ECO 212 Final Exam

ECO 212 Final Exam

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