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practice_test_1_w12.pdf

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Department
Economics
Course
ECON 1BB3
Professor
Hannah Holmes
Semester
Fall

Description
Practice Test #1  ECONOMICS 1BB3 Introductory Macroeconomics Sections C01, C02 This examination paper includes 13 pages including the title page and 43 questions. You are re- sponsible 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, 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   1    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. DoNOT 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". 2    Part A - Multiple Choice (40 points) Identify the choice that best completes the statement or answers the question. Answer on the scan sheet provided. Table 3-4 Labour Hours Needed to Make One Unit of: Amount Produced in 24 Hours: BaBsikdsouasesBsrdhouses Alberta 6 2 4 12 Manitoba 3 4 8 6 1. Refer to Table 3-4. If Alberta and Manitoba trade based on the principle of comparative advantage, what will be exported? a. Alberta will export baskets and Manitoba will export birdhouses. b. Alberta will export birdhouses and Manitoba will export baskets. c. Alberta will export neither good and Manitoba will export both goods. d. Alberta will export both goods and Manitoba will export neither good. 2. Refer to Table 3-4. If Alberta and Manitoba trade based on the principle of comparative advantage, what will happen? a. No one in either province will gain. b. Some individuals within both provinces will be made worse off. c. All individuals in both provinces will gain. d. One province will be better off and the other province will be worse off. 3. Refer to Table 3-4. What is the opportunity cost of 1 basket for Alberta? a. birdhouses. b. 1/birdhouse. c. birdhouses. d. birdhouse. 4. Refer to Table 3-4. Which of the following is correct? a. Alberta has an absolute advantage in baskets and Manitoba has an absolute advantage in birdhouses. b. Alberta has an absolute advantage in neither good and Manitoba has an absolute advantage in both goods. c. Alberta has an absolute advantage in both goods and Manitoba has an absolute advantage in neither good. d. Alberta has an absolute advantage in birdhouses and Manitoba has an absolute advantage in baskets. 5. Holding all else constant, what will result from a higher price for ski lift tickets? a. decreased ski sales b. decreased supply of ski resorts c. increased numberofskiers d. decreased demand for other winter recreational activities 3    6. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Then suppose thattrade is initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30units of wheat. What maximum amounts will Freedonia now be able to consume? a. 60 units of corn and 30 units of wheat. b. 30 units of corn and 30 units of wheat. c. no corn and 30 units of wheat. d. no corn and 60 units of wheat. 7. Kingston is a small college city in Ontario. What happen s to the market demand curve for fast food in Kingston at the end of August each year? a. It shifts left. b. It remains constant, but moves up the curve. c. It shifts right. d. It remains constant, but moves down the curve. 8. Which of the following is NOT a characteristic of a perfectly competitive market? a. numerous buyers b. similarproducts c. numerous sellers d. markep tower 9. Market demand is given as Qd = 60 – P. Market supply is given as Qs = 3P. What would result if the market price were $30? a. a surplus of 30 b. a shortage of 30 c. a surplus of 60 d. a shortage of 60 10. Which of the following is included in GDP? a. the sale of services such as visits to a doctor b. the sale of stocks and bonds c. the sale of used goods d. interest income from a savings account 11. A professional gambler moves from a province where gambling is legal to a province where gambling is illegal. What impact does this move have on Canada’s GDP? a. It does not change GDP because gambling is never included in GDP. b. It raises GDP. c. ItecreasesGDP. d. It does not change GDP because in either case his income is included. 4    12. If the government reports that "GDP increased at an annual ra te of 6.0 percent for the fourth quarter of 2010," by how much did GDP increase? a. 1.5 percent during the fourth quarter of 2010 b. 24.0 percent during 2010 c. 6.0 percent during 2010 d. 6.0 percent during the fourth quarter of 2010 Figure 2-3 13. Refer to Figure 2-3. At which point or points can the economy produce? a. point D, C b. poinDt c. point A, B, D, E d. point B, D, E 14. You know that a chocolate bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today's prices? a. 5 cents × (today's CPI/1962 CPI) b. 5 cents × today's CPI – five cents × 1962 CPI c. 5 cents × (1962 CPI/(today's CPI – 1962 CPI)) d. 5 cents × (1962 CPI/ today's CPI) 15. Lisa buys a 1982 BMW, which she plans to restore and sellS . he anticipates that the cost ofthe car and the repairs will be $14,000 and that she can sell it for $20,000. When she has spent $11,000, she discovers she needs to replace the engine, which will cost $5,000. She can sell the car without the new engine for $14,000. What should Lisa do? a. be totally indifferent between finishing the project and selling the car now b. complete the repairs and sell the car for $20,000 c. never try such an expensive project again d. cut her losses and sell the car now for $14,000 5    16. In 1972 in Sarnia, Ontario, one could buy a bag of chips, a pound of hamburger, a package of buns, and a small bag of charcoal for about $2.50. If the same goods today cost about $6.00, which of the following sets of CPIs would make the cost in today's dollars the same for both years? a. 65 in 1972 and 156 today b. 90 in 1972 and 145.8 today c. 60 in 1972 and 150 today d. 100 in 1972 1nd 41.67 today 17. How does the value of total sales of all firms in the country for a year compare with GDP? a. It is larger than GDP for the year. b. It could be larger or smaller than GDP for the year. c. It equals GDP for the year. d. It is smaller than GDP for the year. Figure 2-9 18. Refer to Figure 2-9. What do cups of coffee per day and the hours that someone can go without sleep have? a. a random correlation b. a negative correlation c. a positive correlation d. nocorrelation 19. What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become less expensive, digital cameras become more expensive, the cost of the resources needed to manufacture traditional film increases, and fewer firms decide to manufacture traditional film? a. quantity will increase and the effect on price is ambiguous b. price will rise and the effect on quantity is ambiguous c. quantity will fall and the effect on price is ambiguous d. price will fall and the
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