Eco312 final exam Questions

1. (TCO 1)
As a consequence of the problem of scarcity (Points : 4)
there is never enough of anything.
individuals
have to make choices from among alternatives.
production has to be planned by government.
things which are plentiful have relatively high prices.

Question 2. 2. (TCO1) Money is not considered to
be an economic resource because (Points : 4)
as such, it
is not productive.
money is not a free gift of nature.
money is made by man.
idle money balances do not earn interest income.

Question 3. 3. (TCO1) A point inside the
production possibilities curve is (Points : 4)
attainable and the economy is efficient.
attainable,
but the economy is inefficient.
unattainable, but the economy is inefficient.
unattainable and the economy is efficient.

Question 4. 4. (TCO1) In a command system
(Points : 4)
self-interest guides and commands individuals to
pursue actions that lead them toward achieving their goals.
the head of each family decides what to do with
the family’s resources.
the government
makes production and allocation decisions.
market traders command what outputs are produced
and how they are allocated.

Question 5. 5. (TCO 2) Which is consistent with
the law of demand? (Points : 4)
A decrease in the price of tacos causes no change
in the quantity of tacos demanded.
An increase in the price of pizza causes an
increase in the quantity of pizza demanded.
An increase
in the price of hamburgers causes a decrease in the quantity of hamburgers
demanded.
A decrease in the price of turkey sandwiches
causes a decrease in the quantity of turkey sandwiches demanded.

Question 6. 6. (TCO 2) What combination of
changes in supply and demand would most likely increase the equilibrium
quantity? (Points : 4)
When supply
increases and demand increases
When supply decreases and demand decreases
When supply decreases and demand increases
When supply increases and demand decreases

Question 7. 7. (TCO 2) Chuck Grim has a price
elasticity of demand for beer of 1.2. Suppose that the price of beer is
increased by 10 percent. What will happen to the total amount Chuck spends on
beer? (Points : 4)
It will not change.
It will
decrease.
It will increase.
It is impossible to tell.

Question 8. 8. (TCO 2) The elasticity of supply
for a product will be 2 if: (Points : 4)
A 1 percent decrease in the price causes a 0.2
percent decrease in quantity supplied
A 2 percent decrease in price causes a 1 percent
decrease in quantity supplied
A 1 percent decrease in price causes a 2 percent decrease in quantity
supplied
A 2 percent decrease in price causes a 2 percent
decrease in quantity supplied

Question 9. 9. (TCO 2) Which is true for a
purely competitive firm in short-run equilibrium? (Points : 4)
The firm is making only normal profits.
The firm’s marginal cost is greater than its
marginal revenue.
The firm’s
marginal revenue is equal to its marginal cost.
A decrease in output would lead to a rise in
profits.

Question 10. 10. (TCO 2) Consumers who clip and
redeem discount coupons (Points : 4)
exhibit the same price elasticity of demand for
a given product than consumers who do not clip and redeem coupons.
exhibit more
price elasticity of demand for a given product than consumers who do not clip
and redeem coupons.
exhibit less price elasticity of demand for a
given product than consumers who do not clip and redeem coupons.
cause total revenue to decrease for firms that
issue coupons for their products.

Question 11. 11. (TCO 3) A major reason that
firms form a cartel is to (Points : 4)
reduce the elasticity of demand for the product.
enlarge the market share for each producer.
minimize the costs of production.
maximize
joint profits.

Question 12. 12. (TCO 3) In the short run,
output (Points : 4)
is absolutely fixed.
can vary as
the result of using a fixed amount of plant and equipment more or less
intensively.
may be altered by varying the size of plant and
equipment which now exist in the industry.
can vary as the result of changing the size of
existing plants and by new firms entering or leaving the industry.

Question 13. 13.
(TCO 4) Refer to the diagram. The phases of the
business cycle from points A to D are, respectively:

Graph Description
(Points : 4)
Peak, recession, expansion, trough
Trough, recovery, expansion, peak
Expansion, recession, trough, peak
Peak, recession, trough, expansion

Question 14. 14. (TCO 4) In calculating the
unemployment rate, part-time workers are (Points : 4)
counted as unemployed because they are not
working full-time.
counted as
employed because they are receiving payment for work.
used to determine the size of the labor force,
but not the unemployment rate.
treated the same as “discouraged”
workers who are not actively seeking employment.

Question 15. 15. (TCO 4) GDP is the market value
of (Points : 4)
resources (land, labor, capita, and
entrepreneurship) in an economy in a given year.
all final
goods and services produced in an economy in a given year.
consumption and investment spending in an
economy in a given year.
all output produced and accumulated over the
years.

Question 16. 16. (TCO 4) Nominal GDP differs
from real GDP because (Points : 4)
nominal GDP is based on constant prices.
real GDP is based on current prices.
real GDP is
adjusted for changes in the price level.
nominal GDP is adjusted for changes in the price
level.

Question 17. 17. (TCO 6) The goal of
expansionary fiscal policy is to increase (Points : 4)
the price level.
aggregate supply.
real GDP.
unemployment.

Question 18. 18. (TCO 6) Refer to the figure.
The economy is at equilibrium at Point B. What would expansionary fiscal policy
do?

Graph Description
(Points : 4)
Shift aggregate demand from AD2 to AD1
Shift aggregate demand from AD2 to AD3
Move the economy from Point B downward along AD2
Move the economy from Point B upward along AD2

Question 19. 19. (TCO 6) The American Recovery
and Reinvestment Act of 2009 is a clear example of (Points : 4)
nondiscretionary expansionary fiscal policy.
nondiscretionary contractionary fiscal policy.
discretionary contractionary fiscal policy.
discretionary
expansionary fiscal policy.

Question 20. 20. (TCO 6) The time which elapses
between the beginning of a recession or an inflationary episode and the
identification of the macroeconomic problem is referred to as a(n) (Points : 4)
budget lag.
recognition
lag.
operational lag.
administrative lag.