ECON 1BB3 Study Guide - Quiz Guide: Starbucks, Nominal Interest Rate, Absolute Advantage

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ECONOMICS 1BB3
Introductory Macroeconomics
This examination paper includes 13 pages including the title page and 43 questions. You are responsible for
ensuring that your copy of the paper is complete. Please bring any discrepancy to the attention of your
invigilator.
Special Instructions:
Only the McMaster Standard (Casio - FX991) Calculator may be used. This test paper must be
returned along with the scan sheet. Write your name and student number on the test paper and
the scan sheet. If you are writing in the wrong room or at the wrong time, you will lose 3 points off
your test score. If you are wearing a baseball cap, please turn it so the peak is in the back.
Please turn off all cell phones. There should be no electronic devices at your seat other than a
calculator. All books and bags must be left at the front of the room. You will need your student
ID card at your desk, along with your calculator, a pencil, and a pen. If you complete the short
answer section in pencil your test will not be re-graded if there is a dispute. Use an HB pencil to
fill in the scan sheet. If a TA has to grade your scan sheet by hand, you will lose 3 points off your
test score. You cannot fill in the version number of your test paper on the scan sheet.
Part A: Multiple Choice Questions: There are 40 multiple choice questions. Please record your answers
on the scan answer sheet provided.
Part B: Short Answer Questions: There are 3 short answer questions. Please record your answers on
the test paper.
Part A – Multiple Choice
/40
Part B – Short Answer
/15
Total
/55
PracticeTest#1,Fall2012
ThistestwasgivenduringtheWinter2012term.Your“Test#1”willconsistof
50multiplechoicequestionsandnoshortanswerquestions.
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OMR EXAMINATION - STUDENT INSTRUCTIONS
NOTE: IT IS YOUR RESPONSIBILITY TO ENSURE THAT THE ANSWER SHEET IS
PROPERLY COMPLETED: YOUR EXAMINATION RESULT DEPENDS UPON
PROPER ATTENTION TO THESE INSTRUCTIONS.
The scanner, which reads the sheets, senses the shaded areas by their non-reflection of light. A
heavy mark must be made, completely filling the circular bubble, with a HB pencil. Marks made
with a pen or felt-tip marker will NOT be sensed. Erasures must be through or the scanner may
still sense a mark. Do NOT use correction fluid on the sheets. Do NOT put any unnecessary
marks or writing on the sheets.
1. Print your name, student number, course name, section number and the date in the
space provided at the top of Side 1 (red side) of the form.
2. Mark your student number in the space provided on the sheet on Side 1 and fill in
the corresponding bubbles underneath.
3. Mark only ONE choice from the alternatives (1,2,3,4,5, or A,B,C,D,E) provided
for each question. If there is a True/False question, enter response of 1 (or A) as
True, and 2 (or B) as False. The question number is to the left of the bubbles.
Make sure that the number of the question on the scan sheet is the same as the
question number on the test paper.
4. Pay particular attention to the Marking Directions on the form.
5. Begin answering questions using the first set of bubbles, marked “1".
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Part A - Multiple Choice (40 points)
Identify the choice that best completes the statement or answers the question. Answer on the scan sheet provided.
1. If the price index in the first year was 90, in the second year was 100, and in the third year was 95, what did the
economy experience?
a. 11 percent inflation between the first and second years and 5 percent deflation between the
second and third years
b. 11 percent inflation between the first and second years and 5 percent inflation between the
second and third years
c. 10 percent inflation between the first and second years and 5 percent deflation between the
second and third years
d. 10 percent inflation between the first and second years and 5 percent inflation between the
second and third years
2. Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year, and a
worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year. There are 20 workers in
Agland and 10 workers in Zenland. Currently the two countries do not trade. Agland produces and consumes 100
units of grain and 20 units of incense per year. Zenland produces and consumes 50 units of grain and no incense per
year. The combined output of the two countries is therefore 150 units of grain and 20 units of incense per year. If the
two countries decided to trade, and completely specialized in producing the good for which each has a comparative
advantage, what would the combined yearly output of the two countries be?
a. 200 units of grain and 150 units of incense.
b. 150 units of grain and 20 units of incense.
c. 200 units of grain and 300 units of incense.
d. 50 units of grain and 40 units of incense.
3. Darla, a U.S. citizen, only works in Canada. How does the value added to production from her employment impact
GDP and GNP?
a. It is not included in either Canadian GDP or Canadian GNP.
b. It is included in both Canadian GDP and Canadian GNP.
c. It is included only in Canadian GDP.
d. It is included only in Canadian GNP.
4. Suppose there is an earthquake that destroys several corn canneries. Which of the following would NOT occur as a
direct result of this event?
a. The supply would decrease.
b. Sellers would not be willing to produce and sell as much as before at each relevant price.
c. Buyers would not be willing to buy as much as before at each relevant price.
d. The equilibrium price would rise.
5. Suppose that Canadian mining companies purchase German-made ore trucks at a reduced price. By itself what will
this do to the GDP deflator and the consumer price index?
a. The consumer price index will fall, and the GDP deflator will fall.
b. The consumer price index and the GDP deflator will be unaffected.
c. The consumer price index will be unaffected, and the GDP deflator will fall.
d. The consumer price index will fall, and the GDP deflator will be unaffected.
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Document Summary

This examination paper includes 13 pages including the title page and 43 questions. You are responsible for ensuring that your copy of the paper is complete. Please bring any discrepancy to the attention of your invigilator. Only the mcmaster standard (casio - fx991) calculator may be used. This test paper must be returned along with the scan sheet. Write your name and student number on the test paper and the scan sheet. If you are writing in the wrong room or at the wrong time, you will lose 3 points off your test score. If you are wearing a baseball cap, please turn it so the peak is in the back. There should be no electronic devices at your seat other than a calculator. All books and bags must be left at the front of the room. Id card at your desk, along with your calculator, a pencil, and a pen.

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