ECO 212 Final Exam 3
ECO 212 Final Exam 3
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Date Created: 11/18/15
1Economics 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 bene ts What term best describes this behavior A equitably B sel sth C emotionally 2 By de nition what is economics the study of A how to make money in the stock market B supply and demand D how to make money in a market economy 3 What is the term in economics by which a group of buyers and sellers of a product come together to trade B tradeoff CcoHchve D cooperative 4 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 5 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 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 If demand is inelastic the absolute value of the price elasticity of demand is A greater than one B greater than the absolute value of the slope of the demand curve C one 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 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 10 A decrease in the price of GPS systems will result in A a decrease in the demand for GPS systems B an increase in the supply of GPS systems D a larger quantity of GPS systems supplied 11 At a product39s equilibrium price A the product39s demand curve is the same as the product39s supply curve C the quantity of the product demanded is less than the quantity of the product supplied D the quantity of the product demanded is greater than the quantity of the product supplied 12 If for a product the quantity supplied exceeds the quantity demanded the market price will fall until A the quantity demanded exceeds the quantity supplied The market will then be in equilibrium C all consumers will be able to afford the product D quantity demanded equals quantity supplied The equilibrium price will then be lower than the market price 13 Marginal revenue product of labor for a competitive seller is A the change in total product from hiring one more worker B the marginal revenue of the product multiplied by the output price C the output price multiplied by the quantity sold 14 Let MP marginal product P output price and W wage then the equation that represents the condition where a competitive rm would hire another worker is APXMPW BPXWgtMP DPXMPltW 15 Marginal revenue product for a perfectly competitive seller is equal to A the output price multiplied by the total product of labor C the change in total revenue that results from hiring another worker D the output price multiplied by the number workers hired 16 An individual39s labor supply curve shows A the maximum wage rates offered to that individual by various potential employers B the relationship between the quantity of hours worked and total income earned by that individual C the relationship between wages and the quantity of labor that a rm is willing to employ 17 A rm39s demand for labor curve is also called its B marginal bene t of labor curve C marginal valuation curve D marginal factor cost of labor curve 18 A decrease in the wage rate causes A a decrease in labor39s productivity C a rightward shift of the rm39s labor demand curve D a leftward shift of the rm39s labor demand curve 19 Which of the following displays these two characteristics nonrivalry and nonexcludability in consumption A common resources C private goods D quasipublic goods 20 Which of the following is an example of a quasipublic good A crime prevention B cable television C organic apples 21 Which of the following displays these two characteristics rivalry and nonexcludability B a public good C a private good D a quasipublic good 22 A monopoly is a seller of a product A without a wellde ned demand curve B with many substitutes D with a perfectly inelastic demand 23 The labor supply for an industry would decrease if A the percentage of the population from age 16 to 65 decreases B a greater percentage of women want to work outside the home D the government welcomes foreign workers into the country 24 A characteristic found only in oligopolies is A products that are slightly different B break even level of pro ts D independence of rms 25 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 D a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines 26 Gross domestic product understates the total production of nal goods and services because of the omission of A intermediate goods C exports D in ation 27 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 D the total market value of goods and services in the economy 28 Fiscal policy refers to changes in B state and local taxes and purchases that are intended to achieve macroeconomic policy objectives C the money supply and interest rates that are intended to achieve macroeconomic policy objectives D federal taxes and purchases that are intended to fund the war on terrorism 29 If the economy is slipping into a recession which of the following would be an appropriate scal policy A a decrease in government purchases B an increase in the money supply and a decrease in interest rates C a decrease in oil prices 30 Which of the following is an objective of scal policy A health care coverage for all Americans B energy independence from Middle East oil D discovering a cure for Ale 31 Which of the following assets is most liquid Abond C stock D savings account 32 If credit card balances rise in the economy then M1 will and M2 will B increase increase C increase decrease D not change increase E decrease increase 33 Economists estimate that of US currency is outside the United States and held primarily by A less than one quarter foreign banks and foreign governments B over half households and rms in countries where there is little con dence in the local currency C less than one quarter households and rms in countries where there is little con dence in the local currency 34 The M2 measure of the money supply equals B savings account balances plus smalldenomination time deposits plus traveler39s checks C M1 plus savings account balances plus smalldenomination time depos s D savings account balances plus smalldenomination time deposits plus noninstitutional money market fund shares 35 The M1 measure of the money supply equals A currency plus checking account balances plus traveler39s checks plus savings account balances B paper money plus coins in circulation D currency plus checking account balances 36 Which of the following is one of the most important bene ts of money in an economy A Money encourages people to produce all of their own goods self suf ciency and therefore increases economic stability B Money allows for the exchange of goods and services 0 D Money allows for the accumulation of wealth 37 Open market operations refer to the purchase or sale of to control the money supply A US Treasury securities by the US Treasury B corporate bonds and stocks by the US Treasury D corporate bonds and stocks by the Federal Reserve 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 pro ts by banks imposed by the US Congress 39 Money market mutual funds sell shares to investors and use the money to buy A overseas assets through foreign direct investment B mortgagebacked securities D foreign currency 40 The goals of monetary policy tend to be interrelated For example when the Fed pursues the goal of it also can achieve the goal of simultaneously A high employment lowering government spending C economic growth a low current account de cit D stability of nancial markets a low current account de cit 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 low government budget de cits low current account de cits high employment and a high foreign exchange value of the dollar D price stability low government budget de cits low current account de cits and low rate of bank failures 42 The Federal Reserve39s two main are the money supply and the interest rate A policy tools C scal policy targets D scal tools 43 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 engage in mutually bene cial trade with other nations C consume a combination of goods that lies outside its own production possibilities frontier 44 Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23 Which of the following statements is true A Serena has an absolute advantage in making both products B Haley has an absolute advantage in making both products D Haley has an absolute advantage in making necklaces and Serena in making bracelets 45 Table 23 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 23 What is Haley39s opportunity cost of making a bracelet A 3 bracelets B 34 of a bracelet D 2 necklaces 46 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 reduces the balance of trade C An increase in the exchange rate reduces imports raises exports and increases the balance of trade D An increase in the exchange rate raises imports reduces exports and increases the balance of trade 47 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 B France has the comparative advantage in wine and cheese C France has the comparative advantage in wine D Italy has the comparative advantage in cheese 48 When the market value of the dollar rises relative to other currencies around the world we say that A the supply of dollars has increased C the demand for dollars has increased D the dollar has depreciated 49 If the dollar appreciates against the Mexican peso A Mexican imports to the US become more expensive B The value of Mexican imports to the United States does not change D US exports to Mexico become less expensive 50 If the purchasing power of the dollar is greater than the purchasing power of the euro purchasing power parity predicts that the exchange rate will A not uctuate and stay constant in the long run B increase if the exchange rate is greater than 1 euro per dollar D decrease if the exchange rate is less than 1 euro per dollar 51 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 52 The three most important international nancial centers today are B New York Los Angeles and London C San Francisco Paris and Mexico City D London Tokyo and Beijing 53 China has been accused of deliberately undervaluing its currency the yuan in order to A maintain purchasing power parity C prevent de ation D increase its imports 54 What two countries each accounted for more than 25 of all foreign purchases of US stocks and bonds in 2008 A Mexico and Canada B Japan and Mexico C Japan and India
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