ECON 209 Lecture Notes - Kilogram, European Route E20

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OC95657

18 Feb 2013

School

McGill University

Department

Economics (Arts)

Course

ECON 209

Professor

Mayssun El- Attar Vilalta

FortyquestionswereautomaticallyandrandomlychosenbythecomputerfromChapters19through26oftheTextʹstest

bank-theinstructorhasnotseenthequestionschosen.

Name:RandomQ.Practice



MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswers

thequestion.

1)SupposetheBankofMontrealwantsafourpercentrealrateofreturn

onallitsloans,andanticipatesanannualinflationrateofsixpercent.It

shouldthereforelenditsmoneyatanominalinterestrateof

1)_______

A)tenpercent.

B)ninepercent.

C)fivepercent.

D)fourpercent.

E)onepercent.



2)Realnationalincome 2) _______

A)referstonationalwealthbutisnotanindicatorofcurrent

production.

B)changesonlywhentheunderlyingquantitieschange.

C)alwaysequalsnominalnationalincome.

D)changesbythesameamountandinthesamedirectionasdoes

nominalnationalincome.

E)referstonationalincomewithnoadjustmentforchangesinprices.



3)IftheCanadiandollarexchangerateincreases,the 3)_______

A)internalvalueofthedollarfalls.

B)Canadiandollardepreciatesrelativetoforeigncurrencies.

C)internalvalueofthedollarrises.

D)Canadiandollarappreciatesrelativetoforeigncurrencies.

E)externalvalueremainsunaffected.



4)Ifacountryʹslabourforceis15millionpeople,and1.35millionofthose

areunemployed,thecountryʹsunemploymentrateis

4)_______

A)2.5percent.

B)3.3percent.

C)4.5percent.

D)6.7percent.

E)9.0percent.



Thetablebelowprovidesmacroeconomicdataforahypotheticaleconomy.Dollaramountsareallin

constant-dollarterms.

YearActualOutput PotentialOutput UnemploymentRate

(billionsof$)(billionsof$)(%oflabourforce)

2002 402 404 7.1

2003 408 411 7.2

2004 415 415 6.3

2005 420 418 5.9

2006 422 420 6.0

2007 420 423 7.0

2008 425 425 6.3

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 -1

5)RefertoTable19-1.Inwhichyearsarethefactorsofproductioninthis

economybeingutilizedatanormalrate?

5)_______

A)2004,2008

B)2002,2003,2007

C)2005,2006

D)allyears

E)noneoftheyears



6)Thechangeinthecountryʹscapitalstockduringayearisequalto 6)_______

A)netinvestment.

B)netchangeininventoriespluscapitalconsumptionallowance.

C)capitalconsumptionallowance.

D)grossinvestment.

E)grossfixedinvestment.



7)Tocalculatethechangeinthevalueofinventoriesfortheinvestment

componentofGDP,oneshouldusetheir

7)_______

A)marketvalueatthetimetheywereproduced.

B)costofproductionatthetimetheywereproduced.

C)valueatthetimethegoodsaresoldandremovedfrominventory.

D)costofproductionminusthecostsoflabourandcapital.

E)currentmarketvalue.



8)OnemajorreasonthatGDPisaninaccuratemeasureofthetruelevelof

economicactivityisthat

8)_______

A)itisstatisticallyveryinaccurate.

B)itcannotbeadjustedforchangesinprices.

C)itdoesnotincludenon-marketactivities.

D)peoplefrequentlybuythingstheydonotwant.

E)alloftheabove



9)WhichofthefollowingisincludedinthecurrentcalculationsofGDP? 9)_______

A)Pizzapurchasedbycollegestudentsfordinner

B)VolunteerworkundertakenbyMarySmith

C)Thepurchaseofasecondhandautomobile

D)Thepurchaseofa1939painting

E)Welfarepayments



10)Theaggregateconsumptionfunctionisbasedonanumberof

assumptions.Giventheseassumptions,whichofthefollowing

statementsistrue?

10) ______

A)TheMPCisgreaterthanzeroandlessthanone,andtheAPCfalls

asincomerises.

B)Belowacertainlevelofincome,APC>1andMPC<0.

C)TheMPCandAPCarealwayslessthanunity.

D)Asincomerises,theMPCfallsandtheAPCrises.

E)TheAPCisgreaterthanzeroandlessthanone,andtheMPCfalls

asincomerises.



Considerthefollowinginformationdescribingaclosedeconomywithnogovernmentandwhereaggregate

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outputisdemanddetermined:



TABLE21-1



11)RefertoTable21-1.Attheequilibriumlevelofnationalincome,desired

savingwillbe

11) ______

A)zero. B)$40. C)$70. D)$200. E)$240.



FIGURE21-3



12)

RefertoFigure21-3.AssumingAE0tobetheprevailingaggregate

expenditurefunction,thedistance0Aisameasureof

12) ______

A)desiredinvestment.

B)autonomousdesiredexpenditures.

C)inducedexpenditures.

D)desiredsaving.

E)aggregateexpenditureatequilibriumnationalincome.



13)

Consideranaggregateconsumptionfunctioninasimplemacromodel

withgovernmentandtaxes.Givenamarginalpropensitytoconsume

outofdisposableincomeof0.9andanettaxrateof10percentof

nationalincome,themarginalpropensitytoconsumeoutofnational

incomeis________.

13) ______

A)0.09 B)0.72 C)0.81 D)0.90 E)1.00.



Thetablebelowshowsnationalincomeandimports.Thelevelofexportsisfixedat$300.Allfigures(in

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ECON 209 Lecture Notes - Kilogram, European Route E20

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