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Midterm

Midterm- 2012

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Department
Economics
Course
ECON 1100
Professor
Eveline Adomait
Semester
Winter

Description
SLG MOCK MID-TERM 1, FOR PRACTICE ONLY Winter 2012 ECON 1100 Introductory Macroeconomics FORMAT: MULTIPLE CHOICE……………73 QUESTIONS The purpose of this mock-midterm is to give you practice answering questions and to help you to gauge which aspects of the course content you know well and which are in need of further development and review. Use this mock-midterm as a learning tool in preparing for the actual midterm. This mock-exam will be reviewed and discussed during the SLG sessions listed below. Please attempt this mock midterm prior to attending a review session. You are welcome to attend any of the session times listed on the attached Supported Learning Groups schedule. GOOD LUCK! SLG Study Group Schedule www.slg.uoguelph.ca WHO? WHEN? WHERE? Thursday Farah 2:30PM-5:30PM LIB 200B Noorain, Gabby Friday Lib 100A (Forster Room) 4:00-7:00 1. Which of the following would not promote economic growth within a society? a. Increasing the skill level of the workforce. b. An increase in technological expertise. c. More people looking for jobs than jobs available. d. An increase in the stock of machines and productive equipment. 2. If you earn a salary of $24 000 and the CPI is 300 (1970 = 100), then the real value of your income, expressed in 1970 dollars is: a. 8000 b. 6000 c. 24000 d. 18600 Use the following table to answer question 3: GOOD Q purchased Price/Unit 1977 ($) Price/Unit 1997 ($) Zaflings 100 2 10 Bluars 75 10 14 Widgets 50 4 2 Skylids 25 40 50 3. The table above shows the prices and quantities purchased of four different goods by the typical household in 1977 and 1997. Using 1977 as the base year, the value of the consumer price index in 1977 was: a. 200. b. 175. c. 100. d. Between 150 and 200. 4. Suppose the price of Canadian oil went down, what would happen to the market of Canadian dollars? a. An increase in the quantity demanded of Canadian dollars. b. An increase in the demand of Canadian dollars. c. No change in the demand for Canadian dollars but a decrease in the quantity demanded of Canadian oil d. A decrease in the quantity of Canadian dollars demanded and a decrease in the demand for Canadian oil. 5. Suppose that the American interest rate went down, it lead to: a. An increase in the supply of Canadian dollars on the foreign exchange market. b. An increase in the supply for American dollars on the foreign exchange market. c. An increase in the demand for foreign dollars on the foreign exchange market. d. All of the above. 6. The unemployment rate equals the number of people: a. Unemployed. b. Unemployed divided by the number employed. c. Unemployed divided by the labour force. d. Unemployed plus discouraged workers divided by the labour force. 7. Double counting can be avoided when computing GDP by: a. Simply deducting a double-counting factor from the GDP estimates b. Adding the value of onlythe intermediate (non-final) goods and services produced. c. Adding only the value contributed (added) by firms at each stage of producti on. d. Including the value of all output produced in the economy. 8. Nominal GDP measures the value of current: a. Output at current prices. b. Output when prices are held constant. c. Income received by households. d. Investment spending by firms. 9. In increase in the economy’s stock of physical productive capital is called: a. Saving. b. Inventory adjustment. c. Investment. d. Crowding out. 10. __________________ are domestically produced but sold abroad and considered as __________________ in the expenditure on domestic output. a. Imports; reductions. b. Imports; increases. c. Exports; reductions. d. Exports; increases. 11. The major component of Canadian net domestic income is: a. Profit and business income. b. Investment income. c. Rental income. d. Employment income. 12. Real GDP is measured in _________________ prices and nominal GDP is measured in ______________ prices. a. Current; base year. b. Base year; current. c. Current; current. d. Base year; base year. 13. Assuming a nominal GDP of $2 billion and a GDP deflator of 170 billion, real GDP must be about: a. $3.4 billion. b. $1.2 billion. c. $0.3 billion. d. $3.7 billion. 14. If the GDP deflator was 105 in 2000 and 115 in 2001, the annual rate of inflation was: a. 10% b. 15% c. 9.5% d. 0.9% 15. Despite some problems, higher real GDP per person does imply higher living standards because it tends to be positively associated with: a. Crime, pollution, and economic inequality. b. Better education, health and life expectancy. c. Poverty, depletion of non-renewable resources, and congestion. d. Unemployment, availability of goods and services, and better education. 16. Suppose a country produces apples and oranges. In Year 1 they produce 100 apples and 200 oranges. The price of apples is $1.00 and the price of oranges is $2.00. In Year 2 they produce 200 apples and 1000 oranges, and the price of apples has risen to $1.5 0 and the price of oranges has risen to $3.00. What is the inflation rate from Year 1 to Year 2 using Year 1 as the base year? a. 1.2% b. 50% c. -5.4% d. -50% 17. In a year, the following activities occur: 1. A gold mining company pays its workers $100 000 to mine 100kg of gold. The gold is then sold to a jewelry manufacturer for $250 000. 2. The jewelry manufacturer pays its workers $150 000 and sells necklaces for $400 000. What is the economy's GDP? a. $100 000 b. $250 000 c. $400 000 d. $650 000 18. Suppose a country produces 6 cookies, 10 bicycles, 15 sweaters, and 10kg of steel (used to produce bicycles). The price of a cookie is $1.00, bicycles are $100.00, sweaters are $20 and steel is $50.00/kg. What is the country's GDP? a. $1 306 b. $2 444 c. $1 000 d. $1 806 19. All of the following are components of investment except: a. Increases in plant and equipment. b. Inventory expansion. c. Residential housing construction. d. Purchases of stocks and bonds. 20. If the GDP deflator is 105, and nominal GDP is 150 000, what is real GDP?
 a. 150 000 b. 1 428.57 c. 15 000 000 d. 142 857 21. Expansionary fiscal policy occurs : a. Decreases aggregate expenditure and equilibrium GDP. b. Occurs when the government cuts taxes and/or increases spending. c. Occurs when the government increases taxes and cuts spending. d. Occurs when the government cuts taxes by less than it cuts spending. 22. At full employment there is no a. Natural unemployment b. Unemployment c. Cyclical unemployment d. Structural unemployment e. Frictional unemployment 23. The unemployment rate is the number of people who are _______________ divided by the _____________________ all multiplied by 100. a. Employed; labour force b. Unemployed; the labour force c. Unemployed; the population d. Unemployed; those who are employed Price ($) Quantity Item Base Current Base Current Rubber Ducks 1.00 1.25 100 100 Soap-on-a-Rope 9.00 6.00 12 14 24. The aforementioned economy (in the table above) has only two consumption goods: rubber ducks and soap-on-a-rope. Compute the Consumer Price Index for the current year. a. 105.6 b. 112 c. 100.5 d. 94.7 e. 100 25. If our ____________ exceed our _______________ then we have a trade deficit which can be seen in our current account. a. Imports; Surplus b. Imports; Exports c. Exports; Imports d. Deficit; Exports 26. Frictional unemployment and structural unemployment are NOT associated with a. changes to the economy’s industrial structure resulting from growth in some industries and decline in others b. deficient levels of overall demand throughout the economy c. disparity between the characteristics of the supply of labour and the dem and for labour d. people entering the labour force typically taking time to find a job e. people who quit their present jobs to look for other jobs 27. If an employer and employees enter into a wage contract specifying a wage increase of 8 percent but the price level rises by 11 percent over the course of the contract, a. the employees’ purchasing power will rise b. the employees’ purchasing power will fall c. the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady d. both employer and employees will benefit in increase purchasing power 28. Transfer payments are not included in the government component in the calculation of GDP because a. They do not represent a payment for a good or a service b. They are not counted as income by any economic agent c. They do not generate additional income in the economy d. It is difficult to assess the market value of a transfer payment e. They are small enough to ignore when computing the national accounts 29. Which of the following is included in the measure of Canadian GDP? a. A 2002 Grand Am produced and sold as a new car in Canada in 2002 b. The tires purchased by GM and installed on a Grand Am c. GM cars produced in Mexico d. All of the above 30. Increased wealth a. Causes no change in consumption because consumption is a function of disposable income only b. Causes no change in consumption because the increase is always expected c. Causes an upward shift in the consumption function d. Causes a shift along the consumption function e. Only affects saving, no consumption 31. Aggregate expenditure in Canada is equal to consumption expenditure plus investment _______. a. Plus government expenditures plus imports b. Minus government expenditures minus imports c. Plus government expenditures plus exports d. Plus government expenditures plus net exports 32. Which of the following would not be included in the income approach to calculating GDP? a. Interest and miscellaneous investment income b. Wages, salaries, and supplementary labour income c. Net exports of goods and services d. Corporate profits 33. The term ‘investment’ in macroeconomics means a. The total amount of capital goods in the country b. The total amount of money invested in bonds and stocks c. The same thing as profits d. The production of goods not for immediate consumption use such as factories, machines, residential housing, and changes in inventories e. The production of all goods for immediate consumption 34. If nominal GDP is $150 and real GDP is $125, then
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