ECO 212 Final Exam 2
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This 0 page Study Guide was uploaded by an elite notetaker on Wednesday November 11, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 29 views.
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Date Created: 11/11/15
1 Why do consumers have to make tradeoffs in deciding what to consume A there are not enough of all goods produced C the prices of goods vary D not all goods give them the same amount of satisfaction 2 Economics does not study correct or incorrect behaviors but rather it assumes that economic agents make the best decisions given their knowledge of the costs and bene ts What term best describes this behavior A selfisth B emotionally D equitably 3 Consider a good whose consumption takes place publicly On what factors would your decision to buy that good depend A only on the price of the good and not on other factors such as other people s actions C only on the characteristics of the good itself and not on other peoples acUons D both on the characteristics of the product and on how many other people are buying it 4 What might you call an outward shift of a nation39s production possibilities frontier A a situation in which a country produces more of one good and less of another B an impossible situation C rising prices of the two goods on the production possibilities frontier model 5 If a commercial dairy farm wants to raise funds to purchase feeding troughs in which market does it do so A dairy products market C product market D output market 6 Which of the following countries is not close to the free market benchmark 7 If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded then the demand for golf balls is B relatively inelastic C perfectly elastic D unitelastic 8 Economists in general A Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements B Believe that they must be able to explain people39s tastes in order to explain what happens when tastes change C Do not believe that people39s tastes determine demand and therefore they ignore the subject of tastes 9 Price elasticity of demand measures A how responsive sales are to a change in buyers39 incomes B how responsive sales are to changes in the price of a related good D how responsive suppliers are to price changes 10 Which of the following is evidence of a surplus of bananas A The quantity demanded of bananas is greater than the quantity supplied C The equilibrium price of bananas rises due to an increase in demand D Firms raise the price of bananas 11 At a product39s equilibrium price B the quantity of the product demanded is greater than the quantity of the product supplied C the quantity of the product demanded is less than the quantity of the product supplied D the product39s demand curve is the same as the product39s supply curve 12 Danielle Ocean pays for monthly pool maintenance for her home swimming pool Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals How is the market for pool maintenance services affected by this A There is a decrease in the supply of pool maintenance services C There is a decrease in the quantity of pool maintenance services supplied D There is an increase in the supply of pool maintenance services 13 Which of the following best explains why unemployment rates are higher in the European economies than in the United States A European industries pay a lower wage rate than industries in the United States C Workers in Europe are less productive than workers in the United States D More Europeans go to school fulltime and are therefore not able to participate in the labor market 14 At low wages the labor supply curve for most people slopes upward because A the demand for labor is perfectly elastic at low wages C as wages increase income also increases unless hours worked decrease D the supply of labor is perfectly inelastic at low wages 15 Let MP marginal product P output price and W wage then the equation that represents the condition where a competitive rm would hire another worker is APXMPW BPXWgtMP DPXMPltW 16 An individual39s labor supply curve shows A the relationship between the quantity of hours worked and total income earned by that individual B the maximum wage rates offered to that individual by various potential employers D the relationship between wages and the quantity of labor that a rm is willing to employ 17 Which of the following will not cause the labor demand curve to shift to the right A an increase in the market wage rate B an increase in the price of the rm39s product C a technological improvement that increases labor productivity 18 The labor supply for an industry would decrease if A a greater percentage of women want to work outside the home B the wage rate falls D the government welcomes foreign workers into the country 19 Private costs A are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good B are borne by producers of a good while social costs are borne by government C are borne by consumers of a good while social costs are borne by government 20 Which of the following is an example of a common resource A taxicab services C rabbit fur D the stock of knowledge in the public domain 21 Which of the following displays these two characteristics nonrivalry and nonexcludability in consumption A common resources C private goods D quasipublic goods 22 A monopoly is a seller of a product A without a wellde ned demand curve B with many substitutes D with a perfectly inelastic demand 23 One reason why the coffeehouse market is competitive is that A consumption takes place in public B demand for specialty coffee is very high C it is trendy and therefore is likely to have a customer following 24 The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because A entry into the market is blocked B barriers to entry are very low C there are many rms in the market 25 Which of the following goods is directly counted in GDP A the plastic bags that Subway purchases to wrap its sandwiches B the lettuce that Subway purchases for its sandwiches C the bread that Subway purchases for its sandwiches 26 Which of the following would be directly counted in GDP in N O H O 390 B kitchen cabinets built in 1887 extracted from the 1887 home and installed in a brand new countrystyle home C kitchen cabinets built in 1887 extracted from the 1887 home and installed in a farm house built in 1950 D none of the these 27 Gross domestic product understates the total production of nal goods and services because of the omission of A exports B in ation C intermediate goods 28 Which of the following is an objective of scal policy B discovering a cure for Ale C health care coverage for all Americans D energy independence from Middle East oil 29 If the economy is slipping into a recession which of the following would be an appropriate scal policy A a decrease in oil prices C a decrease in government purchases D an increase in the money supply and a decrease in interest rates 30 Before the Great Depression of the 19305 the majority of government spending took place at the and after the Great Depression the majority of government spending took place at the A federal level state level B federal level state and local levels C local level federal level 31 Which of the following functions of money would be violated if in ation were high A medium of exchange B certi cate of gold D unit of account 32 In economics money is de ned as B the total amount of salary interest and rental income earned during a yeah C the total value of one39s assets minus the total value of one39s debts in current prices D the total value of one39s assets in current prices 33 Dollar bills in the modern economy serve as money because B they have value as a commodity independent of their use as money C they can be redeemed for gold by the central bank D they are backed by the gold stored in Fort Knox 34 In an economy with there are more prices than in an economy with B money barter C at moneycommodity money D barter money 35 The M1 measure of the money supply equals A currency plus checking account balances plus traveler39s checks plus savings account balances B currency plus checking account balances D paper money plus coins in circulation 36 The M2 measure of the money supply equals B savings account balances plus smalldenomination time deposits plus noninstitutional money market fund shares C M1 plus savings account balances plus smalldenomination time deposits D savings account balances plus smalldenomination time deposits plus traveler39s checks 37 If the central bank can act as a lender of last resort during a banking panic banks can A encourage the public to borrow directly from the central bank and this will worsen the banking panic C borrow more and more money from the central bank and this will lower its reserves and decrease the public39s faith in the banking system D call in their loans to their customers and eventually restore the public39s faith in the banking system 38 Money market mutual funds sell shares to investors and use the money to buy A overseas assets through foreign direct investment B foreign currency D mortgagebacked securities 39 To offset the effect of households and rms deciding to hold less of their money in checking account deposits and more in currency the Federal Reserve could A lower bank taxes C raise the discount rate D raise the required reserve ratio 40 The goals of monetary policy tend to be interrelated For example when the Fed pursues the goal of it also can achieve the goal of simultaneously A stability of nancial markets a low current account de cit B high employment lowering government spending C economic growth a low current account de cit 41 Monetary policy refers to the actions the A Federal Reserve takes to manage government spending and taxes to pursue its economic objectives B President and Congress take to manage the money supply and interest rates to pursue their economic objectives D President and Congress take to manage government spending and taxes to pursue their economic objectives 42 The Federal Reserve System39s four monetary policy goals are A price stability low government budget de cits low current account de cits and low rate of bank failures B low government budget de cits low current account de cits high employment and a high foreign exchange value of the dollar C low rate of bank failures high reserve ratios price stability and economic growth 43 Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23 What is Haley39s opportunity cost of making a bracelet A 2 necklaces B 34 of a bracelet C 3 bracelets 44 Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23 Which of the following statements is true A Haley has an absolute advantage in making necklaces and Serena in making bracelets B Haley has an absolute advantage in making both products C Serena has an absolute advantage in making both products 45 Comparative advantage means the ability to produce a good or service A at a higher pro t level than any other producer B at a lower selling price than any other producer D of a higher quality than any other producer 46 If there is currently a surplus of dollars which of the following would you expect to see in the foreign exchange market A There will be a decrease in the supply of dollars B The dollar will appreciate D There will be a decrease in the demand for dollars 47 Currency traders expect the value of the dollar to fall What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market A Demand for dollars will decrease and supply of dollars will decrease B Demand for dollars will increase and supply of dollars will decrease C Demand for dollars will increase and supply of dollars will increase 48 If the dollar appreciates against the Mexican peso A The value of Mexican imports to the United States does not change B Mexican imports to the US become more expensive C US exports to Mexico become less expensive 49 You decide to work in Japan for the next 10 years accumulate some savings then move back to the United States and convert your savings from yen to dollars At the time of your move economists predict that consumers in the United States have reignited their love of Japanese products especially hybrid cars and expect that this strong preference for Japanese products will continue for the next decade How should this in uence your decision to work and save in Japan B You should be discouraged as the growing US preference forJapanese goods should increase the value of the yen to the dollar and decrease the value of your savings when converted to dollars C You should be discouraged as the growing US preference forJapanese goods should decrease the value of the yen to the dollar and decrease the value of your savings when converted to dollars D You should be encouraged as the growing US preference forJapanese goods should decrease the value of the yen to the dollar and raise the value of your savings when converted to dollars 50 If relative purchasing power between the United States and Argentina is 322 pesos per dollar under which circumstances would we say that the dollar is overvalued A if the actual exchange rate between the dollar and the Argentinean peso is 3 pesos per dollar B if the actual exchange rate between the dollar and the Argentinean peso is 322 pesos per dollar D if the actual exchange rate between the dollar and the Argentinean peso is 022 pesos per dollar 51 If the purchasing power of the dollar is greater than the purchasing power of the euro purchasing power parity predicts that the exchange rate will A not uctuate and stay constant in the long run B increase if the exchange rate is greater than 1 euro per dollar C decrease if the exchange rate is less than 1 euro per dollar 52 China has been accused of deliberately undervaluing its currency the yuan in order to A maintain purchasing power parity B increase its exports D prevent de ation 53 Shares of stock and longterm debt including corporate and government bonds and bank loans are bought and sold on A commodity markets B the stock market D foreign exchange markets 54 What two countries each accounted for more than 25 of all foreign purchases of US stocks and bonds in 2008 A Mexico and Canada B Japan and Mexico D Japan and India
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