ECO 212 Final Exam 7
ECO 212 Final Exam 7
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Date Created: 11/18/15
1 What is the term in economics by which a group of buyers and sellers of a product come together to trade A cooperative B market C tradeoff D collective 2 Consider a good whose consumption takes place publicly On what factors would your decision to buy that good depend A only on the characteristics of the good itself and not on other peoples actions B onlv on how manv other peonle buv the good and not on the good itself C only on the price of the good and not on other factors such as other people s ac ons D both on the characteristics of the product and on how many other people are buying it 3 Why do consumers have to make tradeoffs in deciding what to consume A the prices of goods vary B thev are limited bv a budget constraint C there are not enough of all goods produced D not all goods give them the same amount of satisfaction 4 Which of the following statements describes the actions of producers in the circular flow model A and households spend earnings from resource sales on goods and services in the factor market B hire resourcessold bv households in the factor market C spend earnings from resource sales on goods and services in the product market D sell goods and services in the input market 5 Which of the following is an example of spending on goods and services in the circular flow model A Javier buys 800 square feet of wood flooring for his vacation home B Celeste buvs fresh herbs at the farmers39 market to use in her restaurant C Timmy purchases a new examination table for use in his veterinary clinic D Belinda purchases a new computer for her taxpreparation business 6 What might you call an outward shift of a nation39s production possibilities frontier A rising prices of the two goods on the production possibilities frontier model B an impossible situation C a situation in which a country produces more of one good and less of another D economic growth 7 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 perfectly elastic B relatively inelastic C unitelastic D relativelv elastic 8 A demand curve which is represents perfectly inelastic demand and a demand curve which is represents inelastic demand A horizontal downward sloping B vertical downward sl0ping C downward sloping vertical D upward sloping horizontal 9 Price elasticity of demand measures A how responsive sales are to changes in the price of a related good B how responsive quantitv demanded is to a change in price C how responsive suppliers are to price changes D how responsive sales are to a change in buyers39 incomes 10 Which of the following is the correct way to describe equilibrium in a market A At equilibrium quantitv demanded equals quantitv sUpplied B At equilibrium market forces no longer apply C At equilibrium demand equals supply D At equilibrium scarcity is eliminated 11 Which of the following is evidence of a surplus of bananas A The price of bananas is lowered in order to increase sales B The equilibrium price of bananas rises due to an increase in demand C Firms raise the price of bananas D The quantity demanded of bananas is greater than the quantity supplied 12 If for a product the quantity supplied exceeds the quantity demanded the market price will fall until A quantity demanded equals quantity supplied The equilibrium price will then be lower than the market price B all consumers will be able to afford the product C the quantity demanded exceeds the quantity supplied The market will then be in equilibrium D quantitv demanded equals quantitv sUpplied The market price will then equal the equilibrium price 13 At low wages the labor supply curve for most people slopes upward because A as wagg increase the Opportunitv cost of leisure increaS B as wages increase income also increases unless hours worked decrease C the supply of labor is perfectly inelastic at low wages D the demand for labor is perfectly elastic at low wages 14 Firms use information on labor39s marginal revenue product to determine A how manv workers to hire at each wage rate B how much marginal product to produce at each wage rate C how much to produce at each output price D how much labor services to supply at each wage rate 15 Marginal revenue product of labor for a competitive seller is A equal to the marginal product of labor multiplied bv the output price B the marginal revenue of the product multiplied by the output price C the change in total product from hiring one more worker D the output price multiplied by the quantity sold 16 The labor supply for an industry would decrease if A the percentage of the p0pulation from age 16 to 65 decreaS B a greater percentage of women want to work outside the home C the wage rate falls D the government welcomes foreign workers into the country 17 A decrease in the wage rate causes A a rightward shift of the firm39s labor demand curve B a decrease in labor39s productivity C an increase in the quantitv of labor demanded D a leftward shift of the firm39s labor demand curve 18 How will an increase in population affect the labor market A It will cause a decrease in the quantity of labor demanded B It will increase the opportunity cost of leisure C It will shift the market supplv curve D It will increase the supply of jobs 19 Private costs A are borne by consumers of a good while social costs are borne by government B are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good C are borne by producers of a good while social costs are borne by government D are borne bv producers of a good while social cos are borne bv societv at large 20 Which of the following displays these two characteristics nonrivalry and nonexcludability in consumption A private goods B common resources C public goods D quasipublic goods 21 Which of the following displays these two characteristics rivalry and nonexcludability A a private good B a common resource C a public good D a quasipublic good 22 The key characteristics of a monopolistically competitive market structure include A all sellers sell a homogeneous product B manv small relative to the total market sellers acting independentlv C sellers have no incentive to advertise their products D barriers to entry are strong 23 The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because A there are many firms in the market B barriers to entry are very low C entry into the market is blocked D products are differentiated 24 A characteristic found only in oligopolies is A interdependence of firm B break even level of profits C products that are slightly different D independence of firms 25 Gross domestic product understates the total production of final goods and services because of the omission of A intermediate goods B the underground economv C exports D inflation 26 Gross domestic product is calculated by summing up A the total quantity of goods and services produced in the economy during a period of time B the total quantity of goods and services in the economy C the total market value of final goods and services produced in the economv during a period of time D the total market value of goods and services in the economy 27 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 more than 10 times as well off as the typical person in the Philippines B a typical person in Vietnam is 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 tVDical individual in the 2 countries without additional information D a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines 28 Which of the following would be classified as fiscal policy A The Federal Reserve cuts interest rates to stimulate the economy B The federal government passes tax cuts to encourage firms to reduce air pollution C The federal government cuts taxes to stimulate the economv D A state government cuts taxes to help the economy of the state 29 Fiscal policy refers to changes in A federal taxes and purchasg that are intended to achieve macroeconomic policv obiective B federal taxes and purchases that are intended to fund the war on terrorism C the money supply and interest rates that are intended to achieve macroeconomic policy objectives D state and local taxes and purchases that are intended to achieve macroeconomic policy objectives 30 Which of the following is an objective of fiscal policy A health care coverage for all Americans B discovering a cure for Ale C high rates of economic growth D energy independence from Middle East oil 31 Which of the following assets is most liquid A bond B savings account C stock D money 32 Dollar bills in the modern economy serve as money because A they can be redeemed for gold by the central bank B they have value as a commodity independent of their use as money C peonle have confidence that others will accept them as monev D they are backed by the gold stored in Fort Knox 33 Which of the following functions of money would be violated if inflation were high Qtore of value B certificate of gold C medium of exchange D unit of account 34 In an economy with there are more prices than in an economy with A fiat monev barter B barter money C money barter D fiat moneycommodity money 35 The M1 measure of the money supply equals A currency plus checking account balances B currencv plus checking account balances plus traveler39s check C currency plus checking account balances plus traveler39s checks plus savings account balances D paper money plus coins in circulation 36 Which of the following is one of the most important benefits of money in an economy A Money allows for the accumulation of wealth B Monev makes exchange easier leading to more specialization and higher productivitv C Money encourages people to produce all of their own goods selfsufficiency and therefore increases economic stability D Money allows for the exchange of goods and services 37 Money market mutual funds sell shares to investors and use the money to buy A foreign currency hhortterm securities C mortgagebacked securities D overseas assets through foreign direct investment 38 Which of the following determines the amount of money the banking system as a whole can create A the quantitv 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 US Congress 39 To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency the Federal Reserve could A buv Treasurv securities B raise the discount rate C raise the required reserve ratio D lower bank taxes 40 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 high lowers high raises low lowers low raises low does not change WPPFDP 41 The Federal Reserve System39s four monetary policy goals are A low rate of bank failures high reserve ratios price stability and economic growth B price stabilitv high emplovment economic growth and stabilitv of financial markets and institution C low government budget deficits low current account deficits high employment and a high foreign exchange value of the dollar D price stability low government budget deficits low current account deficits and low rate of bank failures 42 The Federal Reserve39s two main are the money supply and the interest rate A policy tools B fiscal policy targets C monetarv policv targ D fiscal tools 43 Comparative advantage means the ability to produce a good or service A at a lower ODDOI tUhitV cost than anv other producer B of a higher quality than any other producer C at a lower selling price than any other producer D at a higher profit level than any other producer 44 Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except A increase the variety of products that it can consume with no increase in resources B consume a combination of goods that lies outside its own production possibilities frontier C engage in mutually beneficial trade with other nations D produce a combination of goods that lies outside its own production mibilities frontier 45 Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23 Which of the following statements is true A Serena has a comparative advantage in making both products B Haley has a comparative advantage in making necklaces and Serena in making bracelets C Haley has a comparative advantage in making both products D Halev has a comparative advantage in making bracelets and Serena in making necklaces 46 When the market value of the dollar rises relative to other currencies around the world we say that A the dollar has depreciated B the supply of dollars has increased C the dollar has appreciated D the demand for dollars has increased 47 If the nominal exchange rate between the American dollar and the Canadian dollar is 089 Canadian dollars per American dollar how many American dollars are required to buy a product that costs 25 Canadian dollars A 223 B 281 C 132 D 275 48 If the dollar appreciates against the Mexican peso A US exports to Mexico become less expensive B The value of Mexican imports to the United States does not change C Mexican imports to the US become more expensive D US exports to Mexico become more expensive 49 Destabilizing speculation refers to A actions taken by currency traders to sell a currency that is undervalued B any depreciation of a country39s currency as a result of longrun adjustments to purchasing power parity C actions taken by the International Monetary Fund that increase lending to countries who have pegged their currencies against the dollar D actions taken bv investors who sell a countrv39s currency in anticipation of buving it back later at a lower price 50 The gold standard is an example of A a managed float exchange rate system B a flexible exchange rate system C a floating exchange rate system D a fixed exchange rate system 51 If relative purchasing power between the United States and Argentina is 322 pesos per dollar under which circumstances would we say that the dollar is quotovervaluedquot A if the actual exchange rate between the dollar and the Argentinean peso is 4 pesos per dollar B if the actual exchange rate between the dollar and the Argentinean peso is 3 pesos per dollar C if the actual exchange rate between the dollar and the Argentinean peso is 322 pesos per dollar D if the actual exchange rate between the dollar and the Argentinean peso is 022 pesos per dollar 52 The three most important international financial centers today are A London Tokyo and Beijing B Tokvo London and New York C New York Los Angeles and London D San Francisco Paris and Mexico City 53 If the US government places tariffs on imports from countries that have been accused of deliberately undervaluing their currencies the price of these imports will and the demand for the undervalued currency will A rise39 fall B rise rise C fall fall D fall rise 54 What two countries each accounted for more than 25 of all foreign purchases of US stocks and bonds in 2008 A China and the United Kingdom B Japan and Mexico C Mexico and Canada D Japan and India
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