Fall 2016 ECON 2030 Section 001 EXAM ONE Version #1 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers theIf you want to learn more check out What is the rate of loss of NO?
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question. 1)Consider the following statements: 1) a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. c. Farmers produce more cotton when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? A) a only. B) b only. C) c only. D) a and b. E)a, b, and c. Table 1-1 Hours Open Total Revenue (dollars) 1 $275 2 375 3 450 4 500 5 530 6 550 Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. 2)Refer to Table 1-1. Using marginal analysis, how many hours should Ivan extend his hours of 2) operations? A) 2 hours. B) 3 hours. C) 4 hours. D) 5 hours. E) 6 hours. 3) 3)Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? A) Real GDP grows by 2.3% in the second quarter. B) Avocado prices rise due to a late frost in California. C) Airlines raise ticket prices in response to rising fuel costs. D)The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. 14) Which of the following is a positive economic statement? 4) A) U.S. firms should not be allowed to outsource production of goods and services. B) If the price of gasoline rises, a smaller quantity of it will be bought. C) Everyone should live at the same standard of living. D) The government should close income tax loopholes. 5) Which of the following is a normative economic statement? 5) A) The increase in tobacco taxes has caused an increase in the price of cigarettes. B) A reduction in tobacco subsidies has caused the price of tobacco to increase. C) Tobacco products should be banned in all public spaces. D) Better awareness of health risks has decreased tobacco use. 6) 6)In 2015, Peelville consumed 30,000 bananas. In 2016, banana consumption rose to 35,000. Calculate the % change in banana consumption. A) 11.66%. B) 14.28%. C) 16.67%. D) 22.25%. Table 1-2 Demand Supply P = 60 - 2QD P = 15 + QS QD = 30 - 0.5P QS = P - 15 7) 7)Refer to Table 1-2. The equations above describe the demand and supply for Pauline's Pickled Pomegranates. What are the equilibrium price, P*, and quantity (in thousands), Q*, for Pauline's Pickled Pomegranates? A) P*=$20 and Q*=10 thousand. B) P*=$30 and Q*=15 thousand. C) P*=$60 and Q*=20 thousand. D) P*=$15 and Q*=45 thousand. Table 1-3 Market for Cigarettes Price , $ per pack P Quantity Demanded, 1,000s of packs Qd Quantity Supplied, 1,000s of packs Qs $5 70 70 $8 40 370 8) Refer to Table 1-3 above. What is the slope of the supply of cigarretes? 8) A) 0.01. B) 0.1. C) -0.01. D) -0.1. 9) 9)Refer to Table 1-3 above. Using the slope that you calculated in question #8, write down the equation for the supply of cigarettes. A) P = 5.7 - 0.01 * Qs. B) P = -2 + 0.1 * Qs. C) P = 12 - 0.1 * Qs. D) P = 4.3 + 0.01 * Qs. 210) 10)Economics is the study of the ________ people make to attain their goals, given their ________ resources. A) decisions; household. B) choices; scarce. C) purchases; unlimited. D) income; available. 11) Which of the following goods is directly counted in GDP? 11) A) the plastic bags that Subway purchases to wrap its sandwiches. B) the bread that Subway purchases for its sandwiches. C) the lettuce that Subway purchases for its sandwiches. D) a 12-inch Subway sandwich purchased by a student. Table 1-4 Year 2004 2005 2006 2007 2008 2009 RGDP 5.3 5.1 5.2 5.4 5.0 5.1 12) 12)Refer to Table 1-4 above. What phase of the business cycle was this economy in between years 2004 and 2005? A) recession. B) boom. C) peak. D) trough. 13) Refer to Table 1-4 above. How would you call year 2005? 13) A) recession. B) boom. C) trough. D) peak. 14) The purchase of a new house is included in 14) A) government purchases. B) consumption expenditures. C) net exports. D) investment expenditures. Table 1-5 Product Quantity Price per Unit Coke 10,000 $2 iPhones 2,000 150 Backpacks 4,000 25 Sugar 8,000 1 15) 15)Refer to Table 1-5. Consider the table of production and price statistics for a small economy in 20016. Assume that all sugar is used in the production of Coke. What is nominal GDP for 2016? A) $428,000. B) $424,000. C) $420,000. D) $1,424. 16) Which of the following is likely to increase measured GDP? 16) A) Marijuana becomes legal to grow and sell. B) Tax rates increase and more people attempt to underreport their income for tax purposes. C)More people decide to do their own lawn maintenance and give up using a professional service. D)A greater number of women decide to stay at home and provide day care for their children under age 5. 3Table 1-6 Year Nominal GDP Real GDP 2014 $13,399 $12,976 2015 14,078 13,254 2016 14,441 13,312 17) 17)Refer to Table 1-6. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2015 equals A) 108.5. B) 106.2. C) 103.3. D) 94.1. 18) 18)Refer to Table 1-6. As measured by the GDP deflator, what was the inflation rate between 2014 and 2015? A) 2.2%. B) 2.8%. C) 5.1%. D) 8.5%. Table 1-7 Year 2011 2011 2016 2016 Product Quantity Price Quantity Price Pizzas 100 $10 120 $12 Haircuts 50 15 45 20 Backpacks 200 40 210 45 19) Refer to Table 1-7. What was nominal GDP in 2011? 19) A) $9,750. B) $10,275. C) $11,200. D) $11,790. 20) Refer to Table 1-7. What was real GDP in 2011, assuming that 2016 is the base year? 20) A) $9,750. B) $10,275. C) $11,200. D) $11,790. 21) 21)Suppose the working-age population (WAP) is 500 million, the labor-force participation rate (LFPR) is 80%, and the unemployment rate is 20%. How many people are employed in this economy? A) 500 million. B) 400 million. C) 360 million. D) 320 million. Table 1-8 Total population 20,000 Working-age population 15,000 Employment 1,000 Unemployment 100 Consider the data above for a simple economy. 22) Refer to Table 1-8. The unemployment rate, UR, for this simple economy equals 22) A) 0.5%. B) 0.7%. C) 9.1%. D) 10%. 423) 23)Suppose in a small economy, the unemployment rate is 20%. If 300 million people in this economy are currently employed and the labor-force participation rate is 75%, what is the working-age population in this economy? A) 500 million. B) 375 million. C) 300 million. D) 240 million. 24) 24)If you have trouble finding a job because of a recession in the economy, we would say that you are A) frictionally unemployed. B) cyclically unemployed. C) structurally unemployed. D) seasonally unemployed. 25) A student who just graduated from college but has not found a job would most likely be 25) A) seasonally unemployed. B) cyclically unemployed. C) structurally unemployed. D) frictionally unemployed. 5Answer Key Testname: ECON2030_FALL16_EXAM#1_VERSION#1 1) E 2) D 3) A 4) B 5) C 6) C 7) B 8) A 9) D 10) B 11) D 12) A 13) C 14) D 15) C 16) A 17) B 18) B 19) A 20) C 21) D 22) C 23) A 24) B 25) D 6