ECO 212 ECO212 FINAL EXAM VERSION 6

1) Which of the following issues is an
application of using macroeconomics to make a real world decision?
A. Whether a company should increase its
worker benefits
B. Whether this year’s enrollment will
increase for University of Phoenix.
C. Whether the growth rate of the Chinese
economy will exceed 10% in 2010
D. Whether workers should choose to
remain in a factory
2) The forces that make market economies work
are
A. work and leisure
B. demand and supply
C. regulation and restraint
D. taxes and government spending
3) A market is a
A. group of buyers and sellers of a
particular good or service
B. group of people with common economic
characteristics
C. place where buyers and sellers come
together to engage in trade
D. place where an auctioneer helps set
prices and arrange sales
4) If a decrease in income increases the demand
for a good, then the good is
A. a substitute good
B. a complement good
C. a normal good
D. an inferior good
5) Two goods are substitutes if a decrease in
the price of one good
A. decreases the demand for the other
good
B. decreases the quantity demanded of the
other good
C. increases the demand for the other
good
D. increases the quantity demanded of the
other good
6) A likely example of substitute goods for
most people would be
A. peanut butter and jelly
B. tennis balls and tennis rackets
C. televisions and subscriptions to cable
television services
D. pencils and pens
7) Another term for equilibrium price is
A. dynamic price
B. market-clearing price
C. quantity-defining price
D. satisfactory price
8) If, at the current price, there is a
shortage of a good,
A. sellers are producing more than buyers
wish to buy
B. the market must be in equilibrium
C. the price is below the equilibrium
price
D. quantity demanded equals quantity
supplied
9) If there is suddenly an increase in
population in North Carolina, then the average wage for North Carolina will
A. decrease because the supply of labor
increases
B. increase because the supply of labor
increases
C. decrease because the demand of labor
increases
D. increase because the demand of labor
increases
10) The marginal product of labor is equal to
the
A. incremental cost associated with a one
unit increase in labor
B. incremental profit associated with a
one unit increase in labor
C. increase in labor necessary to
generate a one unit increase in output
D. increase in output obtained from a one
unit increase in labor
11) When we focus on the firm as a supplier of
a good or a service, we assume that the firm is a profit maximizer. When we
focus on the firm as a demander of labor, we assume that the firm’s objective
is to
A. minimize wages
B. minimize variable costs
C. maximize the number of workers hired
D. maximize profit
12) What are the two types of imperfectly
competitive markets?
A. Monopoly and monopolistic competition
B. Monopoly and oligopoly
C. Monopolistic competition and oligopoly
D. Monopolistic competition and cartels
13) Monopolistically competitive firms are
typically characterized by
A. many firms selling products that are
similar, but not identical
B. many firms selling identical products
C. a few firms selling products that are
similar, but not identical
D. a few firms selling highly different
products
14) The commercial jetliner industry,
consisting of Boeing and Airbus, would best be described as a (an)
A. perfectly competitive market
B. monopolistically competitive market
C. oligopoly
D. monopoly
15) Imperfectly competitive firms are
characterized by
A. horizontal demand curves
B. standardized products
C. a large number of small firms
D. price making ability
16) Gross domestic product serves as a measure
of two things:
A. the total spending of everyone in the
economy and the total saving of everyone in the economy
B. the total income of everyone in the
economy and the total expenditure on the nation’s output of goods and services
C. the value of the nation’s output of
goods and services for domestic citizens and the value of the nation’s output
of goods and services for the rest of the world
D. the nation’s saving and the nation’s
investment
17) Which of the
following newspaper headlines would be more closely related to what
microeconomists study than to what macroeconomists study?
A. Unemployment rate rises from 5
percent to 5.5 percent.
B. Real GDP grows by 3.1 percent in the
third quarter.
C. Retail sales at stores show large
gains.
D. The price of oranges rises after an
early frost
18) A fiscal policy can be
A. an increase of federal government
spending financed by the treasury
B. a sale of bonds in an open market
operation by the treasury
C. a rise of reserve ratios by the Fed
D. that the Fed prints money
19) Stagflation exists when prices
A. and output rise
B. rise and output falls
C. fall and output rises
D. and output fall
20) An expansionary fiscal policy will
A. reduce unemployment and increase GDP
B. reduce unemployment and decrease GDP
C. increase unemployment and increase GDP
D. increase unemployment and decrease GDP
21) If money is used as a mechanism to hold
purchasing power for a period of time, it is functioning as a
A. medium of exchange
B. store of value
C. unit of account
D. standard of value
22) Inflation can be measured by the
A. change in the consumer price index
B. percentage change in the consumer
price index
C. percentage change in the price of a
specific commodity
D. change in the price of a specific
commodity
23) Given the following information about AAA
bank:
Bank Deposits $100,000
Loans $50,000
Required Reserves $20,000
Excess Reserves $30,000
What is the reserve ratio set by the Federal Reserve
Bank?
A. 10 percent
B. 20 percent
C. 30 percent
D. 50 percent
24) Sally sells 40 bags of lettuce for a total
of $80 at the farmers’ market.
A. The $80 is a real variable. The
quantity of lettuce is a nominal variable.
B. The $80 is a nominal variable. The
quantity of lettuce is a real variable.
C. Both the $80 and the quantity of
lettuce are nominal variables.
D. Both the $80 and the quantity of
lettuce are real variables.
25) Monetary neutrality implies that an
increase in the quantity of money will
A. increase employment
B. increase the price level
C. increase the incentive to save
D. not increase any of the above
26) For any country, if the world price of
computers is higher than the domestic price of computers without trade, that
country should
A. export computers, since that country
has a comparative advantage in computers
B. import computers, since that country has
a comparative advantage in computers
C. neither export nor import computers,
since that country cannot gain from trade
D. neither export nor import computers,
since that country already produces computers at a low cost compared to other
countries
27) Outflow represents the quantity of dollars
A. supplied for the purpose of selling
assets domestically
B. supplied for the purpose of buying
assets abroad
C. demanded for the purpose of buying
U.S. net exports of goods and services
D. demanded for the purpose of importing
foreign goods and services
28) In the open economy macroeconomic model,
net capital outflow is equal to the quantity of
A. dollars supplied in the foreign
exchange market
B. dollars demand in the foreign exchange
market
C. funds supplied in the loanable funds
market
D. funds demanded in the loanable funds
market
29) A tariff on a product
A. enhances the economic well-being
of the domestic economy
B. increases the domestic quantity
supplied
C. increases the domestic quantity
demanded
D. results in an increase in producer
surplus that is greater than the resulting decrease in consumer surplus
30) Aquilonia has decided to end its policy of
not trading with the rest of the world. When it ends its trade restrictions, it
discovers that it is importing incense, exporting steel, and neither importing
nor exporting rugs. Which groups in Aquilonia are better off as a result of the
new free-trade policy?
A. Producers of incense and
consumers of steel
B. Consumers of all three goods
C. Consumers of incense and producers of
rugs
D. Producers of steel and consumers of
incense