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# Economics 1021A/B Study Guide - Midterm Guide: Real Wages, Nominal Interest Rate, Real Interest Rate

Department
Economics
Course Code
ECON 1021A/B
Professor
Terry Biggs
Study Guide
Midterm

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Version 111
THE UNIVERSITY OF WESTERN ONTARIO
Jeannie Gillmore ECONOMICS 1022B-002/004 February 11, 2012
MIDTERM 1
INSTRUCTIONS:
1. The examination begins at 4:00 p.m. and ends at 6:00 p.m.
2. Check that your examination paper contains 14 pages.
3. Use a BLACK PENCIL to complete your Scantron Form.
Enter your SECTION NUMBER, which is either 002 or 004.
4. Please hand in Scantron Form only.
5. You may use a calculator but your cell phone may not be used as a calculator.
6. Your cell phone must be switched off and left in your bag at the front of the exam room.
7. You must remain in the examination room until you have finished the exam. No breaks
outside of the examination room will be allowed.
NOTE: QUESTIONS ARE PRINTED ON BOTH SIDES OF EACH PAGE

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Economics 1022B - 002/004 Mid-term 1
February 11, 2012
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) Which of the following statements is true?
A) Final goods and services produced in Canada by foreigners are part of Canada's GDP.
B) Final goods and services produced in Canada by foreigners are exports.
C) Final goods and services produced in Canada by foreigners are part of the foreign country's
GDP.
D) Final goods and services produced in Canada by foreigners are imports.
Use the figure below to answer the following question.
Figure 1
2) Refer to Figure 1, which shows the circular flow of expenditure and income for Venus. During
2008, A was \$100, B was \$50, C was \$30 and D was \$10. How much is GDP?
A) \$50.
B) \$75.
C) \$90.
D) \$100.
E) None of the above.
A-1

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Use the table below to answer the following question.
Table 1
Data From Eastland
Wages, salaries, and supplementary labour income 800
Farmers' income 80
Government expenditures on goods and services 240
Depreciation 240
Personal income taxes net of transfer payments
Corporate profits 140
80
Indirect taxes 120
Net exports 80
Consumption expenditure 640
Interest and miscellaneous investment income 100
3) Refer to Table 1. From the information given in the table, the value of gross domestic product is
A) \$1,120.
B) \$1,100.
C) \$1,290.
D) \$1,280.
E) \$1,360.
4) The largest component of GDP from the income approach is
A) wages, salaries, and supplementary labour income.
B) corporate profits.
C) interest and miscellaneous investment income.
D) income of non-farm unincorporated businesses.
E) farmers' income.
5) Nominal GDP will increase
A) only if the average level of prices rises.
B) only if both the average level of prices rises and the quantity of goods and services produced
increases.
C) only if the quantity of goods and services produced increases.
D) if either the average level of prices rises or the quantity of goods and services produced
increases.
E) only if the unemployment rate rises.
A-2