ECO 212 Week 5 Final Examination
ECO 212 Week 5 Final Examination
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Date Created: 11/16/15
l The decision of which assumptions to make is B Not a particularly important decision for an economist C Usually regarded as the easiest part of the scientific method D An easy decision for an economist but a difficult decision for a physicist or a chemist 2 Economic models B Were once thought to be useful but that is no longer true C Can be useful even if they are not particularly realistic D Cannot be useful if they are based on false assumptions 3 When studying the effects of public policy changes economists A Always refrain from making assumptions B Consider only the shortrun effects of those policy changes and not the longrun effects D Consider only the direct effects of those policy changes and not the indirect effects 4 A competitive market is a market in which A An auctioneer helps set prices and arrange sales C There are only a few sellers D The forces of supply and demand do not apply 5 In a market economy A Supply determines demand and in turn demand determines prices C Demand determines supply and in turn supply determines prices The allocation of scarce resources determines prices and in turn prices determine supply and demand 6 Which of the following statements is correct A Buyers determine supply and sellers determine demand B Buyers and sellers as one group determine demand but only sellers determine supply D Buyers and sellers as one group determine supply but only buyers determine demand 7 If a decrease in income increases the demand for a good then the good is A A substitute good C A complement good D A normal good 8 A likely example of substitute goods for most people would be B Pencils and pens C Tennis balls and tennis rackets D Televisions and subscriptions to cable television services 9 Economists in general A B Incorporate tastes into economic models only to the extent that tastes determine Whether pairs of goods are substitutes or complements C Believe that they must be able to explain people39s tastes in order to explain What happens When tastes change Do not believe that people39s tastes determine demand and therefore they ignore the subject of tastes 10 A decrease in input costs to firms in a market Will result in B An increase in equilibrium price and an increase in equilibrium quantity C A decrease in equilibrium price and a decrease in equilibrium quantity D An increase in equilibrium price and no change in equilibrium quantity 11 Another term for equilibrium price is A Dynamic price B Satisfactory price 0 D Quantitydefining price 12 The unique point at Which the supply and demand curves intersect is called A Market harmony B C Coincidence D Cohesion 13 The marginal product of labor is equal to the incremental cost associated with a one unit increase in labor A C incremental profit associated with a one unit increase in labor D increase in labor necessary to generate a one unit increase in output 14 When a firm39s only variable input is labor then the slope of the production function measures the A total cost B quantity of labor C quantity of output 15 On a 100acre farm a farmer is able to produce 3000 bushels of wheat when he hires 2 workers He is able to produce 4400 bushels of wheat when he hires 3 workers Which of the following possibilities is consistent with the property of diminishing marginal product B The farmer is able to produce 5800 bushels of wheat when he hires 4 workers C The farmer is able to produce 6000 bushels of wheat when he hires 4 workers D All of these are correct 16 A Luddite would be expected to fear A supplyshifting technologies C laboraugmenting technologies D the Chairman of the Federal Reserve 17 The term Luddite is used to describe B a person who readily adopts the latest technological advances C a person who fears computers D any mythical historical figure 18 Suppose that a new invention decreases the marginal productivity of labor shifting labor demand to the left Such an invention would be an example of laborsaving technology laboraugmenting technology POP supplyshifting technology 20 The typical firm in the U S economy A is perfectly competitive B has some degree of market power D is a monopoly 21 In which of the following markets is economic profit driven to zero in the long run B Oligopoly C Monopoly D Cartels 22 A firm in a monopolistically competitive market is similar to a monopolist in the sense that it A has no barriers to entry or exit B must overcome significant barriers to entry D it is the only seller of the good 23 The US market for locomotives is divided between two producers General Electric has 70 percent of the market and General Motors has 30 percent This market is an example of B monopolistic competition C a collusive monopoly D a cartel 24 The commercial jetliner industry consisting of Boeing and Airbus would best be described as a an B perfectly competitive market C monopolistically competitive market D monopoly 25 For an economy as a whole B GDP measures income more precisely than it measures expenditure C income is greater than expenditure D expenditure is greater than income 26 Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study A Retail sales at stores show large gains B The price of oranges rises after an early frost D Real GDP grows by 31 percent in the third quarter 27 Gross domestic product serves as a measure of two things the value of the nation39s output of goods and services for domestic citizens and the value of the nation39s output of goods and services for the rest of the world B the nation39s saving and the nation39s investment C the total spending of everyone in the economy and the total saving of everyone in the economy IF 28 Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift B aggregate demand to the left C aggregate supply to the right D aggregate supply to the left 29 When production costs rise A the aggregate demand curve shifts to the right B the aggregate demand curve shifts to the left C the shortrun aggregate supply curve shifts to the right 30 Stag ation exists when prices A fall and output rises B and output fall C and output rise 31 One determinant of the longrun average unemployment rate is the existence of efficiency wages while the in ation rate depends primarily upon the extent to which firms are competitive B market power of unions while the in ation rate depends primarily upon government spending rate of growth of the money supply while the in ation rate depends primarily upon the market power of unions 32 Closely watched indicators such as the in ation rate and unemployment are released each month by the A President39s Council of Economic Advisors B Bureau of the Budget C Department of the Treasury 33 If policymakers increase aggregate demand the price level B falls but unemployment rises C and unemployment rise D and unemployment fall 34 Which of the following statements about US in ation is NOT correct The US in ation rate has varied over time but international data shows even more variation B The US public has viewed in ation of even 7 percent as a major economic problem D There were long periods in the nineteenth century during which prices fell 35 Economists all agree that A moderate in ation is as costly as high in ation B C neither high in ation nor moderate in ation is very costly D both high and moderate in ation are quite costly 36 Which of the following concerning the history of US in ation is NOT correct A During it s history the United States has experienced periods of de ation B In ation in the 1970s was below the average over the last 70 years C D There was about a 16fold increase in the price level over the last 70 years 37 Nominal GDP measures A None of these are correct B the total income received from producing final goods and services measured in constant dollars C the total quantity of final goods and services produced D 38 Economic variables whose values are measured in monetary units are called A dichotomous variables B C classical variables D real variables 39 According to the classical dichotomy which of the following is in uenced by monetary factors A real GDP B unemployment C D All of the above are correct 40 According to the classical dichotomy which of the following is NOT in uenced by monetary factors A nominal GDP and nominal interest rates B C the price level and nominal GDP D None of these are correct 41 Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to A B the classical dichotomy but not the quantity theory of money C the quantity theory of money but not the classical dichotomy D neither the classical dichotomy nor the quantity theory of money 42 According to the classical dichotomy when the money supply doubles which of the following also double A B the price level but not the nominal wage C the nominal wage but not the price level D neither the nominal wage nor the price level 43 For any country if the world price of computers is higher than the domestic price of computers without trade that country should A import computers since that country has a comparative advantage in computers neither export nor import computers since that country already produces computers at a low cost compared to other countries C neither export nor import computers since that country cannot gain from trade 44 The price of a good that prevails in a world market is called the A relative price C comparative price D absolute price 45 The price of cotton that prevails in international markets is called the B export price of cotton C comparativeadvantage price of cotton D import price of cotton 46 Out ow represents the quantity of dollars A demanded for the purpose of importing foreign goods and services B supplied for the purpose of selling assets domestically C demanded for the purpose of buying US net exports of goods and services 47 The openeconomy macroeconomic model includes A neither the market for loanable funds or the market for foreigncurrency exchange B only the market for loanable funds D only the market for foreigncurrency exchange 48 The openeconomy macroeconomic model examines the determination of B the output growth rate and the real interest rate C the output growth rate and the in ation rate D unemployment and the exchange rate 49 The beforetrade price of fish in Greece is 300 per pound The world price of fish is 500 per pound Greece is a pricetaker in the fish market If Greece begins to allow trade in fish its consumers of fish will become better off its producers of fish will become worse off and on balance the citizens of Greece will become worse off better off its producers of fish will become better off and on balance the citizens of Greece will become better off worse off its producers of fish will become better off and on balance the citizens of Greece 39 will become worse off IF 50 The beforetrade price of fish in Greece is 300 per pound The world price of fish is 500 per pound Greece is a pricetaker in the fish market If Greece allows trade in fish then Greece Hill become an B importer of fish and the price of fish in Greece will be 300 C exporter of fish and the price of fish in Greece will be 300 D importer of fish and the price of fish in Greece will be 500 51 With which of the Ten Principles of Economics is the study of international trade most closely connected A Prices rise when the government prints too much money C Governments can sometimes improve market outcomes D Trade can make everyone better off 5392 Which of the following statements is true B Free trade benefits a country when it exports but harms it when it imports Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses whereas quotas do not impose deadweight losses quotVoluntaryquot limits on Canadian exports of hogs are better for the United States than US tariffs placed on Canadian hog exports 53 Aquilonia has decided to end its policy of not trading with the rest of the world When it ends its trade restrictions it discovers that it is importing incense exporting steel and neither importing nor exporting rugs Which groups in Aquilonia are better off as a result of the new freetrade policy A consumers of all three goods B consumers of incense and producers of rugs Cproducers of incense and consumers of steel 54 Aquilonia has decided to end its policy of not trading with the rest of the world When it ends its trade restrictions it discovers that it is importing incense exporting steel and neither importing nor exporting rugs We can conclude that producer surplus in Aquilonia is now A higher in the incense and steel markets and unchanged in the rug market B lower in the incense and rug markets and higher in the steel market D lower in the incense and steel markets and the same in the rug market
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