population 235,900
Employment 139,991
Unemployment 14,524
Unemployment rate 9.4%
Labor force 154,515
Labor force participation rate 65.5%
Labor force participation rate = × 100.
Labor force = (Working-age population × Labor force participation rate)/100
Labor force = (227,204 × 66.1)/100 = 150,182
Unemployment rate = × 100.
Unemployed = (Labor force × Unemployment rate)/100
(150,182 × 5)/100 = 7,509
Labor force = Employed + Unemployed
Employed = Labor force - Unemployed
Employed = 150,182 - 7,509 = 142,673
6) B
7) C
8) A
9) C
10) C
11) A
12) C
13) B
14) A
15) C
16) C
17) C
18) C
19) B
20) Y = C + I + G + NX.
Y = 4,000 + 0.5Y + 1,500 + 2,250 + (-150).
Y = 7,600 + 0.5Y.
0.5Y = 7,600.
Y = 15,200.
Fall 2013
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following transactions represents the purchase of a final good? 1) _______
A) Apple computer buys computer processors from Intel.
B) Delta buys a new European-made jetliner.
C) Your father buys a new John Deere riding lawn mower.
D) Starbucks purchases coffee beans.
Table 19-3
Consumption expenditures $800
Investment expenditures 200
Government purchases 300
Exports 100
Imports 200
Wages 800
2) Refer to Table 19-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals 2) _______ …show more content…
A) $2,200. B) $1,600. C) $1,400. D) $1,200.
Table 19-10
Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts 2009 1,800 $0.90 110 $30.00 2011 2,000 1.00 110 35.00
Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts.
3) Refer to Table 19-10. Real GDP for Vicuna for 2009 using 2011 as the base year equals 3) _______
A) $4,620. B) $5,100. C) $5,650. D) $5,850.
4) If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is 4) _______
A) 12.5. B) 80. C) 125. D) 800.
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
5) Fill in the missing values in the table of data collected in the household survey for November, 2009. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.
Working-age population 235,900
Employment
Unemployment
Unemployment rate 9.4%
Labor force
Labor force participation rate 65.5%
5) _____________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Table 20-2
Base Year (2006) 2011
Product Quantity Price Price
Milk 50 $1.20 $1.50
Bread 100 1.00 1.10
6) Refer to Table 20-2. Assume the market basket for the consumer price index has two products bread and milk with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals 6) _______
A) 118. B) 116. C) 86. D) 85.
Table 20-6
Year CPI 1996 157 1997 161 1998 163
7) Refer to Table 20-6.
Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to 7) _______
A) 1.2 percent. B) 2.0 percent. C) 2.5 percent. D) 4.0 …show more content…
percent.
8) Suppose your grandfather earned a salary of $9,000 in 1964.
If the CPI is 31 in 1964 and 219 in 2010, then the value of your grandfather's salary in 2010 dollars is approximately 8) _______
A) $63,580. B) $60,830. C) $37,200. D) $26,280.
9) Suppose you borrow $1,000 at an interest rate of 12 percent. If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation 9) _______
A) equal to 7 percent. B) equal to 0 percent.
C) greater than 7 percent. D) less than 7 percent.
10) In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers) 10) ______
A) Y - C - T + TR B) Y - G - T C) T - G - TR D) Y - C - T
11) Under which of the following circumstances would the government be running a deficit? 11) ______
A) G = $5 trillion
T = $5 trillion
TR = $1 trillion B) G = $7 trillion
T = $10 trillion
TR = $3 trillion C) G = $7 trillion
T = $7 trillion
TR = $0 D) G = $5 trillion
T = $7 trillion
TR = $1 trillion
Figure 22-1
12) Refer to Figure 22-1. Technological change is illustrated in the per-worker production function in the figure above by a movement from 12)
______
A) D to C. B) B to A. C) B to C. D) A to B.
13) Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $27 million, what unplanned changes in inventories occurred? 13) ______
A) There was an unplanned decrease in inventories equal to $19 million.
B) There was an unplanned increase in inventories equal to $2 million.
C) There was an unplanned decrease in inventories equal to $2 million.
D) There was no unplanned change in inventories.
Figure 23-1
14) Refer to Figure 23-1. According to the figure above, at what point is aggregate expenditure greater than GDP? 14) ______
A) J B) K
C) L D) none of the above
15) In the aggregate expenditure model, ________ has both an autonomous component and an induced component. 15) ______
A) government spending B) planned investment spending
C) consumption spending D) net export spending
16) If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then 16) ______
A) the MPC is 0.5. B) the MPC is 0.75.
C) the MPC is 0.8. D) the MPC is 0.9.
17) Given the equations for C, I, G, and NX below, what is the marginal propensity to consume?
C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400 17) ______
A) -0.1 B) 0.1 C) 0.9 D) 2000
Figure 23-4
18) Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP1 which is equal to $90 billion. If the MPC is 0.6, then how much must autonomous spending change for the economy to move to potential GDP? 18) ______
A) $16.7 billion B) -$6 billion C) $4 billion D) $10 billion
19) Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will the new equilibrium level of GDP be if government spending increases to 2,500?
C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500 19) ______
A) $32,500 B) $34,000 C) $38,000 D) $42,000
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
20) C = 4,000 + 0.5Y
I = 1,500
G=2,250
NX = -150
Given the equations for C, I, G, and NX above, what is the equilibrium level of GDP (Y)?
20) _____________
1) C
2) D
3) C
4) C
5)
Working-age population 235,900
Employment 139,991
Unemployment 14,524
Unemployment rate 9.4%
Labor force 154,515
Labor force participation rate 65.5%
Labor force participation rate = × 100.
Labor force = (Working-age population × Labor force participation rate)/100
Labor force = (227,204 × 66.1)/100 = 150,182
Unemployment rate = × 100.
Unemployed = (Labor force × Unemployment rate)/100
(150,182 × 5)/100 = 7,509
Labor force = Employed + Unemployed
Employed = Labor force - Unemployed
Employed = 150,182 - 7,509 = 142,673
6) B
7) C
8) A
9) C
10) C
11) A
12) C
13) B
14) A
15) C
16) C
17) C
18) C
19) B
20) Y = C + I + G + NX.
Y = 4,000 + 0.5Y + 1,500 + 2,250 + (-150).
Y = 7,600 + 0.5Y.
0.5Y = 7,600.
Y = 15,200.