MGT330 Final Exam4
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This 13 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 97 views.
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Date Created: 11/11/15
1) By definition, what is economics the study of? A . the choices people make to attain their goals, given their scarce resources. B. how to make money in a market economy. C. supply and demand. D. how to make money in the stock market. 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 benefits. What term best describes this behavior? A. emotionally B . rationally C. selfishly D. equitably 3) What is the term in economics by which a group of buyers and sellers of a product come together to trade? A . market B. tradeoff C. collective D. cooperative 4) If a commercial dairy farm wants to raise funds to purchase feeding troughs, in which market does it do so? A . factor market. B. dairy products market. C. output market. D. product market. 5) Which of the following statements describes the actions of producers in the circular flow model? A . hire resources sold by households in the factor market. B. spend earnings from resource sales on goods and services in the product market. C. sell goods and services in the input market. D. and households spend earnings from resource sales on goods and services in the factor market. 6) Which of the following is not a critical function of the government in facilitating the operation of a market economy? A. ensuring an equal distribution of income to all citizens. B. enforcing contracts. C . protecting private property. D. enforcing property rights. 7) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand. A . vertical; downward sloping B. upward sloping; horizontal C. downward sloping; vertical D. horizontal; downward sloping 8) Economists in general A. Do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. B. Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. C . Do not try to explain people's tastes, but they do try to explain what happens when tastes change. D. Believe that they must be able to explain people's tastes in order to explain what happens when tastes change. 9) 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 A. relatively inelastic. B . relatively elastic. C. unitelastic. A. relatively inelastic. D. perfectly elastic. 10) At a product's equilibrium price A. the quantity of the product demanded is less than the quantity of the product supplied. B. the product's demand curve is the same as the product's supply curve. C. the quantity of the product demanded is greater than the quantity of the product supplied. D . the product's demand curve crosses the product's supply curve. 11) Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, market forces no longer apply. B. At equilibrium, demand equals supply. C . At equilibrium, quantity demanded equals quantity supplied. D. At equilibrium, scarcity is eliminated. 12) Which of the following is evidence of a surplus of bananas? A. The equilibrium price of bananas rises due to an increase in demand. B. Firms raise the price of bananas. C . The price of bananas is lowered in order to increase sales. D. The quantity demanded of bananas is greater than the quantity supplied. 13) Marginal revenue product of labor for a competitive seller is A. the output price multiplied by the quantity sold. B. the change in total product from hiring one more worker. C . equal to the marginal product of labor multiplied by the output price. D. the marginal revenue of the product multiplied by the output price. 14) Which of the following best explains why unemployment rates are higher in the European economies than in the United States? A. Workers in Europe are less productive than workers in the United States. B. More Europeans go to school fulltime and are therefore not able to participate in the labor market. C . Unemployment benefits are more generous in Europe than in the United States. D. European industries pay a lower wage rate than industries in the United States. 15) Marginal revenue product for a perfectly competitive seller is equal to A. the change in total revenue that results from hiring another worker. B. the output price multiplied by the total product of labor. C. the output price multiplied by the number workers hired. D . the marginal cost of production. 16) The labor supply for an industry would decrease if A. the government welcomes foreign workers into the country. B . the wage rate falls. C. the percentage of the population from age 16 to 65 decreases. D. a greater percentage of women want to work outside the home. 17) A firm's demand for labor curve is also called its A. marginal valuation curve. B. marginal factor cost of labor curve. C. marginal benefit of labor curve. D . marginal revenue product of labor curve. 18) How will an increase in population affect the labor market? A. It will increase the supply of jobs. B. It will cause a decrease in the quantity of labor demanded. C. It will increase the opportunity cost of leisure. D . It will shift the market supply curve. 19) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? A. quasipublic goods B. private goods C. common resources D . public goods 20) Which of the following displays rivalry and excludability in consumption? A. quasipublic goods B. private goods C . common resources D. public goods 21) Private costs A. are borne by producers of a good while social costs are borne by society at large. B. are borne by consumers of a good while social costs are borne by government. C. are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good. D. are borne by producers of a good while social costs are borne by government. 22) The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because A. products are differentiated. B. there are many firms in the market. C. entry into the market is blocked. D. barriers to entry are very low. 23) Which of the following is the best example of an oligopolistic industry? A. public education B . the pharmaceutical industry C. the beauty products industry D. the beef market 24) One reason why the coffeehouse market is competitive is that A . barriers to entry are low. B. it is trendy and therefore is likely to have a customer following. C. consumption takes place in public. D. demand for specialty coffee is very high. 25) Gross domestic product understates the total production of final goods and services because of the omission of A. inflation. B. intermediate goods. C. exports. D . the underground economy. 26) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude A. a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. B. a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. C . it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. D. a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 27) Which of the following would be directly counted in GDP in 2010? A . kitchen cabinets purchased from Home Depot in 2010 to be installed in a house built in 1997 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 28) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy? A . a decrease in taxes B. a decrease in government purchases C. a decrease in oil prices D. an increase in the money supply and a decrease in interest rates 29) Before the Great Depression of the 1930s, 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 and local levels B. local level; federal level C. federal level; state level D . state and local levels; federal level 30) Which of the following does not reflect the state of the tax system in the United States today? A. The tax laws are used to achieve macroeconomic goals of high employment and economic growth. B. The tax laws are used to achieve social policy goals such as energy conservation. C. Many taxpayers use software or professional tax preparation companies to file their income taxes. D . The tax laws have become increasingly simplified as private citizens have demanded these changes. 31) If credit card balances rise in the economy, then M1 will ________ and M2 will ________. A . not change; not change B. decrease; increase C. increase; decrease D. not change; increase E. increase; increase 32) Dollar bills in the modern economy serve as money because A. they have value as a commodity independent of their use as money. B . people have confidence that others will accept them as money. C. they are backed by the gold stored in Fort Knox. D. they can be redeemed for gold by the central bank. 33) Which of the following assets is most liquid? A. savings account B. stock C . money D. bond 34) Dollar bills in the modern economy serve as money because A. they have value as a commodity independent of their use as money. B . people have confidence that others will accept them as money. C. they are backed by the gold stored in Fort Knox. D. they can be redeemed for gold by the central bank. 35) The M1 measure of the money supply equals A . currency plus checking account balances plus traveler's checks. B. currency plus checking account balances plus traveler's checks plus savings account balances. C. paper money plus coins in circulation. D. currency plus checking account balances. 36) Which of the following is one of the most important benefits of money in an economy? A . Money makes exchange easier, leading to more specialization and higher productivity. B. Money encourages people to produce all of their own goods (selfsufficiency) and therefore increases economic stability. C. Money allows for the exchange of goods and services. D. Money allows for the accumulation of wealth. 37) Money market mutual funds sell shares to investors and use the money to buy A . shortterm securities. B. overseas assets through foreign direct investment. C. mortgagebacked securities. D. foreign currency. 38) Which of the following determines the amount of money the banking system as a whole can create? A . the quantity of bank reserves B. the quantity of vault cash held by banks C. the gold reserves held by the Federal Reserve D. the limit on profits by banks imposed by the U.S. Congress 39) To increase the money supply, the Federal Reserve could A . conduct an open market purchase of Treasury securities. B. lower transfer payments. C. raise the discount rate. D. raise the required reserve ratio. E. decrease income taxes. 40) The Federal Reserve's two main ________ are the money supply and the interest rate. A. fiscal policy targets B. fiscal tools C . monetary policy targets D. policy tools 41) If the probability of losing your job remains ________, a recession would be a good time to purchase a home because the Fed usually ________ interest rates during this time. A. high; raises B . low; lowers C. high; lowers D. low; does not change E. low; raises 42) Toll Brothers, a residential home builder, did well during the recession in 2001 but did not do so well in 2007 after the housing bubble burst. The reason for this is A. the Fed raised interest rates in 2001 but did not believe that cutting the interest rate in 2007 would be enough to revive the housing market. B. the Fed lowered interest rates in 2001 but raised interest rates in 2007 to help fight inflation. C . the Fed lowered interest rates in 2001 but did not believe that cutting the interest rate in 2007 would be enough to revive the housing market. D. the Fed raised interest rates in 2001 but lowered interest rates in 2007 to revive the housing market. 43) Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23. What is Haley's opportunity cost of making a bracelet? A . 1 1/3 necklaces B. 3/4 of a bracelet C. 3 bracelets D. 2 necklaces 44) For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries? A. France has the comparative advantage in wine and cheese. B. Italy has the comparative advantage in cheese. C . Italy has the comparative advantage in wine. D. France has the comparative advantage in wine. 45) Comparative advantage means the ability to produce a good or service A. of a higher quality than any other producer. B. at a lower selling price than any other producer. C . at a lower opportunity cost than any other producer. D. at a higher profit level than any other producer. 46) When the market value of the dollar rises relative to other currencies around the world, we say that A. the demand for dollars has increased. B . the dollar has appreciated. C. the dollar has depreciated. D. the supply of dollars has increased. 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 increase. B. Demand for dollars will increase, and supply of dollars will decrease. C. Demand for dollars will increase, and supply of dollars will increase. D. Demand for dollars will decrease, and supply of dollars will decrease. 48) How does an increase in a country's exchange rate affect its balance of trade? A. An increase in the exchange rate reduces imports, raises exports, and increases the balance of trade. B. An increase in the exchange rate reduces imports, raises exports, and reduces the balance of trade. C. An increase in the exchange rate raises imports, reduces exports, and increases the balance of trade. D . An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade. 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 influence your decision to work and save in Japan? A. You should be encouraged as the growing U.S. preference for Japanese goods should decrease the value of the yen to the dollar and raise the value of your savings when converted to dollars. B. You should be discouraged as the growing U.S. preference for Japanese goods should decrease the value of the yen to the dollar and decrease the value of your savings when converted to dollars. C . You should be encouraged as the growing U.S. preference for Japanese goods should increase the value of the yen to the dollar and raise the value of your savings when converted to dollars. D. You should be discouraged as the growing U.S. preference for Japanese goods should increase the value of the yen to the dollar and decrease the value of your savings when converted to dollars. 50) The gold standard is an example of A . a fixed exchange rate system. B. a managed float exchange rate system. C. a flexible exchange rate system. D. a floating exchange rate system. 51) Pegging a country's exchange rate to the dollar can be advantageous if A. a country wishes to conduct independent monetary policy. B. investors believe the dollar to be more stable than the domestic country's currency. C . imports are not a significant fraction of the goods the country's consumers buy. D. the country does not trade much with the United States. 52) If interest rates in the United States rise, A. the value of the dollar will fall as foreign investors increase their holdings of U.S. investments. B . the value of the dollar will rise as the foreign investors increase their holdings of U.S. investments. C. the value of the dollar will rise as foreign investors sell their U.S. investments. D. the value of the dollar will fall as foreign investors sell their U.S. investments. 53) China has been accused of deliberately undervaluing its currency, the yuan, in order to A. prevent deflation. B. increase its imports. C. maintain purchasing power parity. D . increase its exports. 54) Shares of stock and longterm debt, including corporate and government bonds and bank loans, are bought and sold on A. foreign exchange markets. B . capital markets. C. commodity markets. D. the stock market.
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