ECON 2210 Study Guide - Final Guide: Nairu, Parsec, Factors Of Production
Questions of this SAMPLE exam were randomly chosen and may NOT be representative of the difficulty or focus of the
actual examination. The professor did NOT review these questions.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each.
Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell
for $20 each. National product in this economy is
A)
$2470
B)
100 chickens plus 50 bags of corn plus 40 bushels of apples.
C)
190 units of goods produced.
D)
$2100.
E)
not determinable from the information provided.
2)
Most of the statistics used in macroeconomics are
A)
indications of industry performance.
B)
close-up pictures of individual markets.
C)
statistics on the price of individual commodities, such as wheat or corn.
D)
detailed statistics on output, such as the output of shoes.
E)
broad indications of economic performance, such as total employment or the average of all market prices.
3)
Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500.
Which of the following is the best measure of labour productivity in this economy?
A)
real GDP per employed worker = $200 000
B)
real GDP per hour worked = $400
C)
real GDP per employed worker = $400 000
D)
real GDP per hour worked = $200
E)
indeterminable from the information provided
4)
Probably the most commonly used measure of national income is
A)
gross domestic product.
B)
current dollar national income.
C)
dollar value of potential output.
D)
constant dollar national income.
E)
gross national product.
5)
In general, productivity is a measure of
A)
the amount of output that the economy produces per unit of input.
B)
the total amount of output that the economy is capable of producing.
C)
the economy's ability to increase real GDP per capita.
D)
potential output.
E)
real GDP as a function of total employment.
6)
In the study of short-run fluctuations in national income, potential income (output) is usually assumed to be
A)
constant.
B)
equal to actual income.
C)
moving together with potential output in neighbouring countries.
D)
falling at its average growth rate.
E)
irrelevant, as the economy is rarely there.
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7)
Which of the following statements about depreciation is true?
A)
Net investment is equal to gross investment plus depreciation.
B)
Depreciation includes net additions to the economy's total stock of capital.
C)
Depreciation is equal to net investment.
D)
The total amount of capital goods in a country is called depreciation.
E)
Net investment is equal to gross investment minus depreciation.
8)
Which of the following is included in the current calculations of GDP?
A)
Pizza purchased by college students for dinner
B)
Welfare payments
C)
The purchase of a 1939 painting
D)
Volunteer work undertaken by Mary Smith
E)
The purchase of a second hand automobile
9)
Suppose you are hired as a consultant to estimate the increase in consumer demand for automobiles for the
coming year. Which measure of aggregate income would be most useful to you for this type of forecasting?
A)
Net National Product
B)
GDP Deflator
C)
Gross Domestic Product
D)
Disposable Income
E)
Gross National Product
10)
Which of the following statements regarding housing expenditures in the national accounts is correct?
A)
New residential construction is classified as consumption.
B)
Owner-occupied housing is counted as investment by imputing the value of the housing services enjoyed
by the owner.
C)
Rental payments for houses are counted as part of consumption.
D)
The provision of new public housing by the government is classified as private investment.
E)
The cost of a home purchased from its previous occupant is part of investment.
11)
Which one of the following is an example of "government purchases"?
A)
$600 paid to an unemployed worker for employment insurance
B)
$1000 paid to a poor person for income support
C)
$4000 spent for services provided by a private consultant
D)
$100 000 paid as interest on the national debt
E)
$2000 paid to a retiree
12)
Statistics Canada excludes from GDP the value of goods and services exchanged "under the counter" because
A)
these goods do not contribute to well-being.
B)
their production has zero opportunity cost.
C)
these goods are all intermediate goods.
D)
satisfactory methods for their measurement have not been developed.
E)
Statistics Canada is responsible for making an ethical decision about which activities to exclude from
national income measures.
13)
Suppose aggregate output is demand-determined. If the business community decreases its planned investment
expenditures by $4 billion, causing equilibrium national income to fall by $12 billion, the marginal propensity to
spend must be
A)
2/5.
B)
1/3.
C)
1/2.
D)
2/3.
E)
4/5.
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14)
When desired consumption exceeds disposable income, desired saving is ________; when desired consumption
is less than the disposable income, desired saving is ________.
A)
negative; positive
B)
zero; positive
C)
positive; negative
D)
negative; negative
E)
positive; positive
15)
The Smith family's disposable income rose from $40 000 per year to $42 000 and their desired consumption
expenditure rose from $38 000 to $39 600. It can be concluded that their
A)
marginal propensity to consume is 0.8.
B)
marginal propensity to save is 0.8.
C)
average propensity to consume is 0.8.
D)
average propensity to save is 0.8.
E)
marginal propensity to consume is $800.
16)
Suppose the price level is constant, output is demand-determined, and the economy is closed with no
government. If the saving function is S= -100 + (0.4)Y, the simple multiplier is
A)
0.2.
B)
1.
C)
2.5.
D)
5.
E)
insufficient information to know.
17)
The marginal propensity to save refers to the
A)
additional saving that occurs out of an additional dollar of income.
B)
change in saving divided by total income.
C)
total saving divided by a change in income.
D)
additional saving that occurs over time.
E)
additional saving that occurs out of an additional dollar of investment.
18)
If a family's annual disposable income rose from $60 000 to $65 000 and their desired consumption expenditures
rose from $50 000 to $54 000, it can be concluded that the family's
A)
average propensity to consume is 0.8.
B)
marginal propensity to consume is 0.8.
C)
marginal propensity to save is 0.8.
D)
average propensity to save is 0.8.
E)
marginal propensity to consume is $800.
19)
Consider a simple macro model with a constant price level and demand-determined output. The equations of
the model are: C= 60 + 0.43Y,I= 150, G= 260, T= 0, X= 90, IM = 0.06Y. The marginal propensity to spend on
national income, z, is ________.
A)
0.06
B)
0.37
C)
0.43
D)
0.49
E)
0.63
20)
A fall in the Canadian-dollar price of foreign currency, other things being equal, causes Canada's net export
(NX) function to shift ________ and ________.
A)
downward; become flatter
B)
downward; keep the same slope
C)
upward; become steeper
D)
upward; become flatter
E)
downward; become steeper
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Document Summary
Questions of this sample exam were randomly chosen and may not be representative of the difficulty or focus of the actual examination. Choose the one alternative that best completes the statement or answers the question: consider a small economy with 3 individuals. Individual a produces 100 chickens that sell for each. Individual b produces 50 bags of corn that sell for each. Individual c produces 40 bushels of apples that sell for each. If the business community decreases its planned investment expenditures by billion, causing equilibrium national income to fall by billion, the marginal propensity to spend must be: 2/5, 1/3, 1/2, 2/3, 4/5. The equations of the model are: c = 60 + 0. 43y, i = 150, g = 260, t = 0, x = 90, im = 0. 06y. The diagram below shows desired aggregate expenditure for a hypothetical economy.
