ECO 212 Final Exam 4
ECO 212 Final Exam 4
CSU - Dominguez hills
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Date Created: 11/16/15
1Unifver5ity F Phoenur 1 By definition what is economics the study of 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 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 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 B dairy products market C output market D product market 5 Which of the following statements describes the actions of producers in the circular ow model 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 D enforcing property rights 7 A demand curve which is represents perfectly inelastic demand and a demand curve which is represents inelastic demand B upward sloping horizontal C downward sloping vertical D horizontal downward sloping 8 Economists in general A Do not believe that people39s 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 D Believe that they must be able to explain people39s 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 C unitelastic A relatively inelastic D perfectly elastic 10 At a product39s equilibrium price A the quantity of the product demanded is less than the quantity of the product supplied B the product39s demand curve is the same as the product39s supply curve C the quantity of the product demanded is greater than the quantity of the product supplied 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 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 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 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 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 16 The labor supply for an industry would decrease if A the government welcomes foreign workers into the country 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 firm39s 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 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 19 Which of the following displays these two characteristics nonrivalry and nonexcludability in consumption A quasipublic goods B private goods C common resources 20 Which of the following displays rivalry and excludability in consumption A quasipublic goods B private goods D public goods 21 Private costs 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 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 C the beauty products industry D the beef market 24 One reason why the coffeehouse market is competitive is that 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 in ation B intermediate goods C exports 26 The Philippines and Vietnam have roughly the same size population Suppose the GDP of the Philippines is 1000 billion and the GDP of Vietnam is 10000 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 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 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 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 30 Which of the following does not re ect 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 31 If credit card balances rise in the economy then M1 will and M2 will decrease increase increase decrease not change increase meow 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 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 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 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 B currency plus checking account balances plus traveler39s 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 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 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 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 US Congress 39 To increase the money supply the Federal Reserve could B lower transfer payments C raise the discount rate D raise the required reserve ratio E decrease income taxes 40 The Federal Reserve39s two main A fiscal policy targets B fiscal tools D policy tools 41 If the probability of losing your job remains purchase a home because the Fed usually A high raises C high lowers D low does not change E low raises are the money supply and the interest rate a recession would be a good time to interest rates during this time 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 in ation 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 Haley39s opportunity cost of making a bracelet B 34 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 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 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 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 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 country39s 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 F 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 A You should be encouraged as the growing US 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 US 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 D You should be discouraged as the growing US 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 B a managed oat exchange rate system C a exible exchange rate system D a oating exchange rate system 51 Pegging a country39s 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 country39s currency 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 US investments C the value of the dollar Will rise as foreign investors sell their US investments D the value of the dollar Will fall as foreign investors sell their US investments 53 China has been accused of deliberately undervaluing its currency the yuan in order to A prevent de ation B increase its imports C maintain purchasing power parity 54 Shares of stock and longterm debt including corporate and government bonds and bank loans are bought and sold on A foreign exchange markets C commodity markets D the stock market
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