ECO 212 Final Exam 5
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Date Created: 11/11/15
1 Economics does not study correct or incorrect behaviors but rather it assumes that economic agents m their knowledge of the costs and bene ts What term best describes this behavior A r equitably IF C F emotionally D F selfishly 2 According to economics what causes us to have to make choices A F unemployment IF C F greed If D un11m1ted resources 3 What is the term in economics by which a group of buyers and sellers of a product come together to tra A r collective B f cooperative r I D F tradeoff 4 If a commercial dairy farm wants to raise funds to purchase feeding troughs in which market does it d1 output market F A F B product market F D dairy products market 5 Which of the following is an example of spending on goods and services in the circular ow model F A Be11nda purchases a new computer for her taxpreparatlon bus1ness F B J aV1er buys 800 square feet of wood oormg for h1s vacatlon home if D Timmy purchases a new examination table for use in his veterinary clinic 6 What might you call an outward shift of a nation39s production possibilities frontier r1s1ng pr1ces of the two goods on the productlon poss1b111t1es frontler model F an 1mposs1b1e s1tuatlon r B C D a situation in which a country produces more of one good and less of another 7 If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded then t A unitelastic B perfectly elastic C L relatively inelastic f A 39 un1te1astlc 8 Suppose the value of the price elasticity of demand is 3 What does this mean P A 39 A 1 percent 1ncrease 1n the pnce of the good causes quantlty demanded to 1ncrease by 3 percent fquot C A 3 percent 1ncrease 1n the prlce of the good causes quantlty demanded to decrease by 1 percent D if A 1 increase in price causes quantity demanded to fall by 3 units 9 Price elasticity of demand measures if A how respons1ve supphers are to prlce changes ifquot C how respons1ve sales are to a change 1n buyers 1ncomes D r how responsive sales are to changes in the price of a related good 10 Which of the following is evidence of a surplus of bananas Firms raise the price of bananas The equilibrium price of bananas rises due to an increase in demand The quantity demanded of bananas is greater than the quantity supplied I n w gt 11 Which of the following is the correct way to describe equilibrium in a market At equilibrium demand equals supply At equilibrium market forces no longer apply At equilibrium scarcity is eliminated A B C 12 A decrease in the price of GPS systems will result in a decrease in the demand for GPS systems fan B F C an 1ncrease 1n the supply of GPS systems F D a larger quantity of GPS systems supplied 13 Marginal revenue product of labor for a competitive seller is the change in total product from hiring one more worker the output price multiplied by the quantity sold the marginal revenue of the product multiplied by the output price A B C IF 14 Let MP marginal product P output price and W wage then the equation that represents the CO rm would hire another worker is 15 Marginal revenue product for a perfectly competitive seller is equal to A if the output price multiplied by the total product of labor ft B the change 1n total revenue that results from h1r1ng another worker D r the output price multiplied by the number workers hired 16 An individual39s labor supply curve shows the maximum wage rates offered to that individual by various potential employers the relationship between the quantity of hours worked and total income earned by that individual the relationship between wages and the quantity of labor that a firm is willing to employ 17 The labor supply for an industry would decrease if f39 B a greater percentage of women want to work outs1de the home Ifquot C the government welcomes fore1gn workers 1nto the country D r the percentage of the population from age 16 to 65 decreases 18 How will an increase in population affect the labor market if B It w1ll 1ncrease the opportun1ty cost of le1sure C F It will increase the supply of jobs D F It will cause a decrease in the quantity of labor demanded 19 Which of the following displays these two characteristics rivalry and nonexcludability A r a public good Ifquot C a quas1 pub11c good D r a private good 20 Private costs A F are borne by producers of a good while social costs are borne by government B r are borne by producers of a good while social costs are borne by those who cannot afford to purchase tl F D are borne by consumers of a good wh11e soc1al costs are borne by government f A are borne by producers of a good While social costs are borne by government 21 Which of the following displays rivalry and excludability in consumption common I39CSOUI39CCS B LC C quas1 pub11c goods D private goods 22 The key characteristics of a monopolistically competitive market structure include sellers have no incentive to advertise their products B C barriers to entry are strong D all sellers sell a homogeneous product 23 A monopoly is a seller of a product With many substitutes Without a welldefined demand curve With a perfectly inelastic demand A B C IF 24 A characteristic found only in oligopolies is A break even level of profits If C independence of firms D products that are slightly different 25 The Philippines and Vietnam have roughly the same size population Suppose the GDP of the Philippi GDP of Vietnam is 10000 billion You should conclude A r a typical person in Vietnam is 10 times as well off as the typical person in the Philippines B F a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines C F a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines IF 26 Gross domestic product is calculated by summing up the total quantity of goods and services in the economy the total quantity of goods and services produced in the economy during a period of time the total market value of goods and services in the economy 27 Gross domestic product understates the total production of nal goods and services because of the oml If B F intermediate goods C F in ation D F exports 28 If the economy is slipping into a recession which of the following would be an appropriate scal policy an increase in the money supply and a decrease in interest rates F A F B a decrease 1n government purchases ifs D a decrease 1n 011 prlces 29 Fiscal policy refers to changes in state and local taxes and purchases that are intended to achieve macroeconomic policy objectives federal taxes and purchases that are intended to fund the war on terrorism the money supply and interest rates that are intended to achieve macroeconomic policy objectives 30 Before the Great Depression of the 1930s the majority of government spending took place at the Depression the majority of government spending took place at the local level federal level federal level state and local levels B C D federal level state level 31 Which of the following functions of money would be violated if in ation were high f A un1t of account F C cert1f1cate of gold D medium of exchange 32 Economists estimate that of US currency is outside the United States and held primarily by If F B over half fore1gn banks and fore1gn governments C less than one quarter households and firms in countries where there is little confidence in the local curr D less than one quarter foreign banks and foreign governments 33 If credit card balances rise in the economy then M1 will and M2 will A i not change increase B i decrease increase If A not change increase D increase increase L a E 1ncrease decrease 34 In an economy with there are more prices than in an economy with F A barter money F B money barter F C flat moneycommod1ty money 35 Which of the following is one of the most important bene ts of money in an economy Money allows for the exchange of goods and serVices Money allows for the accumulation of wealth Money encourages people to produce all of their own goods selfsufficiency and therefore increases e 36 The M1 measure of the money supply equals A paper money plus coins in circulation currency plus checking account balances Cfi A L paper money plus coins in circulation D L currency plus checking account balances plus traveler39s checks plus savings account balances 37 Which of the following determines the amount of money the banking system as a whole can create ILL the quantity of vault cash held by banks B C L the gold reserves held by the Federal Reserve D the limit on profits by banks imposed by the US Congress 38 Open market operations refer to the purchase or sale of to control the money supply corporate bonds and stocks by the Federal Reserve A C corporate bonds and stocks by the US Treasury D US Treasury securities by the US Treasury 39 If the central bank can act as a lender of last resort during a banking panic banks can A L call in their loans to their customers and eventually restore the public39s faith in the banking system if C borrow more and more money from the central bank and th1s W111 lower 1ts reserves and decrease the pi system if D L encourage the public to borrow directly from the central bank and this will worsen the banking panic 40 The goals of monetary policy tend to be interrelated For example when the Fed pursues the goal of goal of simultaneously economic growth a low current account deficit stability of financial markets a low current account deficit If B C D high employment lowering government spending 41 If the probability of losing your job remains a recession would be a good time to purchase a interest rates during this time A low raises B high raises C low does not change E high lowers 42 The Federal Reserve System39s four monetary policy goals are if A low government budget deflclts low current account deflclts h1gh employment and a h1gh fore1gn exc f C prlce stab111ty low government budget deflclts low current account deflclts and low rate of bank fa11ur f D low rate of bank failures high reserve ratios price stability and economic growth 43 Specializing in the production of a good or service in which one has a comparative advantage enables followingexcept F A engage 1n mutually beneflclal trade W1th other natlons B consume a combmatlon of goods that hes outs1de 1ts own productlon poss1b111tles frontler F D 1ncrease the varlety of products that 1t can consume W1th no 1ncrease 1n resources 44 Comparative advantage means the ability to produce a good or service A F at a lower selling price than any other producer B F of a higher quality than any other producer C r at a higher profit level than any other producer 45 Table 23 Serena Hale Bracelets 8 Necklaces 16 Refer to Table 23 What is Haley39s opportunity cost of making a bracelet A F 34 of a bracelet If r C 2 necklaces A L 34 of a bracelet D L 3 bracelets 46 If there is currently a surplus of dollars which of the following would you expect to see in the foreign The dollar will appreciate There will be a decrease in the demand for dollars There will be a decrease in the supply of dollars A B C If 47 Currency traders expect the value of the dollar to fall What effect will this have on the demand for do in the foreign exchange market Demand for dollars will increase and supply of dollars will decrease A C Demand for dollars will decrease and supply of dollars will decrease D Demand for dollars will increase and supply of dollars will increase 48 When the market value of the dollar rises relative to other currencies around the world we say that the supply of dollars has increased the demand for dollars has increased the dollar has depreciated 49 The gold standard is an example of a oating exchange rate system A B a exible exchange rate system D a managed oat exchange rate system 50 Pegging a country39s exchange rate to the dollar can be advantageous if F A the country does not trade much W1th the Un1ted States F C a country w1shes to conduct 1ndependent monetary pohcy F D investors believe the dollar to be more stable than the domestic country39s currency 51 If relative purchasing power between the United States and Argentina is 322 pesos per dollar under v say that the dollar is quotovervaluedquot if the actual exchange rate between the dollar and the Argentinean peso is 322 pesos per dollar if the actual exchange rate between the dollar and the Argentinean peso is 3 pesos per dollar if the actual exchange rate between the dollar and the Argentinean peso is 022 pesos per dollar A B C If 52 If interest rates in the United States rise the value of the dollar Will fall as foreign investors sell their US investments the value of the dollar Will rise as foreign investors sell their US investments the value of the dollar Will fall as foreign investors increase their holdings of US investments A B C IF 53 If the US government places tariffs on imports from countries that have been accused of deliberately the price of these imports will and the demand for the undervalued currency will rise rise fall fall fall rise A B C 54 China has been accused of deliberately undervaluing its currency the yuan in order to maintain purchasing power parity f B fan C prevent de atlon f D increase its imports
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