ECO 212 Week 5 Final Examination
ECO 212 Week 5 Final Examination
CSU - Dominguez hills
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Date Created: 11/16/15
1) The decision of which assumptions to make is A. Usually regarded as an art in scientific thinking. 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 A. Must incorporate all aspects of the economy if those models are to be useful. 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. C. Sometimes make different assumptions about the short run and the long run. 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. B. No individual buyer or seller has any significant impact on the market price. 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. B. Supply and demand determine prices and, in turn, prices allocate scarce resources. C. Demand determines supply and, in turn, supply determines prices. The allocation of scarce resources determines prices and, in turn, prices determine supply D. 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. C. Buyers determine demand and 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. B. An inferior good. C. A complement good. D. A normal good 8) A likely example of substitute goods for most people would be A. Peanut butter and jelly. B. Pencils and pens. C. Tennis balls and tennis rackets. D. Televisions and subscriptions to cable television services. 9) Economists in general Do not try to explain people's tastes, but they do try to explain what happens when tastes A. change. B. Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. Believe that they must be able to explain people's tastes in order to explain what happens C. when tastes change. D. Do not believe that people's 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 A. A decrease in equilibrium price and an increase in equilibrium quantity. 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. C. Marketclearing price. D. Quantitydefining price 12) The unique point at which the supply and demand curves intersect is called A. Market harmony. B. Equilibrium. C. Coincidence. D. Cohesion. 13) The marginal product of labor is equal to the A. incremental cost associated with a one unit increase in labor. B. increase in output obtained from a one unit increase in labor. 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 firm's 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. D. marginal product of labor 15) On a 100acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? A. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. B. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. C. The farmer is able to produce 6,000 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. B. laborsaving technologies. C. laboraugmenting technologies. D. the Chairman of the Federal Reserve 17) The term Luddite is used to describe A. a person who opposes technological advances. 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 A. Luddite technology. B. laborsaving technology. C. laboraugmenting technology. D. supplyshifting technology. 20) The typical firm in the U. S. economy A. is perfectly competitive. B. has some degree of market power. C. sells its product for a price that is equal to the marginal cost of producing the last unit. D. is a monopoly. 21) In which of the following markets is economic profit driven to zero in the long run? A. Perfect competition 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. C. faces a downwardsloping demand curve. D. it is the only seller of the good. 23) The U.S. 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 A. a duopoly. 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) A. oligopoly. B. perfectly competitive market. C. monopolistically competitive market. D. monopoly. 25) For an economy as a whole, A.income is equal to expenditure. 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. C.Unemployment rate rises from 5 percent to 5.5 percent. D.Real GDP grows by 3.1 percent in the third quarter. 27) Gross domestic product serves as a measure of two things: the value of the nation's output of goods and services for domestic citizens and the value of the A. nation's output of goods and services for the rest of the world. B.the nation's saving and the nation's investment. C. the total spending of everyone in the economy and the total saving of everyone in the economy. the total income of everyone in the economy and the total expenditure on the nation's output of D. goods and services. 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 A. aggregate demand to the right. 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. D.the shortrun aggregate supply curve shifts to the left. 30) Stagflation exists when prices A. fall and output rises. B.and output fall. C.and output rise. D.rise and output falls. 31) One determinant of the longrun average unemployment rate is the existence of efficiency wages, while the inflation rate depends primarily upon the extent to A. which firms are competitive. B.market power of unions, while the inflation rate depends primarily upon government spending. C. rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions. D.minimum wage, while the inflation rate depends primarily upon the money supply growth rate. 32) Closely watched indicators such as the inflation rate and unemployment are released each month by the A.President's Council of Economic Advisors. B.Bureau of the Budget. C.Department of the Treasury. D.Bureau of Labor Statistics 33) If policymakers increase aggregate demand, the price level A.rises, but unemployment falls. B.falls, but unemployment rises. C.and unemployment rise. D.and unemployment fall. 34) Which of the following statements about U.S. inflation is NOT correct The U.S. inflation rate has varied over time, but international data shows even more A. variation B. The U.S. public has viewed inflation of even 7 percent as a major economic problem. C. Low inflation was viewed as a triumph of President Carter's economic policy. D. There were long periods in the nineteenth century during which prices fell. 35. Economists all agree that A. moderate inflation is as costly as high inflation B. high inflation is costly, but disagree about the costs of moderate inflation C. neither high inflation nor moderate inflation is very costly D. both high and moderate inflation are quite costly 36. Which of the following concerning the history of U.S. inflation is NOT correct? A. During it’s history the United States has experienced periods of deflation B. Inflation in the 1970s was below the average over the last 70 years C. Prices rose at an average annual rate of about 4 percent over the last 70 years 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. the dollar value of the economy's output of final goods and services 38) Economic variables whose values are measured in monetary units are called A. dichotomous variables. B. nominal variables C. classical variables. D. real variables. 39) According to the classical dichotomy, which of the following is influenced by monetary factors? A. real GDP B. unemployment C. nominal interest rates D. All of the above are correct 40) According to the classical dichotomy, which of the following is NOT influenced by monetary factors? A. nominal GDP and nominal interest rates B. real wages and real GDP 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. both the classical dichotomy and the quantity theory of money. 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. the price level and nominal wages 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 B. cost compared to other countries. C.neither export nor import computers, since that country cannot gain from trade. D.export computers, since that country has a comparative advantage in computers 44) The price of a good that prevails in a world market is called the A.relative price. B.world price. C.comparative price. D.absolute price. 45) The price of cotton that prevails in international markets is called the A.world price of cotton. B.export price of cotton. C.comparativeadvantage price of cotton. D.import price of cotton. 46) Outflow 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 U.S. net exports of goods and services. D.supplied for the purpose of buying assets abroad. 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. C.both the market for loanable funds and the market for foreigncurrency exchange. D.only the market for foreigncurrency exchange. 48) The openeconomy macroeconomic model examines the determination of A.the trade balance and the exchange rate. B.the output growth rate and the real interest rate. C.the output growth rate and the inflation rate. D. unemployment and the exchange rate. 49) The beforetrade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 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 A. will become worse off. better off, its producers of fish will become better off, and on balance the citizens of Greece B. will become better off. C. worse off, its producers of fish will become better off, and on balance the citizens of Greece will become worse off. worse off, its producers of fish will become better off, and on balance the citizens of D. Greece will become better off. 50) The beforetrade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a pricetaker in the fish market. If Greece allows trade in fish, then Greece will become an A. exporter of fish and the price of fish in Greece will be $5.00. B.importer of fish and the price of fish in Greece will be $3.00. C.exporter of fish and the price of fish in Greece will be $3.00. D.importer of fish and the price of fish in Greece will be $5.00. 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. B.People face tradeoffs. C. Governments can sometimes improve market outcomes. D.Trade can make everyone better off 52) Which of the following statements is true? A.Free trade benefits a country both when it exports and when it imports. 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, C. whereas quotas do not impose deadweight losses. "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. D. 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 C.producers of incense and consumers of steel D.producers of steel and consumers of incense 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. C. higher in the steel market, lower in the incense market, and unchanged in the rug market. D.lower in the incense and steel markets, and the same in the rug market.
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