# ECON 209 Lecture Notes - Kilogram, European Route E20

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18 Feb 2013
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FortyquestionswereautomaticallyandrandomlychosenbythecomputerfromChapters19through26oftheTextʹstest
bank-theinstructorhasnotseenthequestionschosen.
Name:RandomQ.Practice
thequestion.
1)SupposetheBankofMontrealwantsafourpercentrealrateofreturn
onallitsloans,andanticipatesanannualinflationrateofsixpercent.It
shouldthereforelenditsmoneyatanominalinterestrateof
1)_______
A)tenpercent.
B)ninepercent.
C)fivepercent.
D)fourpercent.
E)onepercent.
2)Realnationalincome 2) _______
A)referstonationalwealthbutisnotanindicatorofcurrent
production.
B)changesonlywhentheunderlyingquantitieschange.
C)alwaysequalsnominalnationalincome.
D)changesbythesameamountandinthesamedirectionasdoes
nominalnationalincome.
A)internalvalueofthedollarfalls.
C)internalvalueofthedollarrises.
E)externalvalueremainsunaffected.
4)Ifacountryʹslabourforceis15millionpeople,and1.35millionofthose
areunemployed,thecountryʹsunemploymentrateis
4)_______
A)2.5percent.
B)3.3percent.
C)4.5percent.
D)6.7percent.
E)9.0percent.
Thetablebelowprovidesmacroeconomicdataforahypotheticaleconomy.Dollaramountsareallin
constant-dollarterms.
YearActualOutput PotentialOutput UnemploymentRate
(billionsof\$)(billionsof\$)(%oflabourforce)
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)RefertoTable19-1.Inwhichyearsarethefactorsofproductioninthis
economybeingutilizedatanormalrate?
5)_______
A)2004,2008
B)2002,2003,2007
C)2005,2006
D)allyears
E)noneoftheyears
6)Thechangeinthecountryʹscapitalstockduringayearisequalto 6)_______
A)netinvestment.
B)netchangeininventoriespluscapitalconsumptionallowance.
C)capitalconsumptionallowance.
D)grossinvestment.
E)grossfixedinvestment.
7)Tocalculatethechangeinthevalueofinventoriesfortheinvestment
componentofGDP,oneshouldusetheir
7)_______
A)marketvalueatthetimetheywereproduced.
B)costofproductionatthetimetheywereproduced.
C)valueatthetimethegoodsaresoldandremovedfrominventory.
D)costofproductionminusthecostsoflabourandcapital.
E)currentmarketvalue.
8)OnemajorreasonthatGDPisaninaccuratemeasureofthetruelevelof
economicactivityisthat
8)_______
A)itisstatisticallyveryinaccurate.
C)itdoesnotincludenon-marketactivities.
E)alloftheabove
9)WhichofthefollowingisincludedinthecurrentcalculationsofGDP? 9)_______
A)Pizzapurchasedbycollegestudentsfordinner
B)VolunteerworkundertakenbyMarySmith
C)Thepurchaseofasecondhandautomobile
D)Thepurchaseofa1939painting
E)Welfarepayments
10)Theaggregateconsumptionfunctionisbasedonanumberof
assumptions.Giventheseassumptions,whichofthefollowing
statementsistrue?
10) ______
A)TheMPCisgreaterthanzeroandlessthanone,andtheAPCfalls
asincomerises.
B)Belowacertainlevelofincome,APC>1andMPC<0.
C)TheMPCandAPCarealwayslessthanunity.
D)Asincomerises,theMPCfallsandtheAPCrises.
E)TheAPCisgreaterthanzeroandlessthanone,andtheMPCfalls
asincomerises.
Considerthefollowinginformationdescribingaclosedeconomywithnogovernmentandwhereaggregate
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outputisdemanddetermined:
TABLE21-1
11)RefertoTable21-1.Attheequilibriumlevelofnationalincome,desired
savingwillbe
11) ______
A)zero. B)\$40. C)\$70. D)\$200. E)\$240.
FIGURE21-3
12)
RefertoFigure21-3.AssumingAE0tobetheprevailingaggregate
expenditurefunction,thedistance0Aisameasureof
12) ______
A)desiredinvestment.
B)autonomousdesiredexpenditures.
C)inducedexpenditures.
D)desiredsaving.
E)aggregateexpenditureatequilibriumnationalincome.
13)
Consideranaggregateconsumptionfunctioninasimplemacromodel
withgovernmentandtaxes.Givenamarginalpropensitytoconsume
outofdisposableincomeof0.9andanettaxrateof10percentof
nationalincome,themarginalpropensitytoconsumeoutofnational
incomeis________.
13) ______
A)0.09 B)0.72 C)0.81 D)0.90 E)1.00.
Thetablebelowshowsnationalincomeandimports.Thelevelofexportsisfixedat\$300.Allfigures(in
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